Five reasons fuel prices rise and fall
- 07 August 2015
For a time, Australian motorists saw a fairly regular pricing pattern that gave us cheaper fuel mid-week and more expensive fuel on the weekend. Today though, the cycle troughs (cheaper days) are as likely to fall on a Saturday one week, as they are on a Wednesday the next week.
In actual fact, retail fuel prices fluctuate from day to day and city to city. In this article, we identify five reasons fuel prices rise and fall. The more informed you are about what causes prices to fluctuate, the more likely you are to save.
Supply and demand
One of the main drivers of fuel prices is supply and demand. If there’s an oversupply, as in there’s more oil on the market than people are consuming, this lowers the price right through to the pump. Conversely, if there’s an undersupply in the market caused by increased demand, for example, prices are likely to rise.
Value of the dollar
Petrol, diesel and LPG are priced according to the international benchmark, which is in US dollars. That means that the strength of our local currency can affect petrol prices. That said, petrol prices can remain high even if the Aussie dollar is strong.
Petrol price cycles
Fuel prices move up and down in regular patterns or cycles. In these cycles, prices steadily go down for a period followed by a sharp increase. However, the cheapest and most expensive days can change from cycle to cycle. Also, cycle durations vary in most of our capital cities, which means that the cheapest day in Brisbane will likely be different in Melbourne.
In regional or rural areas, fuel will often be priced at a higher rate as there is often a lower volume of fuel sold compared with metropolitan sites. Fewer sales can mean a lag in price movement too, especially as stocks may not be replenished as frequently.
High freight costs can also impact regional fuel prices, which is particularly true throughout the Northern Territory and Tasmania.
Finally, if there’s a healthy mix of both independent retailers, competition is higher and prices are typically lower. Local competition is why capital cities, which have a greater number of fuel retailers, see lower prices than regional or rural areas.
Websites like MotorMouth can help you find the cheapest fuel in your area. Also, the Australian Competition and Consumer Commission (ACCC) frequently updates its page on petrol price cycles to give consumers the most up to date advice.
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For a competitive quote, contact Bulk Fuel Australia today on 1300 57 9990.