Quality demanded: In the year to September sales of basic unleaded petrol hit 20-year lows. At the same time, sales of proprietary brand petrol hit record highs.
Retail petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.4 cents to a 4-week low of 121.7 cents a litre in the week to November 27. Prices fell in six of the eight capital cities. Prices are around US4 cents a litre down over the year.
Sharemarket near highs: On Friday the All Ordinaries Accumulation index (measures share prices and dividends) was just 0.2 per cent below the all-time high set in late August.
What does it all mean?
Fewer motorists are filling up with the cheapest unleaded petrol, preferring instead proprietary brand or premium unleaded products. While the basic product still accounts for 58 per cent of all auto gasoline sold, a decade ago it was closer to 84 per cent. Sales of the basic unleaded petrol product have hit a 20-year low with E10 at a 7-year low. Whether it is good marketing, an increase in the share of luxury vehicles on the road or a desire for quality, motorists have become less price conscious when it comes to the petrol they are buying.
Petrol prices will remain volatile until this week’s meeting of oil producing nations is out of the way. The Organization of Petroleum Exporting Countries (OPEC) meets in Vienna on November 30 to discuss a production agreement. And non-OPEC nations are also meeting this week. However it is by no means clear whether there will be either an agreement either to cap or reduce output. Of course the aim of producers is to find some way to support prices. And it is seen that the best way to do this is to limit the amount of oil supplied to global markets.
The US Dow Jones, S&P 500 and Nasdaq Composite indexes all hit record highs on Friday. By contrast the ASX S&P 200 in Australia would need to lift 24 per cent to hit record highs. But that is only part of the story. In Australia, dividends have a greater importance. The All Ordinaries Accumulation (AORDA) index measures share prices and dividends. And on Friday, the AORDA index was just 0.2 per cent short of all-time highs. The bottom line is that investors have plenty to celebrate this Christmas.
What do the figures show?
Petrol prices
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.4 cents to 121.7 cents a litre in the past week. The metropolitan petrol price fell by 1.9 cents to 120.3 cents per litre while the regional price fell by 0.2 cents to 124.7 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 2.1 cents to 111.6 c/l), Melbourne (up 2.4 cents to 128.6 c/l), Brisbane (down by 6.1 cents to 122.8 c/l), Adelaide (down 8.3 cents to 106.7 c/l), Perth (down by 0.8 cents to 122.3 c/l), Darwin (up 0.2 cents to 129.5 c/l), Canberra (down by 0.1 cents to 128.7 c/l) and Hobart (down by 0.1 cents to 126.3 c/l).
The national average Australian price of diesel petrol was steady at 123 cents per litre in the week to November 27. The metropolitan price was steady at 123.2 c/l, while the regional average price was down by 0.2 cents to 122.7 c/l.
Today the national average wholesale (terminal gate) unleaded petrol price stands at 109.8 cents a litre, up by 3.6 cents a litre over the week. The terminal gate diesel price stands at 107.5 cents a litre, up by 2.8 cents a litre over the previous week.
Last week the key Singapore gasoline price rose by US$3.10 or 5.4 per cent to US$60.70 a barrel. In Australian dollar terms the Singapore gasoline price rose by $3.78 a barrel or 4.9 per cent to $81.68 a barrel or 51.37 cents a litre.
MotorMouth records the following retail prices for capital cities today: Sydney 113.8c; Melbourne 127.3c; Brisbane 119.5c; Adelaide 103.8c; Perth 117.4c; Canberra 128.9c; Darwin 129.4c; Hobart 126.1c.
In the year to September, 10,540 megalitres of unleaded petrol was sold – a 20-year low. Sales of proprietary brand petrol was a record high of 3,303 ML and premium unleaded sales were 2,336ML.
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?
Petrol prices could move either way in the lead-up to Christmas with much riding on this week’s OPEC meeting. Filling up the car with petrol is the single biggest weekly purchase for most families so the result may have implications for retailers and consumer-focussed businesses like cafes, restaurants and take-away outlets. However latest figures confirm that consumers are less price conscious than a decade ago.
The sharemarket is performing well, with total returns near record highs. Wealth levels are at record highs in Australia, supporting spending and confidence.
CommSec expects no change to interest rates for the foreseeable future.
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