Essential facts about the bulk fuel market and prices
- 04 March 2016
Here are some important facts about how the price of bulk fuel is set in the economy:
- In Australia, our closest major refining centre is in Singapore. Therefore, most of our bulk fuel prices are set according to Singaporean fuel prices.
- Australia imports around 40% of its fuel to meet our high demands. Most of this fuel originates from Asia (particularly Singapore).
- Australia's prices must always be a little higher than Singapore's, or importers would have no incentive to supply Australians.
- If Australia's fuel prices were too low, there would be an incentive to export Australian fuel.
- Australian refineries do compete with Singapore in providing fuel. Even if fuel is sourced in Australia, it still reflects the import price.
The price of fuel that matters the most is the 'import parity price'. This price reflects the cost of importing the fuel from the Asian region. The components of the IPP are:
- The regional benchmark price of fuel across Asia
- Shipping, which is ocean freight, from Singapore to Melbourne
- Insurance costs
- A premium to ensure the fuel meets Australian standards, which are higher than the rest of the region
Once it gets to Australia, you can expect the following costs on top of the original wholesale price from Singapore:
- Shipping from Singapore adds 1 - 2 cents per litre.
- The Australian Federal Government adds a tax of 39.5 cents per litre for fuel excise. This excise increases twice a year with inflation.
- GST is added on top of the fuel excise.
- Add a margin for the wholesaler or retailer and you're looking at an extra 10 - 20 cents on top of that price.
Bulk Fuel Australia are the experts on all things fuel in Australia. Whether it's a cost price analysis, or ideas for bulk fuel storage, we've got you covered. Take advantage of our expertise and wholesale fuel prices, by calling us on1300 579 990.