Weekly average diesel fuel prices in country and regional areas of Australia have stabilised around 155c/litre, after an earlier 3c/l spike caused by global geopolitical issues and supply shortages.
Pump prices for diesel in country/regional areas of Australia averaged 155.3c for the week ended Sunday, April 22, up about 2.5 percent since February.
Information released by the Australian Institute of Petroleum (see graph) shows prices are now above the recent market high-point seen in late November last year, and the highest point since April 2011 when they went above 157c/l.
The international oil market report says the reason for recent rises is escalating supply-side risks. Geopolitical tension in North Africa and the Middle East dented last month’s supply, while potential additional losses relating to Iran embargoes added more uncertainty for the crude oil outlook. Worries over Spanish national debt also added to concerns in Europe.
Crude futures prices regained early-2011 highs in April, underpinned by concern over current and potential supply disruptions. Global oil demand is expected to rise 0.9pc this year on 2011, with demand gradually strengthening through the year as economic growth accelerates.
Westpac’s commodity daily this week said if Iran was genuine in talking about ending the expansion of its nuclear program to avoid European sanctions, it would see a great deal of the geopolitical ‘risk premium’ in current fuel prices eroded. Brent crude oil was quoted on Friday at a shade under US$120/barrel, close to recent highs.
The Australian Institute of Petroleum’s diesel price report for the week ending April 22 showed prices higher in all states and territories, compared with this time last month. Victoria, WA and SA were the worst affected.
Regional diesel prices in the recent AIP report included:
- Victoria 153c/l (up 3.8c on March)
- NSW 155.2c (up 3c)
- Queensland 154.4c (up 2.2c)
- WA 160.2c (up 3.2c)
- SA 154.7c (up 3.3c)
- TAS 156.1c (up1.8c), and
- NT 166.8c (up 1.4c).
The prices are calculated as a weighted average of retail diesel fuel prices for country regions in each State/Territory. All values include GST.
Variation in fuel oil prices can have a considerable impact of cost of production across the Australian beef industry, impacting on livestock transport, cost of shipping in live cattle and boxed beef exports, pumping stock water and providing station electricity in remote locations.
Crude oil, diesel and petrol prices are closely linked, as the price of crude oil accounts for the majority of the cost of producing a litre of petrol or diesel. Crude oil is purchased in US$, meaning that changes in the value of the A$ against the US currency have a direct impact on the relative price of crude oil in A$ terms.
Removing diesel offset added tax burden
Meanwhile, the Mining industry this morning launched a media campaign warning of the impact that removal of the diesel tax offset, designed for users of vehicles off-road, such as agriculture and mining, would have, if implemented in the next Federal Budget.
The Federal Treasury had confirmed that the diesel offset was not a subsidy, miners argued in ful-page newspaper advertisements this morning. They said reducing or abolishing the diesel offset would simply add to the Australian mining and agriculture sectors' mounting tax burden.
- Click on the image here for a better view of recent regional Australian diesel price trends.