DIESEL fuel prices in regional and rural parts of Australia have eased by almost 2c/litre over the past month, as global fuel demand starts to wane 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 around 127c/litre.

The Australian Institute of Petroleum’s weekly price report for the week ended Sunday, August 2 indicates prices for diesel in non-metro regional areas of Australia averaged 135.8c/litre, down 1.6c on average since our previous monthly report. Current pricing is still more than 26c/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 fell to their lowest level in three months in mid-July, pressured by ever rising supply while financial turmoil in Greece and China unsettled world markets.

World oil demand growth appears 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 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 $187 – almost $28 less than the same fill in November.

All regions have seen lifts in price this past month, with the biggest declines seen in Victoria, South Australia and NSW.

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

• Victoria 130.2c/litre (down 1.6c since early July)
• NSW 136.3c (down 1.4c)
• Queensland 138.3c (down 1.1c)
• WA 139.9c (down 0.8c)
• SA 130.2c (down 1.7c)
• TAS 143.4 (down 0.7c), and
• NT 141.4c (down 1.2c).

Notes:

AIP’s reported 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.