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WEEKLY PETROL PRICES REPORT

Week Ending 20 July 2014

All data, charts and tables in this Report are based on the latest available market data to Sunday, 20 July 2014.

Use the following links to see more detailed information on:

Pricing Facts www.aip.com.au/pricing/facts.htm
Terminal Gate Prices (wholesale) www.aip.com.au/pricing/tgp.htm
Pump Prices (retail) www.aip.com.au/pricing/retail.htm
International Fuel Prices www.aip.com.au/pricing/international.htm

Should you have any questions about the material in this report, please contact AIP at petrolprices@aip.com.au.

In the AIP Weekly Petrol Prices Report:

  • the data for international crude oil and petrol prices is supplied by Platts (McGraw Hill Inc.) (see www.platts.com).
  • the data for wholesale petrol prices is based on market data published by AIP member companies (BP, Shell, Mobil and Caltex) (see www.aip.com.au).
  • the data for retail petrol prices is based on available market data supplied by MotorMouth (see www.motormouth.com.au).

This report has been prepared by ORIMA Research Pty Ltd on behalf of AIP. Whilst AIP has taken due care in ensuring the accuracy of the information or material in this report, the report is made available for general use only and is provided without any express or implied warranty as to its accuracy, completeness or currency.






THE AUSTRALIAN FUEL MARKET - AN OVERALL SNAPSHOT

Understanding Movements in Key Petrol Price Indicators

The Chart below provides an overall 'snapshot' of movements in key market indicators relevant to the price of petrol at the pump in Australia.

The Australian refining sector is a price taker. Domestic prices are closely linked to relevant international prices. The Singapore benchmark price of petrol (MOPS95 Petrol) is the key price benchmark for petrol in Australia. As the chart below shows, MOPS95 Petrol plus shipping costs and Australian taxes represents almost the entire wholesale price of petrol (around 95%).

NOTES
(1) MOPS95 Petrol: the international petrol prices are provided by Platts (Copyright © 2013 The McGraw-Hill Companies, all rights reserved), and represent the end of day assessment for the mean of Singapore prices for 95 Octane Petrol (MOPS95 Petrol). No portion of the publication may be photocopied, reproduced, retransmitted, put into a computer system or otherwise redistributed, without prior written Authorisation from Platts. Platts is a trademark of the McGraw-Hill Inc. Information has been obtained from sources believed reliable. However, because of the possibility of human or mechanical errors by sources, McGraw-Hill or others, McGraw-Hill does not guarantee the accuracy, adequacy or completeness of any such information and is not responsible for any errors or omissions or for results obtained from use of such information.
(2) SHIPPING: is the weighted average of daily market shipping rates (Australian cents per litre) for journeys from Singapore to major Australian ports (weighted by the volume of fuel sales in the relevant State). Source data include Platts, Worldscale, Australian Petroleum Statistics and the Reserve Bank of Australia.
(3) TAXES: is excise and GST less any relevant state rebates weighted by the volume of petrol consumed in each State.
(4) NATIONAL AVERAGE WHOLESALE PRICES: are derived from capital city prices weighted by fuel volume consumed in each State.
(5) NATIONAL AVERAGE RETAIL PRICES: are calculated as the weighted average of each State/Territory's metropolitan and non metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions.






INTERNATIONAL MARKET TRENDS

FIGURE 1: COMPARISON OF SINGAPORE PETROL PRICE (MOPS95 PETROL) WITH CRUDE OIL PRICES

NOTE: Australia is part of the Asia-Pacific fuel market (Singapore is the regional refining/distribution centre) and relevant pricing benchmarks in this market are Singapore petrol prices for unleaded petrol (MOPS95 Petrol) and Tapis and Dated Brent for crude oil. Prices for MOPS95 Petrol and for Tapis and Dated Brent crude oil are provided by Platts (The McGraw-Hill Companies, Inc). Platts have publicly reported that countries across the Asia-Pacific region including Australia are increasingly moving to using Dated Brent as the relevant crude pricing benchmark for crude oil contract purposes and spot transactions. Caltex Australia has also indicated in public statements a shift to Dated Brent crude pricing. For information on crude oil pricing and Dated Brent pricing in Asia see www.aip.com.au/pricing/crude.htm.


FIGURE 2: DIFFERENCE BETWEEN MARKET PRICES
MOPS95 Petrol price minus Tapis Crude Oil price

NOTE: The refiner margin above is the difference between market prices for MOPS95 Petrol and Tapis. It is not a figure determined by refiners.



Cents per litre (A$)TAPIS CRUDE OILDATED BRENT CRUDE OILMOPS95 PETROL
 Average: Last Week (to Friday 18/07/14)74.670.582.2
 Average: Previous Week (to Friday 11/07/14)75.571.783.2
 Average: Last 4 Weeks76.472.884.0
 Average: Last 12 Weeks76.373.882.8
 Average: Last 12 Months78.274.881.5


PLEASE NOTE
Differences/margins between market prices or benchmarks are used as indicators of general trends in the petroleum market, they do not represent profits accruing to oil companies at the refining, wholesale or retail segments of the market. For each market segment, a range of costs would need to be deducted to determine actual profits.






