When you own a service station, it’s important to know what factors affect the price of fuel. In Australia, the prices are set by the market, and the two things that have the most influence on what consumers pay include international benchmark prices and the value of the Australian dollar.
What also influences fuel prices are pricing decisions made by wholesalers and retailers, along with the amount of competition in differing locations.
International Benchmark Prices
The factor that has the most influence on how much consumers pay for petrol, diesel, and automotive LPG is international benchmark prices. These prices are linked to the price of crude oil because crude oil is a major production input and an internationally traded commodity. The price of crude oil is determined by global demand and supply.
When international benchmark prices change, it can take about two weeks to make their way through the supply chain to reach Australian cities, but it takes a bit longer for regional areas.
Value of the Australian Dollar
The U.S. dollar sets the international benchmark price. So, when the value of the Australian dollar changes in relation to the U.S. dollar, it can affect the domestic price of fuel.
But fuel prices won’t drop every time the value of the Australian dollar reaches higher than the U.S. dollar. The drop will only happen if the benchmark stays the same or falls and other local factors don’t increase the price.
Fuel Wholesaler and Retailer Costs
Fuel wholesalers and retailers need to recover costs through their fuel pricing – costs like wharfage, freight, insurance, transport, storage, salaries, rent, power, and other such utilities.
They also need to make a profit in order for their businesses to run – that’s something service station owners know very well. The level of competition also influences the fuel prices that are set.
Petrol Price Cycles
The price of petrol goes up and down in certain patterns across Australia’s large capital cities. The prices will steadily decrease for a period of time, and then that decrease will be followed by a sharp increase. This is known as the petrol price cycle.
These price cycles are the result of pricing policies and not from a shift in the wholesale cost of fuel. These cycles can be used to help determine when to buy fuel in major cities like Sydney, Melbourne, Brisbane, Perth, and Adelaide.
The Price of Fuel
The price of fuel matters to service station owners and consumers alike. To find out more about the variables that affect these prices, check out ServoPro’s website.