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East Coast petrol prices lift from lows

Aussies use stimulus payments to pay bills

Weekly Petrol Prices; COVID-19 Household survey

Petrol prices: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 1.6 cents to an 11-week low of 116.2 cents a litre last week.

East Coast petrol prices: According to data from MotorMouth, daily unleaded retail petrol prices in Brisbane, Sydney and Melbourne are averaging $1.14-$1.20 a litre today and are now in the price hike phase of the cycle. Drivers should fill up their tanks as soon as possible.

COVID-19: Survey of households: According to the Australian Bureau of Statistics (ABS), “The June survey showed a slight increase in the numbers of Australians who had received a Government stimulus payment in response to the COVID-19 pandemic, rising from 32 per cent in May to 35 per cent in June. The main use of the stimulus payment in June was to pay household bills (32 per cent), which was a change from May when the main use of stimulus payments was to add to savings (29 per cent).”

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers.

What does it all mean?

• East Coast petrol prices are climbing. Brisbane, Sydney and Melbourne are now in the price hike phase of the retail petrol price cycle. That said, there is still cheap fuel available if motorists take the time to consult real-time fuel apps and shop around. Drivers should fill up their tanks as soon as possible before prices reach the most expensive phase of the cycle. Filing the car with petrol is the biggest weekly expense for most families.

• Sydney’s unleaded petrol prices are averaging $1.18 a litre today, up by 11 cents a litre from the lows of the most recent retail price cycle on August 19, according to real-time fuel app MotorMouth. Pump prices have already surged above $1.46 a litre in parts of the city, but $1 a litre petrol can still be found around Bankstown, Liverpool, Granville and Blacktown. Drivers should fill up their tanks now.

• Melburnians would have also awoken this morning to rising fuel prices. Retailers have been protecting their profit margins with fewer drivers on the road during virus lockdown 2.0. Pump prices declined at a snail’s pace over the month-long discounting cycle, falling by 26 cents a litre to almost $1.16 a litre at the trough on August 20. But prices are back at $1.20 today with motorists encouraged to shop around with prices still under $1.10 a litre at servos in Footscray, Maidstone, Maribyrnong, Avondale Heights, Springvale and Waverley Gardens.

• Brisbane’s unleaded petrol prices averaged $1.14 a litre over the weekend after bottoming at $1.13 a litre on August 20. With prices lifting but not yet at the most expensive phase of the cycle yet, drivers should fill up their tanks as soon as possible. Motorists can still find unleaded fuel prices below $1.05 a litre in Inala, Richlands, Heathwood, Forest Lake and Blacksoil. But prices have already climbed above $1.47 a litre at Alexandra Hills, Capalaba, Birkdale and Wellington Point.

• What are Aussies doing with their COVID-19 government stimulus payments? According to an ABS survey released today, 35.5 per cent of those surveyed received a payment in June. And 31.6 per cent of those recipients paid off their bills, while 27.3 per cent saved their coin.

• And where did most recipients of government stimulus payments reside? In June, 39.6 per cent of Tasmanian adults received a payment, compared to 35.5 per cent of adults nationally. Recipients were second highest in South Australia (38.6 per cent), followed by NSW (36.2 per cent), Queensland (36.1 per cent), Western Australia (35.2 per cent), Victoria (33.1 per cent) and Northern Territory/ACT (19.5 per cent). Of course, the number of Victorian recipients will likely increase in later surveys due to the renewed lockdown in Melbourne.

What do the figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 1.6 cents to an 11-week low of 116.2 cents a litre last week. The metropolitan price fell by 2.0 cents to 115.8 cents a litre and the regional price was down by 0.6 cents to 117.1 cents a litre.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 0.7 cents to 110.2 c/l), Melbourne (down by 2.3 cents to 116.6 c/l), Brisbane (down by 9.6 cents to 114.3 c/l), Adelaide (up by 7.6 cents to 126.8 c/l), Perth (up by 0.3 cents to 117.8 c/l), Darwin (down by 0.2 cents to 118.0 c/l), Canberra (down by 0.4 cents to 122.1 c/l) and Hobart (up by 0.3 cents to 124.3 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol fell from 17.56 cents a litre to 17.30 cents (24-month average: 14.5 cents a litre).

