Biggest lift in petrol prices in 24½ years

Weekly Petrol Prices

• Petrol prices: According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 3.7 cents per litre to 142.1 cents per litre in the week to June 14.
• Regional prices up: The Singapore gasoline price rose to a 7-month high in Australian dollar terms last week.
• Quarterly prices: So far in the June quarter, CommSec estimates that the price of petrol has lifted 13.1 per cent – putting it on tracking to the largest quarterly price increase in 24½ years.

The petrol figures have implications for retailers, especially petrol marketing groups.

What does it all mean?

• The good news for motorists is that petrol prices are still down on a year ago. The bad news is that the early-February low-point for pump prices is now a distant memory. Pump prices are set to rise a little further in coming weeks, based on higher Singapore gasoline prices and domestic wholesale petrol prices.
• After falling by 12.2 per cent in the March quarter, the petrol price is currently up by 13.1 per cent in the June quarter, boosting the economy-wide inflation rate by 0.4-0.5 percentage points in the quarter. Petrol is on track to the biggest quarterly increase in 24½ years (since December quarter 1990).
• Consumer sentiment has softened in recent weeks, and it is highly likely that the lift in petrol prices and a weaker Aussie dollar are key culprits driving the gloomier disposition. It is not that the economic environment has deteriorated markedly; rather it isn’t as favourable as it was a few months back.
• Motorists are paying on average 30c more per litre for fuel than at the start of 2015, adding an extra $21 to the cost of filling up an average sedan. The key unknowns are how many families adjusted their budgets to the lower petrol prices operating earlier this year and how many are still working on the higher pump prices in operation over 2014. Petrol is the single biggest weekly purchase for most families.

What do the figures show?

• According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 3.7 cents per litre to 142.1 cents per litre in the week to June 14. The metropolitan petrol price rose by 4.9 cents to 143.4 cents per litre and the regional price rose by 1.3 cents to 139.5 cents per litre.
• The national average Australian price of diesel petrol rose by 0.7 cents to 133.9 c/l in the week to June 14. Last week the metropolitan price rose by 0.2 cents to 131.9 c/l, while the regional average price lifted 1.0 cents to 135.5 c/l.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (up 0.8 cents to 142.8 c/l), Melbourne (up 13.8 cents to 146.1 c/l), Brisbane (up 4.0 cents to 147.2 c/l), Adelaide (down by 0.4 cents to 138.2 c/l), Perth (up by 0.7 cents to 136.7 c/l), Darwin (down by 0.2 cents to 135.1 c/l), Canberra (up by 0.3 cents to 144.0 c/l) and Hobart (up by 0.3c/l to 142.9 c/l).
• Today, the national average wholesale (terminal gate) unleaded petrol price stands at a 7-month high of 131.0 cents a litre, up 1.6 cents a litre on a week ago and well up from the 6-year low of 100.4 cents per litre set on January 20.
• Last week the key Singapore gasoline price rose by US$5.10 or 6.3 per cent to a 6½-month high of US$85.90 a barrel. Singapore gasoline previously hit a near 6-year low (lowest since March 2009) of US$52.20 a barrel on January 13. In Australian dollar terms the Singapore gasoline price rose by $6.06 a barrel or 5.8 per cent last week to a 7-month high of $111.01 a barrel or 69.82 cents a litre.

What is the importance of the economic data?

• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

What are the implications for interest rates and investors?

• Global crude oil prices remain volatile, but they are well above the lows set earlier this year. While the world is well supplied with fuel, global economies are strengthening. Overall, crude oil seems to be settling near US$60-70 a barrel. Retailers received a boost earlier in 2015 from lower petrol prices, but the upward trend for pump prices suggests that consumers will return to their practice of value-shopping.
• If the higher petrol price crimps consumer spending, the Reserve Bank may have to re-introduce the easing bias for monetary policy.