Has Christmas arrived early bringing $1 a litre petrol?

Sceptical Victorian motorists spurred predictions that the price of petrol was heading towards $1.00 a litre at the bowser.

Prices are currently at their lowest in more than a year, dipping under $1.20, but motorists are still unconvinced that there will be a major fall in prices.

Economists are predicting that the price of crude oil will fall to $US40 a barrel, which means Melbourne motorists could yet get an early Christmas present and see prices fall below a dollar a litre.

As long as crude prices stay down, petrol prices will continue to tumble.

What determines petrol prices in Australia?

Factors affecting petrol prices:

  • Changes in international prices for refined petroleum products.
  • Movements in the Australian / US dollar exchange rate.
  • The level of federal and state excise and taxes.
  • Local price cycles.

Why does the level of petrol prices differ among cities or towns?

The factors that influence price cycles may also influence the level of prices, however, when comparing prices between cities it is important to remember that the cities may be at different stages of the price cycle. Other factors that influence the level of prices include different fuel subsidy arrangements and fuel standards among the states.

Published on November 11-th, 2008 in Financial Planning
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.