Petrol prices in Australia’s five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) fell sharply at the end of last year, hitting lows not seen since August 2017.
The ACCC’s December quarter 2018 petrol monitoring report shows that daily average prices peaked at 10-year highs of 159.9 cents per litre (cpl) in late-October 2018, before dramatically falling by more than 40.0 cpl to 119.2 cpl by the end of 2018.
Lower international crude oil and refined petrol prices were the main reason for the decrease in retail petrol prices. Crude oil prices peaked in October 2018, contributing to retail price increases in Australia. By the end of December, crude oil prices had significantly decreased and Australian retail prices followed.
Crude oil prices fell significantly during November and December 2018, due to concerns over a global trade war, with worries that it would reduce economic activity and subsequently demand for crude oil. Compounding this was increased US shale oil production, which boosted global oil supplies and helped offset the impact of the OPEC cartel crude oil production cuts.
"Petrol prices dropping so dramatically in time for the end of year holidays was great news for motorists. It’s good to see that retail prices followed the fall in international prices in many locations," ACCC Chair Rod Sims said.
Petrol prices did not fall by as much in the smaller capital cities of Canberra, Hobart and Darwin, nor in many regional locations during the quarter. However, prices continued to fall further in almost all regional locations monitored by the ACCC in January 2019.
"We will monitor prices closely in our smaller cities and regional areas and highlight where prices do not reflect the large fall in crude oil prices," Mr Sims said.
Perth was the most expensive of Australia’s five largest cities in the December quarter 2018 at 144.4 cpl, while Sydney had the cheapest prices (137.9 cpl).
Mr Sims said it was important for motorists to stay active in the market and use price cycles to their advantage.
"There are big savings to be had by motorists who use apps to shop around for cheap fuel and who also use price cycle information on the ACCC website to time their purchases.
"Price transparency through fuel price websites and apps, and price cycle buying tips is important for consumers and has a flow-on effect. As more motorists start using information to their advantage, petrol stations become aware they need to be competitive on price to get business," Mr Sims added.
Main findings in the December quarter 2018 petrol monitoring report
- In the December quarter 2018, average retail petrol prices across the five largest cities were 142.1 cpl, a decrease of 4.6 cpl from the previous quarter.
- Average gross indicative retail differences (GIRDs) in the five largest cities increased to 13.9 cpl in the quarter. GIRDs are the difference between average retail prices and average wholesale prices, and are a broad indicator of gross retail margins.
- The average differential between petrol prices in regional locations monitored by the ACCC and the five largest cities was 11.4 cpl. This was 5.0 cpl higher than in the September quarter 2018.
- In the December quarter 2018, diesel and automotive LPG prices in the five largest cities increased. Average retail diesel prices were 158.1 cpl, and automotive LPG prices were 88.4 cpl in the quarter.
Background
The ACCC collects retail petrol prices for all capital cities and over 190 regional locations across Australia.
On 20 December 2017, the Treasurer issued a new Direction to the ACCC to monitor the prices, costs and profits relating to the supply of petroleum products and related services in the petroleum industry in Australia.
Under the new Direction, the ACCC produces quarterly petrol monitoring reports focusing on price movements in the capital cities and over 190 regional locations across Australia. It also produces industry reports that focus on particular aspects of consumer interest in the fuel market in relation to prices, costs and profits. Today’s report was the fifth quarterly report published under the Direction.
In its report on petrol price cycles in Australia, released in December 2018, the ACCC estimated that motorists who both time their purchases at the trough of the cycle, as well as seek out lower priced retail sites over the rest of the cycle, could potentially save around $300 per year in Sydney and Adelaide, and around $250 per year in Melbourne and Brisbane. Motorists in Perth who fill up once a week, and always on the cheapest day of each week, could save themselves around $520 a year, compared with always filling up on the most expensive day.