AUSTRALIAN WHOLESALE MARKET TRENDS

FIGURE 3: COMPARISON OF AUSTRALIAN TGP ULP (OR 'WHOLESALE PRICE')
WITH SINGAPORE PETROL PRICE (MOPS95 PETROL)

NOTE: MOPS95 Petrol prices and Shipping rates are provided by Platts (McGraw-Hill Inc), see Notes above.


FIGURE 4: DIFFERENCE BETWEEN MARKET PRICES
National Average TGP ULP minus MOPS95 Petrol (plus Shipping & Taxes)



 MOPS95 PETROLCents per
litre (A$)
   TGP ULP (National Average)Cents per
litre (A$)
 Average: Last Week (to Friday 18/07/14)82.2    Average: Last Week (to Friday 18/07/14)144.5
 Average: Previous Week (to Friday 11/07/14)83.2    Average: Previous Week (to Friday 11/07/14)146.5
 Average: Last 4 Weeks84.0    Average: Last 4 Weeks145.8
 Average: Last 12 Weeks82.8    Average: Last 12 Weeks144.1
 Average: Last 12 Months81.5    Average: Last 12 Months142.8


PLEASE NOTE
Differences/margins between market prices or benchmarks are used as indicators of general trends in the petroleum market, they do not represent profits accruing to oil companies at the refining, wholesale or retail segments of the market.
For each market segment, a range of costs would need to be deducted to determine actual profits.
For example, at the wholesale level, a range of costs (including 'landed costs' and 'wholesaling costs') would need to be deducted to determine actual profits at the wholesale level. These 'landed costs' include the costs of the quality premium (market cost) for Australian fuel standards, insurance and loss, and local wharfage costs. The standard 'wholesaling costs' include terminal operating costs, administration and wholesale marketing costs and corporate taxes and government charges on wholesaling activities.






AVERAGE TERMINAL GATE PRICES (TGPs) ACROSS
AUSTRALIAN STATES/TERRITORIES

Week ended 18 July 2014

UNLEADED PETROL (cents per litre $A)
  Monday
14 July 2014
Tuesday
15 July 2014
Wednesday
16 July 2014
Thursday
17 July 2014
Friday
18 July 2014
 Sydney 145.4 144.9 144.8 144.4 144.2
 Melbourne 144.9 144.4 144.3 144.0 143.7
 Brisbane 145.0 144.5 144.4 144.0 143.8
 Adelaide 144.8 144.3 144.2 143.9 143.6
 Perth 145.2 144.8 144.6 144.3 144.0
 Darwin 148.9 148.4 148.3 148.0 147.7
 Hobart 149.5 149.0 148.9 148.6 148.3

Notes:  Daily TGP data are published by all wholesale fuel suppliers. AIP's website presents average TGP data for each weekday – see www.aip.com.au/pricing/tgp.htm. This data has been prepared by ORIMA Research Pty Ltd on behalf of AIP, using information from BP Australia, Caltex, Shell Australia, and ExxonMobil Australia. Prices shown are the average TGP for unleaded petrol across each of these companies for the day.






EXPLAINING THE TIME LAG BETWEEN CHANGES IN SINGAPORE PRICES AND CHANGES IN AUSTRALIAN WHOLESALE PETROL PRICES

Generally, there is a short time lag of 1-2 weeks between changes in Singapore prices and changes in Australian prices.

  • The lag can be seen in FIGURE 3 above. That is, see the slight delay in the peaks and troughs in the pink line (National Average TGP) compared to the purple line (MOPS95 Petrol plus Shipping & Taxes).
  • Importantly, this time lag occurs whether: prices are going up (when the lag slows price rises to consumers) or prices are going down (when the lag delays price falls).
  • The lag is a result of using a rolling average of Singapore prices as part of the wholesale pricing methodology (very similar to that used by the ACCC when wholesale prices were regulated by government). The pricing methodology is called import parity pricing (IPP).
  • The use of rolling averages smooths day-to-day price volatility.
  • Not accounting for this lag, introduced by the rolling average, leads to incorrect conclusions about how Singapore prices flow through to prices in Australia.

The very close relationship between changes in MOPS95 Petrol and changes in Australian TGPs can be seen by applying a rolling average to the MOPS95 Petrol data (a 7 day rolling average is used in the Chart shown above to illustrate this).







AUSTRALIAN RETAIL MARKET TRENDS

FIGURE 5: COMPARISON OF AUSTRALIAN PUMP PRICE WITH AUSTRALIAN TGP
Average Retail Price versus Average Wholesale Price


FIGURE 6: DIFFERENCE BETWEEN MARKET PRICES
Australian Average Retail Price minus Average Wholesale Price



 Wholesale: TGP ULP
(National Average)
Cents per
litre (A$)
   Retail: Pump Price ULP
(National Average)
Cents per
litre (A$)
 Average: Last Week (to Friday 18/07/14)144.5    Average: Last Week (to Sunday 20/07/14)157.3
 Average: Previous Week (to Friday 11/07/14)146.5    Average: Previous Week (to Sun 13/07/14)153.7
 Average: Last 4 Weeks145.8    Average: Last 4 Weeks154.4
 Average: Last 12 Weeks144.1    Average: Last 12 Weeks153.0
 Average: Last 12 Months142.8    Average: Last 12 Months152.7


PLEASE NOTE
(1) The data for retail petrol prices is based on available market data supplied by MotorMouth (see www.motormouth.com.au).

