DIESEL fuel prices continued to ease this month, despite the political instability being seen in the major oil producing region of the Middle East.

Diesel prices in rural and regional areas of Australia sat at 161c/litre earlier this week, the Australian Institute of Petroleum’s weekly report shows, easing about 3c/l since March.

The easing trend follows three months of stubbornly high diesel prices at or around 164c/litre at the start of the year.

The cycle may start to turn again, however, with oil futures prices for Brent going above $112/barrel on 12 June, the highest level this year, in the wake of the military campaign by Sunni insurgents in Iraq and continued supply outages in Libya. An apparent build in China’s crude strategic reserve in April and May is also strengthening markets.

A recent rally in the value of the Australian dollar, rising about US4c on where it sat three months ago, has contributed to the recent easing trend in fuel price. Australia is only about 40 percent self-sufficient in transport fuels, meaning international market trends have a direct impact on local pricing.

As the graph published on this page shows, prices have eased further during June. The latest survey conducted by the Australian Institute of Petroleum for the week ended Sunday, June 15 shows a national average price for regional and rural areas of Australia at 161c/litre. That’s a decline of 2.4c/l since mid-March, but the figure is still 13c/litre above the recent low-point in the cycle of 148c/l recorded back in May last year.

Based on this week’s AIP diesel price for regional/rural areas of Australia, filling a Toyota Landcruiser 200 series (138 litres, main and auxiliary tanks) today would cost almost $18 more than the same fill back in mid-May last year.

Biggest declines in price have been seen in Victoria, NSW and Queensland.

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

•  Victoria 157.3c/litre (down 1.0c/litre since mid-May)
• NSW 161.3c (down 0.4c)
• Queensland 160.6c (down 0.4c)
• WA 164.4c (down 0.1c)
• SA 159c (down 0.3c)
• TAS 168.2c (down 0.1c), and
• NT 176.6c (down 0.2).

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.