Pressure on pumps: Petrol prices unlikely to drop below $2 per litre for the next few weeks
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Have you recently noticed the numbers at the petrol pump reaching dizzying heights?
It's certainly not news that petrol prices have been on the rise, with many of us feeling the sting when we check the prices up and down the street. But what's causing the fuel price surge, and why do we feel like we can never escape it?
Analysts recently said petrol prices would stay above $2 a litre for 'the next few weeks' after reaching their highest level this year, as pressures from the global oil market flow to petrol bowsers nationwide.
The national average weekly petrol price hit 196.5 cents this week. Although we usually expect prices to hover in the 175-180 cent region, prices across the capital cities now sit much higher at 197.5 cents a litre.
There is no getting away from the truth: petrol prices are high.
But when we add up the exorbitant price of petrol with the additional service and shipping costs we sometimes have to pay from online stores and groceries, fluctuating fuel taxes and the general cost of living—it can feel like the money's being pulled from us in all directions.
The international and domestic factors that cause the price hike
We can identify a few key factors when we drill down into why petrol prices have surged. According to Vivek Dhar, Mining and Energy Economist at Commonwealth Bank, two main reasons stand out in particular:
'One has been a tightening of oil markets, and that's driven by one resilient demand, as well as OPEC+ supply cuts, which is a group of countries that control about 40 per cent of global supply,' he said.
The weakening of the Australian dollar against the US dollar also has a major impact, increasing the wholesale price by about 'four cents a litre'. The federal government has added another cent to the cost of petrol with their fuel excise indexation that kicked in on 1st August.
Mark McKenzie, the Chief Executive of the Australasian Convenience and Petroleum Marketers Association, agreed that strong demand for oil and production cuts had added about 12 cents a litre to the overall cost of petrol.
'Those factors are really due to movement in the oil price movements in the refining margin,' he said. This means that, while swings in the global economy are largely responsible for the price surges, retail petrol prices still make up around 85 per cent of what we end up paying.
Unfortunately, this means that the pain at the pump may stick around for a bit longer, particularly since petrol price cycles in Australia are highly volatile, even at the best of times.
'In terms of our forecast for oil… We're calling oil prices at $85 a barrel, and we're also saying that the Australian dollar will fall to 64 cents,' Dhar said. This would result in prices of $2 to $2.10 a litre for petrol, and unfortunately, this may be held for the next few weeks.
The impacts on families and small businesses
Of course, it's not just a tiny ding in our wallets. In households all over the country, the rise in petrol prices is fuelling a very real cost-of-living pressure.
And it's not just families; small business owners like Paul Mance, who runs a flower shop in Melbourne, also have to contend with the financial woes of petrol price increases.
'We try and absorb it as much as we possibly can. However, you do get to the point where you cannot do that all the time, and you do have to pass that cost back on to the customer,' he said.
It's a difficult balance to strike, trying to cover rental and staffing costs in addition to the fuel excise tax, a weaker Australian dollar, and rising international oil prices.
How to save money on petrol
Thankfully, saving money on petrol isn't a lost cause. Mark McKenzie urged Australian motorists to shop around for the best prices before making a purchase.
'There's always variance across markets and even within local areas, so it's vital at this point you use fuel price apps,' he said.
It may be a tedious habit requiring extra time and careful scanning for promotions and discounts, but it could save you 10 to 15 cents a litre or more.
It's also a good idea to keep up with the government's rebate scheme and the petrol indexation date, as well as check for cheaper services online that you may be able to sign up for to get discounts on fuel.
The 7-Eleven app also allows you to compare petrol prices at 7-Eleven petrol stations and 'lock in' the lowest fuel price for up to seven days.
There are also websites like PetrolSpy that could help you scout ahead of your petrol refill trip.
Doing these things won't guarantee you'll never pay more than you would like for petrol, but they can take the edge off some of the cost. Even saving a few cents a litre on petrol can add up over time, and every little bit helps!
Households and businesses are feeling the effect of high petrol prices, and it appears we won't get any relief anytime soon. Members, what has your experience been like with petrol prices? Please share your stories in the comments below.
