Petrol: new decade highs, but light in the tunnelPetrol prices; New home sales
Unleaded petrol price: According to the Australian Institute of Petroleum the national average price of unleaded petrol rose in the past week by 1.2 cents to 160.5 cents a litre – the highest level for over a decade (highest prices since the week to July 20 2008).
Regional petrol prices: The Singapore gasoline price fell by almost 5 per cent last week. In Australian dollar terms, Singapore gasoline has fallen by 11 cents a litre in the past three weeks.
Wholesale prices: Australian wholesale fuel prices (terminal gate) have eased from recent highs. Unleaded petrol has fallen around 8.5 cents a litre over the last 18 days with diesel down by over 3 cents a litre.
New home sales: Sales of new detached houses rose by 1.1 per cent in September. The petrol figures have implications for retailers, especially petrol marketing groups. Data on new house sales is a consideration for investors in retailers, building material suppliers, home builders and developers.
What does it all mean?
The regional gasoline price has fallen 11 cents a litre from recent highs and Australia’s wholesale petrol price has fallen by 8½ cents. So this is an indication about where the pump price is headed. Of course, a fall of 10 cents a litre puts $7 back in motorist pockets when filling up a 70 litre petrol tank. If sustained, the drop in petrol prices does represent a potential boost to discretionary spending.
Saudi Arabia and Russia are vowing to fill the gap in global oil production when US oil sanctions are applied on Iran from Thursday. Also, worries about the outlook for the global economy have been weighing on investor minds, resulting in falls on global sharemarkets and a softening of global oil prices.
Both regional petrol prices and wholesale domestic petrol prices have fallen sharply in a short space of time. To date, pump prices haven’t responded. But it does take time for the cheaper fuel to arrive in Australia. And it takes time for the dearer fuel in petrol station bunkers to be sold and be replaced by cheaper supplies. But after three weeks of declines for regional petrol prices, Australian motorists will want to see petrol signboards displaying lower prices in the coming week. The gross retail margin stands at a record high of 19.8 cents per litre.
Filling up the car with petrol is the single biggest weekly purchase for most families. Petrol prices affect household budgets, discretionary spending and nationwide inflation.
What do the figures show?Petrol prices
According to the Australian Institute of Petroleum the national average price of unleaded petrol rose in the past week by 1.2 cents to 160.5 cents a litre – the highest level for over a decade (highest prices since the week to July 20 2008).
The metropolitan petrol price rose by 1.5 cents to 160.5 cents per litre, and the regional price rose by 0.7 cents to 160.4 cents per litre. The gross retail margin rose by 6.0 cents to 19.80 cents a litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 3.0 cents to 158.7 c/l), Melbourne (up by 10.8 cents to 164.2 c/l), Brisbane (down by 5.7 cents to 159.6 c/l), Adelaide (up by 5.5 cents to 157.5 c/l), Perth (down by 0.9 cents to 158.1 c/l), Darwin (steady at 163.2 c/l), Canberra (down by 0.1 cents to 165.6 c/l) and Hobart (up by 0.1 cents to 164.5 c/l).
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 138 cents a litre, down by 4.7 cents over the week. The terminal gate diesel price stands at 149.8 cents a litre, down by 1.1 cents over the past week.
The national average diesel petrol price rose by 0.2 cents to 164.9 cents a litre over the week. The metropolitan price rose by 0.2 cents to 165.1 cents a litre with the regional price up by 0.2 cents to 164.7 cents a litre.
Last week the key Singapore gasoline price fell by US$3.95 or 4.7 per cent to US$80.80 a barrel. In Australian dollar terms, the Singapore gasoline price fell by $4.34 or 3.6 per cent last week to $114.87 a barrel or 72.25 cents a litre. Over the past three weeks, Singapore gasoline has fallen 11 cents a litre in Australian dollar terms.
MotorMouth records the following average retail prices for capital cities today: Sydney 153.6c; Melbourne 161.9c; Brisbane 157.0c; Adelaide 166.8c; Perth 149.9c; Canberra 165.4c; Darwin 163.2c; Hobart 163.4c. 
New home sales
According to the Housing Industry Authority sales of new detached houses rose 1.1 per cent in September but sales are still down 4.6 per cent on a year ago.
The HIA reported: “Private detached house sales in September increased in all but one of the mainland states: by 7.9 per cent in Victoria; 4.0 per cent in Western Australia; 0.6 per cent in New South Wales, and; 0.4 per cent in South Australia. Sales in Queensland fell by 10.8 per cent.”
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’s 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?
Fuel prices affect discretionary spend and transport costs so there are implications for retailers and transport operators.
The Singapore gasoline price has fallen 14 per cent in three weeks – a relatively rare event over time. So petrol retailers haven’t yet had a chance to respond. But there will be scrutiny on ump prices in the next fortnight.
At present, CommSec expects interest rates to remain unchanged until late 2019. But we will be watching wage and price trends closely over coming months.
Published by Craig James, Chief Economist, CommSec