DIESEL fuel prices in regional and rural areas of Australia have strengthened recently, after reaching a nine-month low last month.
While it’s great for beef export prospects, a falling A$ is not good news for fuel prices.
Pricing data released by the Australian Institute of Petroleum shows that for the week ended Sunday, June 23, the average retail price for diesel in country areas rose to 150.7c/litre, about 2.3c/l higher than where it sat this time in May (see graph below).
Analysts say both diesel and petrol prices are likely to rise further, as the effect of the US13c decline in the value of the A$ over the past month continues to take effect.
Australia is only about 40pc self-sufficient in transport fuels, meaning international market trends have a direct impact on local pricing.
"Higher crude prices and a substantially weaker Aussie dollar – pushing up the cost of imported fuel – are likely to see domestic pump prices rise considerably over the next few weeks," an energy sector analyst warned.
"Had the Aussie dollar remained at levels it was two months ago (US105c) fuel users now would be saving around 9c/litre of petrol, and similar for diesel."
The currency impact has been seen in rises in regional and rural areas in all Australian States and territories over the past month, with the biggest jumps seen in drops seen in Victoria, Queensland and South Australia.
Regional non-metro diesel prices in the latest AIP report included:
- Victoria 147.7c/l (up 3.2c/litre since May 21)
- NSW 150.3c (up 1.9c)
- Queensland 150.9c (up 2.8c)
- WA 154.7c (up 1.8c)
- SA 148.9c (up 3.4c)
- TAS 154.3c (up 1.4c), and
- NT 167.6c (up 0.2c).
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.