Melbourne petrol prices on the march
Cars growing faster than people
Weekly petrol prices; Motor vehicle census; New home sales
Petrol: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 1.0 cent in the past week to 141.8 cents a litre. Prices fell for the first time in four weeks, led lower by declines in Brisbane (down 15.1 cents a litre) and Sydney (down 12.6 cents a litre). But prices rose in Melbourne (up 9.3 cents a litre) and Adelaide (up 23.1 cents a litre) over the week.
Motor vehicle census: The national vehicle fleet rose by 1.7 per cent to 19.5 million in the year to January 2019 – still ahead of population growth of 1.6 per cent.
New house sales: The Housing Industry Association reported that in seasonally-adjusted terms, new detached house sales rose by 0.8 per cent to 13,801 units in the June quarter – the first quarterly lift since December 2017. But sales still fell by 12.4 per cent over the year to June.
Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. The home sales data has implications for banks, retailers, developers, building and building material companies.
What does it all mean?
• Unleaded petrol prices are on the march in Melbourne. Retail pump prices bottomed near $1.30 a litre on July 18, but are now averaging $1.53 a litre today. Prices at the bowser are likely to lift to around $1.60 a litre – approaching the peak of the cycle – by the weekend. Melburnians should top up rather than fill up.
• Fuel retailers typically lift prices after discounting becomes unsustainable, pressuring profit margins. Wholesale fuel prices (i.e. terminal gate prices) were above the retail price in Melbourne between July 17 and July 21, but wholesale prices have since eased to around 128.5 cents a litre.
• Aussie wholesale prices usually follow trends in international refined petrol or gasoline prices. Australia imports around 20 per cent of its petrol requirements from Singapore and South Korea. The key Singapore benchmark gasoline price has fallen for two successive weeks following a sharp lift earlier in July.
• Global oil prices rose last week. The Brent crude price lifted by 1.6 per cent to US$63.46 a barrel and the US Nymex price rose by 1.0 per cent to US$56.20 a barrel. Concerns about Iran’s seizure of a British tanker provided support to crude prices, but weakening crude oil demand capped gains.
• The number of cars continue to grow faster than the number of people, underpinning the demand for roads and auto-dependent industries including tollway operators.
• In a further sign of a stabilisation in the Aussie property market, data from the Housing Industry Association shows that new detached house sales lifted in the June quarter – the first quarterly increase since December 2017.
What do the figures show?
• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 1.0 cent in the past week to 141.8 cents a litre. The metropolitan price fell by 1.5 cents to 141.3 cents a litre and the regional price declined by just 0.1 cent to 142.9 cents a litre.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 12.6 cents to 136.7 c/l), Melbourne (up by 9.3 cents to 140.8 c/l), Brisbane (down by 15.1 cents to 141.6 c/l), Adelaide (up by 23.1 cents to 153.1 c/l), Perth (up by 0.9 cents to 141.5 c/l), Darwin (down by 0.1 cents to 140.0 c/l), Canberra (down by 0.3 cents to 142.8 c/l) and Hobart (down by 0.2 cents to 151.9 c/l).
• The smoothed gross retail margin for unleaded petrol fell from 14.19 cents a litre to 14.12 cents a litre last week (24-month average: 12 cents a litre).
• The national average diesel petrol price fell by 0.2 cents a litre to 147.8 cents a litre over the week. The metropolitan price fell by 0.1 cent to 146.5 cents a litre and the regional price fell by 0.1 cent a litre to 148.9 cents a litre.
• MotorMouth records the following average retail prices for capital cities today: Sydney 131.8c; Melbourne 153.0c; Brisbane 135.0c; Adelaide 163.0c; Perth 131.7c; Canberra 142.4c; Darwin 139.8c; Hobart 152.3c.
• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 128.8 cents a litre, down by 4.0 cents over the week. The terminal gate diesel price stands at 134.9 cents a litre, down by 1.0 cent over the past week.
• Last week, the key Singapore gasoline price fell by US$1.70 or 2.3 per cent to US$71.80 a barrel. In Australian dollar terms, the Singapore gasoline price fell by 64 cents or 0.6 per cent last week to $103.40 a barrel or 65.03 cents a litre.
Motor vehicle census
• The national vehicle fleet rose by 1.7 per cent to 19.5 million in the year to January 2019 – just ahead of population growth of 1.6 per cent in the year to December 2018.
• Petrol-powered vehicles decreased by 1.0 percentage points to 73.6 per cent of the national fleet with diesel powered vehicles up 1.2 percentage points to 24.6 per cent of the total.
• Over the year, light rigid trucks rose by 5.7 per cent, followed by campervans, up 4.7 per cent. Passenger vehicles increased by 1.2 per cent.
New house sales
• The Housing Industry Association reported that in seasonally-adjusted terms, new detached house sales rose by 0.8 per cent to 13,801 units in the June quarter – the first quarterly lift since December 2017. But sales still fell by 12.4 per cent over the year to June.
• Sales lifted in three ‘major’ states in the June quarter. The volume of detached house sales rose in Victoria (up 5.1 per cent), Western Australia (up 2.9 per cent) and South Australia (up 2.6 per cent). But quarterly sales fell in Queensland (down 8.9 per cent) and New South Wales (down 1.7 per cent).
• No data was published by the HIA for multi-unit sales.
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 motor vehicle census is conducted annually by the ABS. The data is useful to glean prospects for auto-dependent sectors.
• The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia’s largest 100 home builders. The survey covers around 20 per cent of the home building industry.
What are the implications for interest rates and investors?
• The removal of housing policy uncertainty in the aftermath of the Federal Election, combined with lower mortgage rates and an easing in home lending restrictions have boosted property market sentiment. Auction clearance rates in Sydney and Melbourne have rebounded. And home prices continue to stabilise in Australia’s two largest cities.
• Retail margins for servos remain above ‘normal’. In fact, Melbourne retail pump prices are currently running well ahead of wholesale prices (terminal gate prices). According to MotorMouth, Informed Sources and the RACV, retailers are charging as much as $1.64 a litre for unleaded petrol across the Melbourne metropolitan area today.
• Melbourne motorists should keep an eye on real-time fuel apps on their smartphones – such as MotorMouth – and look for the best deals in their suburbs. Top up rather than fill up as prices increase this week.
• The number of motor vehicles on the road continues to increase. But the annual growth rate of the national fleet slowed to 1.7 per cent in the year to January 2019. Tasmania’s population growth rate of 1.2 per cent in 2018 was the strongest pace in 9 years. The number of registered motor vehicles in the Apple Isle grew by 2.6 per cent over the year to January – the strongest rate across all states and territories.
• The Reserve Bank will likely take a few months to see how the economy is responding to the two rate cuts as well as other events and developments that have occurred in recent months. These events include tax cuts, the minimum wage decision, record-breaking sharemarkets here and abroad and the stabilisation of home prices in key capital cities.
• All eyes will be on the June quarter inflation (Consumer Price Index) release on Wednesday.