Petrol prices are coming down, down for Christmas.
Just two months ago motorists around the country were plotting nationwide fuel boycotts to protest record high prices, but a sudden crash in the global oil price combined with a surging Australian dollar has “effectively wiped out” more than a year of steady increases in the space of eight weeks.
NRMA spokesman Peter Khoury said prices were “falling, big time”.
“We’ve had a pretty rough 2018 but for the last few weeks we’ve started to see prices turn. You’re now starting to see it at the bowser in time for Christmas,” he said.
“Prices should fall right through the Christmas period into the new year. To give you an idea, Sydney is 129.5 cents per litre and it’ll fall to about 116 cents. Melbourne is 129.4, Brisbane 131.4 and Adelaide is 124.8, so they’re all falling, just at different rates.”
Mr Khoury said unlike last year when prices were rising just before the break, this year “the cycle is working in our favour”.
“The longer you wait the better,” he said.
“There are bargains anyway — the cheapest in Sydney at the moment is 111 cents for regular unleaded — but our advice is, if you’re leaving the capitals, to fill up before you leave. You’re probably going to find better bargains in the city at this point than regional areas.”
Mark McKenzie, chief executive of service station peak body the ACAPMA, said between July 2017 and October 2018, a steady rise in crude oil prices combined with a fall in the Australian dollar pushed up petrol prices by 45 per cent.
Since then the global oil price has “tanked” from highs of $US88 a barrel to around $US59 a barrel, at the same time as the Australian dollar rallied on the back of a stronger economy, rebounding to 74 US cents earlier this month after flirting with multi-year lows of just over 70 cents.
Analysis of petrol prices over last 8 weeks shows drop in world oil prices has flowed through to average petrol prices in recent weeks – and prior to Christmas Break (even after considering the recent rise in the fuel price cycle in some major cities). Some welcome news pic.twitter.com/1aQMh5cRvK
— ACAPMA (@_ACAPMA) December 17, 2018
“That has effectively wiped out that increase,” Mr McKenzie said.
“We’ve seen significant discounting during the month of November. We had then a short spike at the start of December and prices have been coming down since then. The wholesale price has dropped about 28 cents per litre since the peak in mid-October, so while we had a turn-up in Sydney, Brisbane and Melbourne in the first week of December, the top of that cycle was about 20 cents lower than the previous peak.”
Mr McKenzie said the general outlook was for prices to continue to decline past Christmas, but there were some “cautious headwinds” with the global oil cartel OPEC threatening to put the squeeze on prices again.
Contrary to popular belief, Mr McKenzie said petrol retailers actually didn’t like high prices. “It’s counterintuitive but in periods of high prices, typically fuel retailers lose money or are at cost,” he said.
“They’ve got to trim their margin to deal with the discretionary buy. When fuel prices are high, people don’t tend to spend as much on convenience items — that’s where the profit comes from. Only when prices come off, people get more comfortable and spend more in store.”
Over the past half decade, retailers estimate rising costs including power prices, rents and wages have added about one cent per litre per year to the bowser price.
“What needs to be understood is 85 per cent of the price we pay at the pump is due to global factors and taxation,” Mr McKenzie said. “The retail element is 15 per cent at best.”
The Australian Competition and Consumer Commission (ACCC) tracks the fuel price cycle in every city, and a number of consumer apps are available to find the best deal near you, including the NRMA’s MyNRMA and RACWA’s RAC Go apps.
In the NSW, WA and NT, retailers are required by law to report real-time price data, which is fed into the FuelCheck, FuelWatch and MyFuelNT services. The Motormouth app uses national data supplied by industry body Informed Sources, while the GasBuddy app relies on crowdsourced data.
NSW introduced real-time data in 2016 while Queensland and South Australia are set to roll out trials later this year.