DIESEL fuel prices have risen sharply over the past six weeks in regional areas of Australia, due to currency effects, higher demand for heating oil heading into the northern hemisphere winter and outages in oil-producing trouble spots in the Middle East.
Diesel fuel remains a major input for many cattle producers in Australia, used for pumping water, generating power, and transporting livestock and inputs.
The International Energy Agency says demand for oil heading into 2017 is likely to be modest, due to economic slowdowns in the OECD, the Americas and China.
“There is currently little evidence to suggest that economic activity is sufficiently robust to deliver higher oil demand growth next year, and if the current supply surplus persists, there must be some prospect of fuel oil prices declining,” it’s latest weekly report says.
Based on the latest weekly survey conducted by the Australian Institute of Petroleum, diesel in many regional parts of Australia has lifted 4-5c/litre since our last report in late September. The figure currently sits at 122.9c/litre.
As the graph pictured above shows, average retail diesel prices in regional/rural areas hit a 14-year low in March at 112c/litre – the lowest seen since 2002. While they have recovered somewhat since then, diesel is still a long way from the prices above 137c/l seen during periods last year.
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 $169.60 – still $8 cheaper than the same fill this time last year.
Biggest price rises over the past month have been seen in NSW and Queensland.
Regional/rural non-metro diesel prices in the latest AIP report for the week ended last Sunday, November 20 included:
- Victoria 120.9.5/litre (up 3.4c/litre)
- NSW 123.3c (up 5.8c)
- Queensland 123c (up 5c)
- WA 126.5c (up 4.6c)
- SA 119.5c (up 4.6c)
- TAS 125.8c (up 3.6c), and
- NT 126.3c (up 2.7c).
Worth noting is the fact that this month is the first time in recent memory that the Northern Terrritory has not had the highest priced regional fuel in Australia.
Monthly diesel report notes:
Australian Institute of Petroleum’s reported prices are calculated as a weighted average of retail diesel fuel for non-metro regions in each state/territory. All values include GST.
Variation in fuel prices can have a considerable impact of cost of production across the Australian beef industry, impacting on livestock transport, cost of shipping in live cattle and boxed beef exports, pumping stock water and providing station electricity in remote locations.
Crude oil, diesel and petrol prices are closely linked, as the price of crude oil accounts for the majority of the cost of producing a litre of petrol or diesel. Crude oil is purchased in US$, 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.