It's certainly not news that petrol prices have been on the rise, with many of us feeling the sting when we check the prices up and down the street. But what's causing the fuel price surge, and why do we feel like we can never escape it?
Analysts recently said petrol prices would stay above $2 a litre for 'the next few weeks' after reaching their highest level this year, as pressures from the global oil market flow to petrol bowsers nationwide.
The national average weekly petrol price hit 196.5 cents this week. Although we usually expect prices to hover in the 175-180 cent region, prices across the capital cities now sit much higher at 197.5 cents a litre.
Aussie motorists are unlikely to see relief at the petrol pump over the coming weeks after fuel prices hit their highest level all year. Image source: Shutterstock.
There is no getting away from the truth: petrol prices are high.
But when we add up the exorbitant price of petrol with the additional service and shipping costs we sometimes have to pay from online stores and groceries, fluctuating fuel taxes and the general cost of living—it can feel like the money's being pulled from us in all directions.
The international and domestic factors that cause the price hike
We can identify a few key factors when we drill down into why petrol prices have surged. According to Vivek Dhar, Mining and Energy Economist at Commonwealth Bank, two main reasons stand out in particular:
'One has been a tightening of oil markets, and that's driven by one resilient demand, as well as OPEC+ supply cuts, which is a group of countries that control about 40 per cent of global supply,' he said.
The weakening of the Australian dollar against the US dollar also has a major impact, increasing the wholesale price by about 'four cents a litre'. The federal government has added another cent to the cost of petrol with their fuel excise indexation that kicked in on 1st August.
Mark McKenzie, the Chief Executive of the Australasian Convenience and Petroleum Marketers Association, agreed that strong demand for oil and production cuts had added about 12 cents a litre to the overall cost of petrol.
'Those factors are really due to movement in the oil price movements in the refining margin,' he said. This means that, while swings in the global economy are largely responsible for the price surges, retail petrol prices still make up around 85 per cent of what we end up paying.
Unfortunately, this means that the pain at the pump may stick around for a bit longer, particularly since petrol price cycles in Australia are highly volatile, even at the best of times.
'In terms of our forecast for oil… We're calling oil prices at $85 a barrel, and we're also saying that the Australian dollar will fall to 64 cents,' Dhar said. This would result in prices of $2 to $2.10 a litre for petrol, and unfortunately, this may be held for the next few weeks.
The impacts on families and small businesses
Of course, it's not just a tiny ding in our wallets. In households all over the country, the rise in petrol prices is fuelling a very real cost-of-living pressure.
And it's not just families; small business owners like Paul Mance, who runs a flower shop in Melbourne, also have to contend with the financial woes of petrol price increases.
'We try and absorb it as much as we possibly can. However, you do get to the point where you cannot do that all the time, and you do have to pass that cost back on to the customer,' he said.
It's a difficult balance to strike, trying to cover rental and staffing costs in addition to the fuel excise tax, a weaker Australian dollar, and rising international oil prices.
How to save money on petrol
Thankfully, saving money on petrol isn't a lost cause. Mark McKenzie urged Australian motorists to shop around for the best prices before making a purchase.
'There's always variance across markets and even within local areas, so it's vital at this point you use fuel price apps,' he said.
It may be a tedious habit requiring extra time and careful scanning for promotions and discounts, but it could save you 10 to 15 cents a litre or more.
It's also a good idea to keep up with the government's rebate scheme and the petrol indexation date, as well as check for cheaper services online that you may be able to sign up for to get discounts on fuel.
The 7-Eleven app also allows you to compare petrol prices at 7-Eleven petrol stations and 'lock in' the lowest fuel price for up to seven days.
There are also websites like PetrolSpy that could help you scout ahead of your petrol refill trip.
Doing these things won't guarantee you'll never pay more than you would like for petrol, but they can take the edge off some of the cost. Even saving a few cents a litre on petrol can add up over time, and every little bit helps!
Households and businesses are feeling the effect of high petrol prices, and it appears we won't get any relief anytime soon. Members, what has your experience been like with petrol prices? Please share your stories in the comments below.
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