Petrol prices have risen to a decade high, making fuel costs the largest weekly purchase for some families.
Prices rose last week to hit a national average of $1.59 a litre, the highest since July 2008, according to the Australian Institute of Petroleum.
While Sydney prices hit an average of $1.65 per litre last week, buyers in Melbourne had some respite from the $1.66 a litre it reached late last month, with prices down slightly to $1.52. However, prices in Melbourne are rising again, heading up to $1.57.
Commsec chief economist Craig James said rising costs were hitting families hard.
“Filling up the car with petrol is now the single biggest weekly purchase for most families,” Mr James said.
“In capital cities with a discounting cycle, petrol prices could fall as low as $1.43 a litre but may still be as high as $1.70 cents a litre when the discounting cycle ends. Average Australian unleaded petrol prices will hold $1.50 to $1.60 a litre.”
High prices have been driven by major oil producers strangling supplies, and global investment volatility, particularly the rising trade war between the US and China.
Oil cartel OPEC and Russia had been steadily reducing their oil production levels for the last two years, and while they agreed to lift production rates in June, a series of falls in other nations have offset any increases.
These additional declines were driven by trade sanctions on Iran – which could potentially remove about one million barrels per day of oil from global supplies – and the economic collapse of major oil producer Venezuela.
This helped drive oil prices to nearly $US87 a barrel earlier this month. At the previous peak, fuel price oil was more than $US100 a barrel.
Beyond the barrel
Fuel analysts Fueltrac said the price was, in part, being kept high by an ongoing battle between major petrol retailer Coles Express and its fuel supplier Viva Energy over prices.
According to the consumer watchdog, Coles now has some of the most expensive fuel in the country, as it passes on higher prices from its supplier, and the owner of the Coles Express petrol station network, Viva Energy.
Fueltrac head Geoff Trotter told Fairfax Media, “Viva Energy has been lifting their price unilaterally based on import prices and thought Coles would cop it, but they aren’t.”
Coles fuel sales have slumped for the last two years.
This is not the first time such an argument has occurred between the two groups. In 2017, Coles managing director John Durkan blamed Viva for higher petrol prices.
Mr Trotter said the latest fight between the two companies over supplies had helped drive prices up to $1.78 a litre.
“This is like World War Two between Coles and Viva,” Mr Trotter said.
Viva Energy and Coles were approached for comment.
Some relief ahead
Mr James said high prices would abate, albeit briefly, but a continued strong Aussie dollar could help drive down petrol costs in the near future.
“The relief may prove to be only temporary, but the good news is that the key Singapore gasoline price has gone into reverse over the past fortnight while the Aussie dollar has stabilised,” Mr James said.
“If prices hold at current levels, motorists could see relief of as much as eight cents a litre in the next one to two weeks.”
Mr James told Fairfax Media if the US and China can resolve their trade dispute this may also ease prices.
Extracted from The Sydney Morning Herald