Petrol prices have plunged more than 25 cents a litre in less than a month and look set for further falls, putting cash back in drivers’ pockets just in time for Christmas.
A sharp drop in the price of crude oil and an increase in the value of the Australian dollar have been cited as reasons for a 15 per cent drop in wholesale fuel prices.
According to the Australian Institute of Petroleum, the recent slide in the fuel price at the pump is the steepest seen in more than a decade.
Only a month ago, NSW drivers were paying an eye-watering $1.95 a litre for petrol in some parts of the state. However, prices have dropped by up to 30 cents a litre in the past week alone, providing significant hip-pocket relief for drivers.
Petrol price monitoring service Motor Mouth reported the average cost of petrol in Sydney on Thursday was $1.335 a litre.
While recent price falls are not as substantial in Melbourne, the average price of a litre of fuel has still fallen from a peak of $1.673 on October 24 to $1.428 on Thursday. This translates into savings of up to $18 a week when compared to the price drivers were paying last month.
John, who was filling his car on Thursday on Wellington Parade, East Melbourne, said the price drop would save him at least $10 on his weekly fill.
“It’s handy cash to have before Christmas,” he said.
Behind the drop
Further fuel price falls are expected over the next three weeks, providing more comfort for household budgets.
AIP said fuel prices were closely linked to Singapore wholesale prices, the closest major refining and marketing centre, and a common source of imported petrol to Australia.
Australia imports about 20 per cent of its petrol from Singapore and South Korea. To maintain import/export parity, local wholesale prices must closely follow the trends of the Singaporean price. The federal government fuel tax of 41.2 cents a litre adds to the overall cost.
How long can the recent price drop last? Economists say the outlook for global oil markets remain uncertain, with major oil producers threatening to slash output by the end of the year in a bid to push up prices.
Saudi Arabia, the world’s second largest oil producer behind Russia, has decided to cut its output by 50,000 barrels a day from next month.
The price of oil, which represents up to 40 per cent of the total price of petrol, dropped almost 7 per cent to an eight-month low earlier this week.