Facts About Petrol Prices and the Australian Fuel Market
FACTS ABOUT PETROL PRICES & THE AUSTRALIAN FUEL MARKET
INTERNATIONAL PRICES
Crude oil, petrol and diesel are different products and are bought and sold in their own markets. Each market is typically regionally-based and there are linkages and transactions between regional markets. Prices in regional markets reflect the supply and demand balance in each market and the physical characteristics and quality of each commodity. Prices in regional markets can be volatile and can move in different directions from each other. This can be due to the impact of factors and events unique to one market – such as supply and demand pressures in a region, hurricanes, wars and civil unrest. This is why focusing on relevant markets and longer term price trends is more important than daily or week-to-week price movements. Australia’s regional market for petroleum products is the Asia-Pacific market. Key crude oil pricing benchmarks for the Asia-Pacific market including Australia are Tapis, Dated Brent and Dubai – not West Texas Intermediate (the US market benchmark) widely reported in the media. The Singapore price of unleaded petrol (MOPS95 Petrol) is the key petrol pricing benchmark for Australia. To meet Australian fuel demand, around 15-20% of petrol is imported (mainly from Singapore). Singapore is the regional refining and distribution centre and among the world’s largest. If Australia’s petrol prices were below Singapore prices, Australian fuel suppliers would have no commercial incentive to import to Australia (because sales of that fuel would be at a loss here). In addition, Australian refiners would have an incentive to export production. ‘Refiner margins' are the differences between product prices and crude oil prices – both of which are set by the market, not by oil companies (e.g. a Singapore petrol ‘refiner margin’ = MOPS95 Petrol price minus the relevant crude oil price).
AUSTRALIAN WHOLESALE PRICES
Australian wholesale prices for petrol and diesel (including
INTERNATIONAL PRICES
Crude oil, petrol and diesel are different products and are bought and sold in their own markets. Each market is typically regionally-based and there are linkages and transactions between regional markets. Prices in regional markets reflect the supply and demand balance in each market and the physical characteristics and quality of each commodity. Prices in regional markets can be volatile and can move in different directions from each other. This can be due to the impact of factors and events unique to one market – such as supply and demand pressures in a region, hurricanes, wars and civil unrest. This is why focusing on relevant markets and longer term price trends is more important than daily or week-to-week price movements. Australia’s regional market for petroleum products is the Asia-Pacific market. Key crude oil pricing benchmarks for the Asia-Pacific market including Australia are Tapis, Dated Brent and Dubai – not West Texas Intermediate (the US market benchmark) widely reported in the media. The Singapore price of unleaded petrol (MOPS95 Petrol) is the key petrol pricing benchmark for Australia. To meet Australian fuel demand, around 15-20% of petrol is imported (mainly from Singapore). Singapore is the regional refining and distribution centre and among the world’s largest. If Australia’s petrol prices were below Singapore prices, Australian fuel suppliers would have no commercial incentive to import to Australia (because sales of that fuel would be at a loss here). In addition, Australian refiners would have an incentive to export production. ‘Refiner margins' are the differences between product prices and crude oil prices – both of which are set by the market, not by oil companies (e.g. a Singapore petrol ‘refiner margin’ = MOPS95 Petrol price minus the relevant crude oil price).
AUSTRALIAN WHOLESALE PRICES
Australian wholesale prices for petrol and diesel (including