Brisbane and Sydney petrol prices surge

Melbourne-Sydney passenger growth hits 6½-year low
Weekly petrol price; Domestic air travel

Petrol: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 3.9 cents in the past week to 139.8 cents a litre, led lower by a 15 cents a litre fall in Melbourne prices.

Brisbane and Sydney petrol prices: According to data from MotorMouth and Informed Sources, unleaded petrol prices rose by 23-28 cents a litre in Brisbane and Sydney as the discounting cycle ended last week.

People flying: There were 5.37 million passengers carried on Australian domestic commercial aviation (including charter operations) in April 2019, an increase of 1.8 per cent on April 2018. But rolling annual passenger growth on the Sydney-Melbourne route is at 6½-year lows.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Domestic aviation data is a key indicator for airline and airport performance as well as the broader economy.

What does it all mean?

• Who is winning the petrol price State of Origin? Like Origin I, Queensland is ahead. In fact, unleaded pump prices have lifted by almost 28 cents a litre in Brisbane over the past week, according to MotorMouth and Informed Sources figures. But New South Wales isn’t far behind with Sydney metropolitan bowser prices up by 23 cents a litre over the week.

• And there is no relief in sight for drivers with unleaded pump prices in both cities expected to remain elevated at between $1.50 and $1.60 a litre for the rest of this week. The discounting cycle ended in both cities in a week where the wholesale price fell. But Melburnians continued to enjoy falling pump prices as discounting continued.

• The Aussie economy lost momentum before the Federal election and this is most evident in domestic air travel data. Passenger numbers have dropped in annual terms for five straight months.

• And on the key Melbourne-Sydney route, passenger numbers are growing at the slowest rate in 6½ years. With the election done and dusted, business confidence picking up and airlines reducing airfares, business passenger numbers are expected to strengthen in the coming months. But consumer spending caution will mean that airlines will have to compete more aggressively on fares to entice Aussies to holiday interstate during the July school holidays.

What do the figures show?

• Petrol prices

• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 3.9 cents to 139.8 cents a litre in the past week. The metropolitan price fell by 4.1 cents to 138.4 cents a litre with the regional price down by 3.4 cents to 142.7 cents a litre.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 5.4 cents to 137.8 c/l), Melbourne (down by 15.0 cents to 142.2 c/l), Brisbane (up by 0.8 cents to 136.1 c/l), Adelaide (down by 11.9 cents to 128.3 c/l), Perth (down by 3.3 cents to 137.9 c/l), Darwin (down by 0.5 cents to 145.1 c/l), Canberra (down by 0.8 cents to 144.8 c/l) and Hobart (down by 1.4 cents to 153.4 c/l).

• MotorMouth records the following average retail prices for capital cities today: Sydney 153.2c; Melbourne 135.3c; Brisbane 158.3c; Adelaide 151.8c; Perth 125.9c; Canberra 144.5c; Darwin 145.0c; Hobart 152.3c.

• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 123.3 cents a litre, down 0.2 cents over the week. The terminal gate diesel price stands at 130.2 cents a litre, down by 1.2 cents over the past week.

• Last week, the key Singapore gasoline price fell by US95 cents or 1.4 per cent to a 4½-month low of US$65.75 a barrel. In Australian dollar terms, the Singapore gasoline price fell by 38 cents or 0.4 per cent last week to a 4½-month low of $95.32 a barrel or 59.95 cents a litre.

Domestic aviation

• There were 5.37 million passengers carried on Australian domestic commercial aviation (including charter operations) in April 2019, an increase of 1.8 per cent on April 2018. And 5.15 million passengers were carried on regular passenger transport (RPT) flights in April 2019, an increase of 1.3 per cent on April 2018.

• For the year ending April 2019 there were 60.94 million RPT passengers, an increase of 0.6 per cent on the year ending April 2018 – slowest growth in over three years (40 months).

• Capacity, measured by available seat kilometres (ASKs), increased by 1.0 per cent compared with April 2018 to a total of 7.54 billion. With RPT passenger traffic increasing at a faster rate than capacity the industry wide load factor (RPKs/ASKs) increased from 79.6 per cent in April 2018 to 80.3 per cent in April 2019.

• On the key Melbourne-Sydney route, passenger numbers were down 3.8 per cent on a year ago. On a rolling annual total (smoothed) basis, annual passenger growth fell by 0.2 per cent – the first decline since August 2012.

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 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.

• The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases data on domestic and international aviation each month. The data is useful in tracking consumer spending and airline performance as well as broader economic activity.

What are the implications for interest rates and investors?

• Escalating tensions between the US and Iran following attacks on oil tankers in the Persian Gulf have clouded the near-term outlook for crude oil. Aussie motorists, however, remain captive to the vagaries of the retail unleaded petrol price discounting cycle. Prices in Brisbane and Sydney decreased steadily until June 12, but have since lifted sharply and are set to remain high this entire week.

• An important leading indicator of Aussie economic activity is the growth of airline passenger numbers – especially the key business route between Sydney and Melbourne – one of the busiest aviation corridors globally. But will passenger numbers lift in May, in-line with the post-election rebound in the NAB Business Confidence survey?

• CommSec has pencilled in another rate cut in August.

Published by Ryan Felsman, Senior Economist (Author), CommSec