• The national average diesel petrol price fell by 0.1 cent to 120.1 cents a litre over the past week. The metropolitan price also fell by 0.1 cent to 118.5 cents a litre and the regional price was down 0.1 cent to 121.4 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) stood at 104.4 cents a litre, up by 1.6 cents over the week. The terminal gate diesel price stood at 105.2 cents a litre, up by 0.1 cent over the week.

• Today, the average unleaded TGP stands at 104.7 cents a litre, up 0.5 cents over the week. The terminal gate diesel price stands at 104.8 cents a litre, down 0.4 cents a litre over the week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 118.4c; Melbourne 119.8c; Brisbane 113.7c; Adelaide 108.9c; Perth 106.7c; Canberra 122.0c; Darwin 117.7c; Hobart 124.6c.

• Last week the key Singapore gasoline price lifted by US90 cents a barrel or 1.9 per cent to a 9-week high of US$49.00 a barrel. In Australian dollar terms, the Singapore gasoline price rose by 81 cents or 1.2 per cent to a 6-week high of $68.02 a barrel or 42.78 cents a litre.

Household Impacts of COVID-19 Survey, June

• According to the ABS, “[Survey] Information was collected between 7 June and 20 June 2020 from approximately 2,500 people via telephone interview.”

Key findings for the receipt and use of government stimulus payments:

• According to the ABS, “The June survey showed a slight increase in the numbers of Australians who had received a Government stimulus payment in response to the COVID-19 pandemic, rising from 32 per cent in May to 35 per cent in June.

• The main use of the stimulus payment in June was to pay household bills (32 per cent), which was a change from May when the main use of stimulus payments was to add to savings (29 per cent).

• Three in five people (61 per cent) who were unemployed or not in the labour force had received a stimulus payment by June, compared to one in five people (20 per cent) who were employed.

• People who were employed and received a stimulus payment were three times as likely to use it to pay mortgages or rent than those not working or not in the labour force (27 per cent compared to 8 per cent). Similarly, those who were employed were also more likely to pay household bills with their payment (55 per cent compared to 38 per cent).”

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.

• The Australian Bureau of Statistics (ABS) is providing updates on the coronavirus impacts on job situation, health services, health precautions, social distancing, household stressors, support network, lifestyle changes.

What are the implications for investors?

• Last week global crude oil prices were mixed. The Brent crude oil price fell by US45 cents or 1 per cent to US44.35 a barrel, but the US Nymex price rose by US33 cents or 0.8 per cent to US$42.34 a barrel. And the key Singapore gasoline price – a key influence on Aussie pump prices – lifted by US90 cents a barrel or 1.9 per cent to a 9-week high of US$49.00 a barrel.

• US benchmark crude oil prices have risen for three successive weeks as US supplies fell with demand for fuel lifting during the peak summer driving season. US Nymex futures prices lifted as much as 0.8 per cent in early trading this morning as twin hurricanes in the US Gulf of Mexico threatened oil operations. According to Bloomberg, more than half of US Gulf of Mexico crude production was shut down on Sunday as Category One Hurricane Marco and Tropical Storm Laura both took aim at the Texas and Louisiana coastline.

• With global oil prices lifting and the East Coast retail petrol price discounting cycle concluding last week, more motorists can expect to see unleaded pump prices closer to $1.50 a litre in the coming fortnight.

• Government stimulus payments are boosting household incomes during the pandemic. In June, 61.1 per cent of those surveyed that were unemployed or not in the labour force had received a stimulus payment. Of these recipients, 39.5 per cent added to their savings and 38.3 per cent paid off their bills. Employed recipients used the money to pay off their bills (55.4 per cent), save (36 per cent) and pay down their mortgages (26.7 per cent).

• All eyes will be on tomorrow’s Bureau of Statistics’ weekly payroll jobs and wages data for the period to August 8. In a statement this morning, Federal Treasurer Josh Frydenberg said that Australia’s effective unemployment rate will exceed 13 per cent in coming months, up from 9.9 per cent in July, as 450,000 people lose work in August and September. Mr Frydenberg added, “Data is showing signs that the jobs recovery may be slowing as state border closures have been tightened.” Closed borders are certainly hindering Australia’s economic recovery.

Published by Ryan Felsman, Senior Economist, CommSec