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Are Aussies paying too much at the pump?
Fuel prices are falling dramatically due to a Russian and Saudi Arabian oversupply and a lack of demand from consumers who are self-isolating, leading to a better deal for Australian consumers.
Are Aussies paying too much at the pump?
Fuel prices are falling dramatically due to a Russian and Saudi Arabian oversupply and a lack of demand from consumers who are self-isolating, leading to a better deal for Australian consumers.
Across the country, Australia’s fuel prices have fallen to levels not seen since the Sydney Olympics, with motorists paying 11 cents a litre less for fuel in March.
Abigail Koch, household savings expert at comparethemarket.com.au, said: “Our analysis shows that petrol prices across the country have been falling, which is good news for motorists who are looking to save some cash during this unpredictable time.
“Canberra had the most expensive fuel in the country, with a quarterly average of 143cpl, while Perth motorists once again paid the least over the quarter, at 132cpl,” she explained.
State Street Global Markets (SSGM) predicts the good times could continue for motorists as it can’t rule out oil prices below US$10 a barrel as demand drops by more than 20 million barrels per day.
“As we look at pictures of empty streets in London, New York and other major cities around the world, it is clear 2020 is going to see far fewer miles driven,” said Ben Jones, multi-asset class strategist at SSGM.
How does Australia stack up?
nestegg has analysed data from global petrol prices around the world to see if Australian consumers are really paying too much for fuel.
While countries’ exchange rates play a pivotal role in prices, Australia is roughly in the middle when it comes to fuel costs.
Despite this, as major fuel companies continue to pump oil, the cost of Australia’s fuel should continue to fall.
“From 1 April, Saudi Aramco will open the taps and produce 12 million barrels of oil a day, up from an average of 10 million. From a budget perspective, Saudi Arabia will need oil prices of around $87 to breakeven, whereas Russia needs oil at just $42. There is no sign that Saudi Arabia and Russia will return to the negotiating table any time soon, so we expect little softening in either’s stance.”
US shale may be able to sell to the US Strategic Petroleum Reserve at relatively high prices, but with supply now exceeding demand by more than 20 million barrels a day, those stores could fill within three to four months.
“Storage is profitable at the moment, as the futures market has moved into ‘super contango’. However, oil has had its worst quarter ever in dollar terms, but single-digit oil is still a possibility,” Mr Jones said.
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