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Petrol prices up: According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 3.6 cents per litre to 157.3 cents a litre in the week to July 20.

Petrol prices poised to fall, lifting spirits

Craig James
23 July 2014

by Craig James

Weekly Petrol Prices

Petrol prices up: According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 3.6 cents per litre to 157.3 cents a litre in the week to July 20. But the wholesale price has continued to fall and now stands at a 21-day low. The low point for petrol prices in southern and eastern capital cities will be around a week’s time.

Petrol is the single biggest regular purchase each week: As per the attached table, petrol is the single biggest item purchased each week by Australian households. In terms of weekly outlays or obligations overall, the biggest outlay is the mortgage, followed by rent and purchase of a car.

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

What does it all mean?

Every 5-6 years the Bureau of Statistics publishes the Household Expenditure Survey – a detailed assessment of spending by Aussie households. In the last survey, conducted in 2009/10, petrol was the single biggest “purchase” at $36.66 a week or around 3 per cent of household spending. In terms of broader outlays or obligations, in weekly equivalent terms paying off the mortgage, rent and car were the three biggest items. Number five was purchasing a meal in a restaurant, club etc, followed by takeaway food purchased.

In 2009/10 the average weekly purchase of petrol was $36.66, at an average $1.25 a litre, or around 29 litres per week. Today, if around 30 litres of petrol was purchased a week, the average family would be paying around $46 a week to fill up the car with fuel or around $184 a month.

Fortunately, over the past four years the average wage has lifted from $1,250 a week to around $1,460 a week, comfortably covering the lift in the petrol bill in dollar terms, but only up 17 per cent compared with the 25 per cent lift in the petrol bill.

At present, petrol prices are trending sideways – not serving to make consumers either significantly cheerier or gloomier. While petrol prices rose sharply in the past week in many capital cities, this reflects the high point of the “discounting cycle”. The better gauge of “national” prices is the Perth pump price, down almost a cent a litre last week. The Singapore gasoline price has hit a 6-week low and the domestic wholesale price is at a 3-week low, pointing to lower pump prices ahead. The national average unleaded price should ease from around 157 cents to around 151-153 cents a litre.

The drop in world oil prices reflects more plentiful global supplies in response to only moderately higher demand.

What do the figures show?

Petrol prices

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 3.6 cents a litre to a 16-week high of 157.3 c/l in the week to July 20. The lift in prices reflects peak prices in the three-week discounting cycle (peak-to-peak) that exists in southern and eastern capital cities. The metropolitan price rose by 5.0 cents to 157.5 c/l, while the regional average price was up just 0.8 cents to 156.8 c/l.

The national average Australian price of diesel petrol fell by 0.4 cents a litre to 158.5 c/l in the week to July 20. The metropolitan price fell by 0.5 cents to 156.6 c/l, while the regional average price was down by 0.4 cents to 160.0 c/l.

Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 5.4 cents to 157.9 c/l), Melbourne (up by 6.4 cents to 156.6 c/l), Brisbane (up by 9.0 cents to 161.4 c/l), Adelaide (up by 1.6 cents to 154.1 c/l), Perth (down by 0.9 cents to 153.7 c/l), Darwin (unchanged at 173.0 c/l), Canberra (down 0.3c/l to 157.2 c/l) and Hobart (unchanged at 160.9 c/l).

Today, the national average wholesale (terminal gate) unleaded petrol price stands at 143.9 c/l, down around 1.3 cents over the week and the lowest level in three weeks.

Last week the key Singapore gasolineprice fell by US$4.05 or 3.2 per cent to a 6-week low of US$120.90 a barrel. In Australian dollar terms the Singapore gasoline price fell by $3.97 a barrel or 3.0per cent last week to $117.28 a barrel or 81.18 cents a litre.

Figures from MotorMouth show that petrol prices in Sydney, Melbourne, Brisbane, and Adelaide are now trending lower towards an expected trough in the discounting cycle in a week’s time.

Why is the data important?

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?

Petrol prices have largely trended sideways in 2014. While that hasn’t proved a major weight on consumer sentiment, neither has petrol price trends served to boost consumer sentiment.

There is still no imperative for the Reserve Bank to change interest rate settings.

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