Merry Christmas, Aussie Motorists
Fuel prices: The Australian Institute of Petroleum will next report on weekly national retail petrol prices on January 4.
Wholesale prices: Today, the wholesale unleaded price stands at 108.1 cents a litre and the wholesale diesel price stands at 109.3 cents a litre. Wholesale fuel prices are the lowest for this time of year in five years and the second lowest in 12 years.
Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers.
What does it all mean?
• Filling up the car with petrol is the single biggest weekly purchase for most of Australia’s 8.9 million households. The good news for motorists is that fuel prices are on average 25-30 cents a litre cheaper than Christmas 2019. In fact you would we need to go back five years to find cheaper prices.
• Wholesale petrol prices can best compare petrol prices over time as they are not affected by the vagaries of the retail discounting cycle like prices in major capital cities. But using MotorMouth pump prices data for Perth (with a defined cycle) they were 138.5 cents a litre a year ago and today they are 106.5 cents a litre. And cities with no discounting cycles, Canberra, Darwin and Hobart pump prices are around 30 cents a litre cheaper than a year ago.
• Based on a weekly purchase of 40 litres of fuel, the average household is saving around $40 per month compared with the same time last year.
• Globally, the coronavirus has resulted in reduced mobility and therefore reduced demand for fuel. On the supply side, OPEC oil producers have restricted production in an attempt to support crude prices. Overall, prices represent a good balance for producers and consumers.
• At Christmas 2019, the Nymex crude price was near US$62 a barrel with the Aussie dollar near US70 cents. This year Nymex is near US$47.60 a barrel and the Aussie is near US76 cents. Both the global oil price and the currency are working in favour of Aussie consumers.
What do the figures show?
Weekly petrol prices
• Today, the average unleaded terminal gate price (TGP or wholesale price) stands at 108.1 cents a litre, up by 0.2 cents over the week. The terminal gate diesel price stands at 109.3 cents a litre, down 0.2 cents a litre over the week.
• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 123.7c/l; Melbourne 125.2c/l; Brisbane 136.6c/l; Adelaide 109.9c/l; Perth 106.5c/l; Hobart 123.9c/l; Darwin 115.8c/l; and Canberra 122.6c/l.
What is the importance of the economic data?
• Weekly petrol prices data 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 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 investors?
• Low petrol prices are supporting consumer spending intentions. And prices should remain historically low for the next few months.
• While the coronavirus vaccine is being rolled out in a number of countries, global virus cases numbers are still near record levels. Mobility will gradually improve over 2021 but OPEC oil producers will also be looking to supply more oil to markets.
• It is that constant tug-o-war for oil producers between trying to lift volumes and trying to lift price margins in order to extract the highest possible revenues and profits.
• The energy sector has been one of the major sharemarket sectoral under-performers in 2020. At the other end of the scale, consumer staples and consumer discretionary sectors have lifted over 2020.
Published by Craig James, Chief Economist, CommSec