DIESEL fuel prices have spiked in the past month as a consequence of the sharply lower trend in the value of the Australian dollar.  

Australia is only about 40 percent self-sufficient in transport fuels, meaning international market trends and prices have a direct impact on local pricing.

While it’s great for beef export prospects, a falling A$ is not good news for fuel prices.

The 14pc reduction in the value of the A$, trading at US90.68c this morning after sitting in the US103s as recently as May, has had a direct impact on diesel prices. Other factors include recent political disturbances in Egypt affecting supply, and a colder than expected northern hemisphere winter, lifting demand in OECD countries, the latest International Oil Market report says.

As the 40-week price graph above shows, the recent spike in price follows a nine-month low seen in May.

Pricing data released by the Australian Institute of Petroleum shows that for the week ended Sunday, July 28, the average retail price for diesel in regional/country areas of Australia rose to 158.1c/litre, 7.5c/l higher than where it sat this time in June.

The currency impact has been seen in big rises in regional and rural areas in all Australian States and territories over the past month, with the biggest jumps seen in Victoria and NSW.

Regional non-metro diesel prices in the latest AIP report included:

• Victoria 155.4c/litre (up 7.7c since June 25)
• NSW 155c (up 7.7c)
• Queensland 158.1c (up 7.2c)
• WA 161.3c (up 6.6c)
• SA 156.3c (up 7.4c)
• Tasmania 160.8c (up 6.5c), and
• NT 174.3c (up 6.7c).

The prices are calculated as a weighted average of retail diesel fuel for country regions in each state/territory. All values include GST.

Variation in fuel 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 have a direct impact on the relative price of crude oil in A$ terms.