Australians are beginning to feel a touch of financial relief as fuel prices ease after a prolonged period of record highs. The cost of crude oil — the raw material refined into petrol and diesel — has dropped to its lowest point in over four years, prompting a fall in fuel prices at the bowser and potentially leading to broader savings across the economy.
Brent crude oil is now trading at around $US62.50 per barrel, down from a peak of $US125 in mid-2022. As fuel prices adjust in response, both motorists and businesses are seeing some benefits.
Petrol and Diesel Prices Ease
According to the Australia Institute of Petroleum, average national petrol prices fell to 178 cents per litre as of early May, down from a high of 201 cents over the past year. Diesel is also down to 183 cents per litre from a previous 200-cent mark.
Despite these drops, many Australians are still struggling with broader cost of living pressures. In Darwin, a local resident said she has cut back on driving due to persistent high fuel prices, noting the need to divert spending from other areas to cover petrol costs.
Regional areas are feeling the pinch even more. One WA resident highlighted the stark price difference between Broome and his hometown, saying regional Australians have little choice but to pay higher prices despite the apparent drop in oil costs.
Industry Confirms Price Drops
Industry experts confirmed that cheaper crude oil is translating into savings at the pump. It was explained that whereas a full tank of fuel last year cost over $100, it’s now closer to $90.
There is expectation that fuel prices will remain steady or continue falling slightly for the rest of the year.
Transport Sector Benefits — and So Might Shoppers
Transport operators are also seeing a financial reprieve. Scott Hannah, who owns a logistics company with over 40 trucks, said that with each long-distance truck using up to 600 litres of diesel a day, falling prices make a major difference. He explained that his business passes fuel costs on to clients through levies, which are now decreasing in line with fuel prices.
He believes that as transport costs decline, customers should start seeing modest savings reflected in retail pricing — particularly in groceries and everyday items.
Road Freight Drives Price Impacts
Tony Wood, director of Energy and Climate Change at the Grattan Institute, noted that most goods sold in shops and supermarkets are delivered via road freight. As transport becomes more affordable, so too should the price of many everyday items.
He added that reduced fuel costs are likely to have a meaningful effect on the broader cost of living.
What’s Behind the Price Drop?
Experts say two main factors are driving the fall in oil prices.
First, global demand is softening. ANZ’s senior commodities analyst Daniel Hynes explained that trade tensions and tariffs have slowed economic activity, reducing demand for oil. Wood supported this view, noting that when industrial output slows, oil demand typically falls.
Second, oil supply is rising. OPEC+, the alliance of major oil-producing nations, recently agreed to increase production by 411,000 barrels per day from June. While output hasn’t yet reached pre-pandemic levels, the additional supply is pushing prices downward.
Hynes pointed out that producers are trying to make use of their spare capacity before market conditions worsen. However, Wood warned that simply increasing supply to counter lower prices could backfire by driving prices even lower, calling it a risky approach.
Economic Outlook: Some Relief on the Horizon
Despite ongoing economic uncertainty, the general consensus is that falling oil prices offer a positive development for Australian households and businesses alike.
Wood said the current trend could help ease inflation and reduce pressure on consumers. While not a complete solution to the cost-of-living crisis, the drop in fuel prices provides a welcome reprieve — and the potential for further relief if the trend continues.
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