Will Cheap Petrol Prices Stay When Life Gets Back To Normal?
Fuel is at the lowest price it's been in four years because of the corornavirus crisis, but what does that mean for Aussies when life returns to 'business as usual'?
Peter Khoury, NRMA spokesperson, said current petrol prices are not just the result of motorists staying off the roads.
“Economies have slowed, there aren’t as many trucks on the roads, airlines aren’t flying so jet fuel isn’t being used, industrial fuel is not being sold,” he told 10 daily.
The last time Aussies saw prices this low was back in 2016 after the oil market was flooded with supply. Before then, it was in 2004 that motorists could buy petrol for $1 per litre at the bowser.
According to the Khoury, Australian motorists could see fuel prices drop a further seven to 10 cents per litre over the coming weeks.
And Khoury expects other cities, such as Canberra, Darwin and Hobart, as well as regional areas, to see further drops to catch up to the capital cities.
“It’s pathetic that regional areas have not fallen near enough,” he said.
Regional Australians are losing out on the cheapest petrol prices despite global oil prices plummeting amid the decreased demand caused by the COVID-19 pandemic.
Khoury said that while most motorists are seeing $1 per litre at the bowser, others such as those in Bourke or Bega in NSW are seeing prices of about $1.30 per litre.
He added the higher prices in regional towns had nothing to do with logistics or distance, blaming competition in the local markets.
Australian Competition and Consumer Commission Chair Rod Sims agreed.
"We have previously found that the lack of vigorous and effective competition in some regional locations was a major reason for higher prices in those locations,” he said.
“Where there is competition, you tend to see lower prices. Giving your business to outlets that are pricing competitively sends a strong message to those that have high prices that they will lose your business.
“We recommend motorists compare prices on fuel price apps and websites, such as MotorMouth and the government schemes in NSW, WA and the NT, which also provide information on retail prices in regional locations.”
The ACCC warned petrol retailers on Wednesday that they should reduce their prices in-line with international petrol prices and not use the pandemic to increase profits.
Worldwide, crude oil prices have decreased by about US$50 a week since the start of the year, which has been largely reflected in Australia, with fuel prices falling by about 50 cents per litre.
“The drop in the crude oil price is good news for Australian motorists. At this time the Australian economy needs all the assistance it can get, and lower world crude oil prices are one of the few positives from current world events,” Sims said.
“In the larger Australian capital cities, petrol retailers took too long to pass on the savings from the rapid drop in international oil prices, and this did not reflect well on them.”
In Western Australia, automotive club RAC has said petrol retailers in the state are gouging residents at the bowser.
Sellers in the state's major regional centres made an average of 49 cents per litre last week, compared with 15 cents per litre during the same week in 2019.
Average margins in Perth last week were 13.7 cents per litre.
"Big reductions in the international oil price flowed on to reductions in fuel prices at the wholesale level in WA, but much of this was not passed on to motorists at the pumps," RAC manager vehicles and fuels Alex Forrest said.
"This was especially evident in regional areas, where pump prices remained high for weeks despite big drops in wholesale pricing."
While people can’t take advantage of cheap fuel to travel because of the coronavirus pandemic, Khoury said prices should stay low for some time.
Life will gradually return to normal and as Khoury pointed out, experts say it won’t be a matter of “flicking a switch” to go back to normal.
“Supply hasn’t cut back, OPEC’s decision to reduce supply doesn’t kick in until next week, so we won’t see a balance of demand to supply soon,” he said.
“We will still have to work through the supply surplus of oil.”
And Khoury has a strong message for anyone hoping to take advantage of current petrol prices to use in the future.
“The last thing we want to see is anyone stockpiling,” he said.
“Petrol prices are the reflection the coronavirus has had on the economy.”
With AAP.
