Agribusiness

Diesel fuel prices fall to 10-year lows

Jon Condon 03/03/2016

diesel Feb 16

 

GLOBAL fuel prices continued to spiral lower during February, producing pump prices at ten-year record lows and pushing Beef Central’s regular monthly rural diesel fuel price report figure into uncharted territory.

As the graph above shows, diesel prices have continued to plummet, reaching a national average price in rural/regional areas of Australia this week of 112.8c/litre – down another 9.2c/l on our previous report published in late January.

Pressured by a growing global surplus of fuel oil, poor economic performance in China and Europe and a strong US$, diesel fuel prices have continued to slide since November.

Brimming oil stockpiles around the world have pushed global benchmarks below $30/barrel. At the same time global oil demand growth is forecast to ease considerably in 2016, pulled down by notable slowdowns in Europe, China and the US.

The International Energy Agency’s weekly oil market report says the surplus of supply over demand in the early part of 2016 is even greater than anticipated. Supply and demand data for the second half of the year suggests more stock-building.

“If these forecasts prove accurate, and with the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” the IEA said.

The latest Australian Institute of Petroleum weekly survey for the week ended Sunday, February 28 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 $155.60 – $38 less than the same fill this time last year.

All regions have seen big declines in diesel pump prices since mid-December, with the biggest drops seen in the NT, Victoria and Tasmania.

Regional/rural non-metro diesel prices in the latest AIP report for the week ended last Sunday included:

  • Victoria 109.7c/litre (down 10.6c since January 22)
  • NSW 114.1c (down 8.6c)
  • Queensland 109.6c (down 9.9c)
  • WA 119c (down 9.0c)
  • SA 111.6c (down 6.9c)
  • TAS 118.6c (down 10.4c), and
  • NT 124c (down 13.8c).

Monthly diesel report notes:

Diesel fuelAustralian Institute of Petroleum’s reported prices are calculated as a weighted average of retail diesel fuel for non-metro 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.

 

 

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Comments

  1. Alex McDonald, 03/03/2016

    Another well researched report by Beef Central and we all appreciate the substantial drop in diesel price. Great report.

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