East coast petrol prices lift ahead of Christmas
Weekly petrol prices

Petrol prices: According to the Australian Institute of Petroleum, the weekly national average price of unleaded petrol fell by 6.5 cents to 144.9 cents a litre. But prices are likely to rise this week as the retail discounting cycle is ending in Brisbane, Sydney and Melbourne.

East coast petrol prices lift: According to data from MotorMouth and Informed Sources, unleaded retail petrol prices have risen by 4-17 cents a litre in Brisbane, Sydney and Melbourne from recent lows on December 3-5. Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers.

What does it all mean?

Motorists have enjoyed lower unleaded petrol prices on the east coast of Australia since the start of December. But the retail discounting cycle ended in Brisbane, Sydney and Melbourne in the middle of last week. With pump prices already up by around 5 cents a litre in Sydney and Melbourne, drivers should fill up immediately with prices likely to hit $1.70 a litre in some suburbs by the weekend. And in Brisbane, bowser prices have jumped by around 17 cents a litre to average near $1.54 a litre today.

Of course, the timing couldn’t be worse with many of us hitting the road for the school holidays in the lead up to Christmas. That said, drivers can save money by consulting real-time fuel apps – such as MotorMouth, NSW Fuel Check and RACV. By simply downloading the app on your smartphone and plugging in your location, motorists can shop around for the cheapest fuel by finding retailers that have not yet increased prices.

In fact, a quick glance of the MotorMouth map of Sydney fuel retailers today shows that unleaded petrol prices are averaging below $1.30 a litre in Blacktown, Cabramatta, Croydon Park, Punchbowl and Villawood. While in Melbourne, pump prices are below $1.33 a litre on average around Altona, Cranbourne and Laverton. And Brisbane unleaded petrol prices are averaging below a $1.31 a litre in Albany Creek, Aspley, Caboolture and Ipswich.

In terms of the direction of global oil prices – and thus domestic petrol prices – the benchmark Singapore gasoline price has been broadly stable at around US$76 a barrel over the past four weeks. But global producers – primarily OPEC and Russia – remain determined to support crude oil prices in the short-term.

While much depends on producer compliance, the OPEC+ group of producers agreed last week to deepen crude oil production cuts by 500,000 barrels to 1.7 million barrels per day for the first quarter of 2020. Last week, the Brent crude oil price rose by 3.1 per cent to US$64.39 a barrel and the Nymex price jumped by 7.3 per cent to US$59.20 a barrel.

What do the figures show?

According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 6.5 cents to 144.9 cents a litre. The metropolitan price fell by 9.1 cents to 143.3 cents a litre and the regional price declined by 1.5 cents to 148.0 cents a litre.

Average unleaded petrol prices across states and territories over the past week were: Sydney (down 16.0 cents to 138.6 c/l), Melbourne (down 17.0 cents to 140.4 c/l), Brisbane (down 6.1 cents to 142.3 c/l), Adelaide (up 12.3 cents to 161.4 c/l), Perth (down 0.1 cent to 146.2 c/l), Darwin (down 0.4 cents to 142.7 c/l), Canberra (unchanged at 147.7 c/l) and Hobart (unchanged at 156.0 c/l).

The smoothed gross retail margin (2-month rolling average) for unleaded petrol eased from 13.82 cents a litre to 13.51 cents a litre (24-month average: 13.1 cents a litre).

The national average diesel petrol price was unchanged at 149.0 cents a litre over the week. The metropolitan price fell by 0.1 cent to 147.6 cents a litre and the regional price was flat at 150.2 cents a litre.

Today, the national average wholesale (terminal gate) unleaded petrol price stands at 134.7 cents a litre, down by 1.2 cents over the week. The terminal gate diesel price stands at 136.1 cents a litre, down by 0.2 cents over the past week.

MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 140.5c; Melbourne 142.8c; Brisbane 154.0c; Adelaide 147.7c; Perth 139.5c; Canberra 147.7c; Darwin 142.3c; Hobart 155.9c.

The key Singapore gasoline price rose by 13 cents or 0.2 per cent last week to US$76.23 a barrel. In Australian dollar terms, the Singapore gasoline price fell by 83 cents or 0.7 per cent to $111.46 a barrel or 70.10 cents a litre.

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.

What are the implications for interest rates and investors?

Petrol prices are ‘on the march’ again. While most motorists understand that the larger and more competitive capital cities have periodic retail discounting cycles – which can benefit consumers through lower prices – the sudden and unexpected surge in prices when cycles end is a continuing source of frustration. In some streets and suburbs pump prices can vary as much as 40 cents a litre. A more consistent petrol price cycle – as seen in Perth – would give consumers greater certainty and control over their fuel spending at a time when household budgets are stretched in the lead up to Christmas and New Year.

The national wholesale or Terminal Gate Price (TGP) is currently averaging around $1.35 a litre. If you add a retail margin of around 12-13 cents a litre, pump prices should be a smidgen below $1.50 a litre – not the peaks of $1.70 a litre seen in the big cities recently.

Commonwealth Bank Group economists expect another interest rate cut in February 2020. But its hoped that some additional fiscal initiatives – such as increased spending on aged care, drought and infrastructure – will be announced by the Federal government when the Mid-Year Economic and Fiscal Outlook (MYEFO) is handed down on Monday week.

Ryan Felsman, Senior Economist, CommSec