(2) There is a time lag between changes in Australian wholesale (TGP) petrol prices and the change in retail petrol prices which needs to be taken into account when comparing relative price movements. According to the ACCC, this time lag can be longer during times of significant volatility in international and wholesale petrol prices.

(3) Differences/margins between market prices or benchmarks are used as indicators of general trends in the petroleum market, they do not represent profits accruing to oil companies at the refining, wholesale or retail segments of the market.
For each market segment, a range of costs would need to be deducted to determine actual profits.
For example at the retail level, a range of standard retailing costs would need to be deducted to determine actual profits.
These costs include:
  • land transport costs (of getting fuel from the terminal gate to the petrol bowser)
  • administration and retail marketing costs
  • the costs of running service stations like wages, rent and utilities
  • corporate taxes and other government charges on retailing activities






SUMMARY: RETAIL PETROL PRICE TRENDS ACROSS STATES/TERRITORIES

Week ended 20 July 2014

'NATIONAL AND STATE' AVERAGE PRICES (cents per litre $A)
 Weekly Average Weekly ChangeLowHigh
 National Average 157.3 3.6 155.2 159.0
 NSW / ACT 157.8 3.0 155.8 159.6
 Victoria 155.8 5.4 153.4 157.9
 Queensland 159.8 6.3 157.5 161.9
 South Australia 154.1 1.2 150.6 157.2
 Western Australia 154.9 -0.7 151.2 158.3
 Northern Territory 173.7 0.0 173.7 173.8
 Tasmania 161.4 0.0 161.3 161.6



'METROPOLITAN' AVERAGE PRICES (cents per litre $A)
 Weekly Average Weekly ChangeLowHigh
 National Metropolitan Average 157.5 5.0 154.7 159.9
 Five Major Capital City Average 156.7 4.4 153.8 159.1
 Sydney 157.9 5.4 154.5 160.9
 Canberra 156.9 -0.3 156.8 157.1
 Melbourne 156.6 6.4 153.7 159.2
 Brisbane 161.4 9.0 158.1 164.4
 Adelaide 154.1 1.6 149.4 158.2
 Perth 153.7 -0.9 149.0 158.1
 Darwin 173.0 0.0 173.0 173.0
 Hobart 160.9 0.0 160.7 161.2



'REGIONAL' AVERAGE PRICES (cents per litre $A)
 Weekly Average Weekly ChangeLowHigh
 National Regional Average 156.8 0.8 156.4 157.2
 NSW / ACT 157.7 0.2 157.3 158.2
 Victoria 153.4 2.6 152.7 154.1
 Queensland 156.8 1.1 156.4 157.1
 South Australia 154.1 -0.1 154.0 154.2
 Western Australia 159.1 -0.3 158.9 159.4
 Northern Territory 175.7 0.0 175.7 175.8
 Tasmania 161.7 -0.1 161.5 161.9


For average weekly retail (pump) prices for petrol and diesel across Australian cities and towns, please see www.aip.com.au/pricing/retail.htm.


NOTES
(1) The data for retail petrol prices is based on available market data supplied by MotorMouth (see www.motormouth.com.au).
(2) The National Average Retail Price is calculated as the weighted average of each State/Territory's metropolitan and non metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions.
(3) The National Metropolitan Average price is calculated as the weighted average of the retail petrol prices across each capital city, where the weights are based on the number of vehicles using petrol registered in each city.
(4) The Five Major Capital City Average is the unweighted average of the prices for Sydney, Melbourne, Brisbane, Adelaide and Perth.
(5) The Regional Average price is calculated as the weighted average of the retail petrol prices for the non metropolitan regions in each State/Territory, where the weights are based on the number of vehicles using unleaded petrol.
(6) The vehicle data source is ABS Motor Vehicle Census, 2011, Cat No 9309.0.
(7) 'Weekly Low' and 'Weekly High' are based on the lowest and the highest average daily prices in the relevant area.
The average daily price for each region (eg. Geelong) is calculated as a straight numerical average of all 'price points' provided for that day. Aggregate daily prices are based on a weighted average of all regions (eg. Geelong, Ballarat, Wodonga etc) in the relevant area (eg. Victoria) where weights are based on the number of vehicles using unleaded petrol in each region.
(8) Weekly Average prices are a straight average of the seven days.
(9) Weekly Change is the change compared with the Weekly Average last week.
For more information on data methodology, please see the AIP Website (www.aip.com.au/pricing/retail.htm).






PETROL AND DIESEL – PRICES & TAXES IN OECD COUNTRIES

March Quarter 2014

The Charts show Australia has among the lowest petrol and diesel prices of all OECD countries.


Petrol Prices and Taxes in OECD Countries

Diesel Prices and Taxes in OECD Countries

Source: Australian Petroleum Statistics, Bureau of Resource & Energy Economics



 

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