Price of fuel

I have noted the price of oil dropping, yet the price of our fuel stays well over the dollar.

When oil was around $150 a barrel we were paying just over $1.50 a litre.

Now it is mid $30s and maybe falling more, so how come we are still paying as at today, just over $1.30 a litre?

Is there such a thing as a graph showing the comparison of the barrel cost vs the pump price say over the last 10 years ?

A: I don’t have immediate access to such a graph.

You are right in that the price at the bowser is currently too high, and no doubt, will come down in time (after Christmas?).

That said, the relationship between the oil price and the bowser price will never be linear due to these other factors:

  • Oil price is in USD – we pay in AUD. When the oil price was USD150, the AUD was a lot higher;
  • Government takes a fixed excise of approx. 38.6c per litre – this doesn’t vary as the oil price changes; and
  • Distributor margins (and profit margins for the retailer) don’t change materially as the oil price changes.

As you can see from the above, the price of oil is just one factor (but obviously, a very important factor) in determining the price we pay at the bowser.


Read Answer