DIESEL fuel prices in regional and rural parts of Australia have continued to soften over the past two months, as global fuel demand wanes because of economic slowdown in China and elsewhere.
The softening trend arrests a rally in diesel pricing which started back in February this year, when average regional prices were down around 127c/litre.
The Australian Institute of Petroleum’s weekly price report for the week ended Sunday, September 27 indicates prices for diesel in non-metro regional areas of Australia averaged 131.1c/litre, a drop of 4.7c/l since our previous early August report. Current pricing is 30c/litre better than the high-point in January last year, when average diesel prices in rural areas of Australia were above 162c/litre.
The downwards pressure currently being seen on price is being impacted by world crude oil prices, which sank to six-year lows in August as a supply overhang grew and concern deepened over the health of the global economy, especially in China. World oil demand growth appeared to have peaked in the first quarter this year, energy analysts said.
Australia is only about 40 percent self-sufficient in transport fuels, meaning international market trends and currency have a direct impact on local pricing. The Australian cattle industry is heavily reliant on diesel fuel, used for livestock transport, water pumping and power generation.
The latest Australian Institute of Petroleum weekly survey shows that based on current average diesel prices for regional/rural areas of Australia, filling a Toyota Landcruiser 200 series (138 litres, main and auxiliary tanks) today would cost $181 – almost $35 less than the same fill this time last year.
All regions have seen declines in pump prices since August, with the biggest drops seen in Queensland, NSW and Tasmania.
Regional non-metro diesel prices in the latest AIP report for the week ended last Sunday included:
- Victoria 126.4c/litre (down 3.8c since early August)
- NSW 130.5c (down 5.8c)
- Queensland 132.9c (down 5.4c)
- WA 137.2c (down 2.7c)
- SA 126.8c (down 3.4c)
- TAS 138.7 (down 4.7c), and
- NT 138.5c (down 2.9c).
Variation in fuel prices can have a considerable impact of cost of production across the Australian beef industry, impacting on livestock transport, cost of shipping in live cattle and boxed beef exports, pumping stock water and providing station electricity in remote locations.
Crude oil, diesel and petrol prices are closely linked, as the price of crude oil accounts for the majority of the cost of producing a litre of petrol or diesel. Crude oil is purchased in US$, 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.