Retailers under pump as prices fall

ANDREW FRASER
DECEMBER 02, 2014
THE AUSTRALIAN
PETROL prices in Australia have fallen in the past week and are set to keep on dropping, but not to the same extent as world oil ­prices.
An oversupply of oil has seen world prices drop about 35 per cent in recent weeks, but they have dived since OPEC last week declined to cut world production.
While world oil prices dropped dramatically after the OPEC ­announcement, the fall is not being reflected at Australian petrol pumps, despite crude oil being the major input into the cost of production of petrol.
The drop in the exchange rate is another complicating factor, because with the Australian dollar trading about 10c below where it was a few months ago not all of the drop in the cost of production has been passed on.
But there is still a general trend towards lower petrol prices, which should continue, and petrol in most Australian capital ­cities should be retailing around $1.25 a litre within the coming weeks.
The NRMA’s Peter Khoury said in Sydney petrol was selling for about $1.55 a litre at the start of November, but the price had dropped to $1.47 last week and was currently sitting around $1.36.
“We estimate that prices should come down about 18c ­because of the lower cost of oil, so there’s still a bit of a way to fall, until it will finish at around $1.25,” he said.
The Budget Petrol station manager at Sydney’s inner-west Petersham, George Theogosiou, said customers had noticed the drop in petrol prices.
“It’s about 20c a litre less now than it was in the middle of the year, so that’s about $10 cheaper if people fill up 50 litres,” he said.
“It should get even better in the next few weeks.”
In Perth, fuel was selling around $1.39 at the start of ­November, but last week the ­average was about $1.34, and yesterday it was trading around $1.26. Perth-based FuelWatch manager Lynne Gould said that Perth prices relied on the cost of unleaded petrol from Singapore “and generally it takes about two weeks for any change in the Singapore price to flow through to here”.
She said petrol in Perth in July was selling for $1.54 a litre, so there had already been a ­substantial fall. “The last time ­prices were around this level was April last year,” she said.
But Chris West from the Royal Automobile Association in Adelaide said that, while prices were dropping, petrol companies were not passing on the full extent of the drop.
“It’s the retailers — they need to pass on those drops in the cost of their inputs to the consumers so that there’s cheaper petrol. Petrol prices are down, but they could be even lower,” he said.