DIESEL fuel prices in regional non-metropolitan areas across Australia have stabilised at an average of around 118c/litre over the past month, ending a gradual decline seen since early June.

Prices reported in the latest weekly survey conducted by the Australian Institute of Petroleum have fallen up to 6c/litre in some states since surveys taken in July.

The International Energy Agency’s latest oil market report suggests that with the price of oil at current low levels, one would expect supply to contract and demand to grow strongly.

“However, the opposite now seems to be happening,” the IEA says. “Demand growth is slowing and supply is rising. Consequently, world oil stocks are swelling to levels never seen before,” it said.

That’s because recent pillars of demand growth like China and India are wobbling. Economic worries in other developing countries have not helped, and demand momentum in the US has also slowed dramatically.

The result has been a slump in oil demand growth. Consequently, supply is likely to continue to outpace demand at least through the first half of next year, keeping fuel prices lower, the IEA says.

As the graph pictured above shows, retail diesel prices in regional/rural areas of Australia hit a 14-year low in March at around 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 $162.97 – still $23 cheaper than the same fill in November last year.

Biggest price falls over the past month have been seen in the NT, Queensland and NSW.

Regional/rural non-metro diesel prices in the latest AIP report for the week ended last Sunday, September 18 included:

• Victoria 117c.5/litre (unchanged on last month)
• NSW 117.5c (down 1.1c)
• Queensland 118c (down 0.9c)
• WA 121.9c (unchanged)
• SA 114.9c (up 0.6c)
• TAS 122.2c (up 0.1c), and
• NT 123.6c (down 2.3c).

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.