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WEEKLY PETROL PRICES REPORT

Week Ending 3 August 2008

All data, charts and tables in this Report are based on the latest available market data to Sunday, 3 August 2008 .

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

Should you have any questions about the material in this report, please contact AIP at petrolprices@aip.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 © 2008 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 PRICES: are derived from capital city prices weighted by fuel volume consumed in each State.





INTERNATIONAL MARKET TRENDS

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

NOTE: Australia is part of the Asia Pacific fuel market (Singapore is the regional refining/distribution centre) and the relevant market benchmark is Tapis for crude oil and Singapore petrol prices for unleaded petrol (MOPS95 Petrol). Tapis crude oil and MOPS95 Petrol prices are provided by Platts (McGraw-Hill Inc), see Notes on page 2.


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.



 TAPIS CRUDE OILCents per
litre (A$)		    MOPS95 PETROLCents per
litre (A$)
 Average: Last Week (to Friday 01/08/08)89.1    Average: Last Week (to Friday 01/08/08)81.4
 Average: Previous Week (to Friday 25/07/08)90.1    Average: Previous Week (to Friday 25/07/08)82.0
 Average: Last 4 Weeks93.4    Average: Last 4 Weeks86.6
 Average: Last 12 Weeks92.5    Average: Last 12 Weeks89.9
 Average: Last 12 Months73.9    Average: Last 12 Months74.3


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 on page 2.


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 01/08/08)81.4    Average: Last Week (to Friday 01/08/08)144.6
 Average: Previous Week (to Friday 25/07/08)82.0    Average: Previous Week (to Friday 25/07/08)151.7
 Average: Last 4 Weeks86.6    Average: Last 4 Weeks153.0
 Average: Last 12 Weeks89.9    Average: Last 12 Weeks152.3
 Average: Last 12 Months74.3    Average: Last 12 Months134.2


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 1 August 2008

UNLEADED PETROL (cents per litre $A)
  Monday
28 July 2008		 Tuesday
29 July 2008		 Wednesday
30 July 2008		 Thursday
31 July 2008		 Friday
1 August 2008
 Sydney 146.7 144.9 144.1 144.0 143.1
 Melbourne 146.1 144.3 143.5 143.4 142.5
 Brisbane 146.6 144.8 144.0 143.9 142.9
 Adelaide 147.0 145.2 144.4 144.3 143.4
 Perth 147.8 145.7 145.0 145.0 143.7
 Darwin 150.5 148.8 148.0 147.9 146.9
 Hobart 149.4 147.7 146.9 146.8 145.9

DIESEL (cents per litre $A)
  Monday
28 July 2008		 Tuesday
29 July 2008		 Wednesday
30 July 2008		 Thursday
31 July 2008		 Friday
1 August 2008
 Sydney 170.2 168.3 167.4 167.2 165.9
 Melbourne 169.5 167.5 166.6 166.4 165.1
 Brisbane 169.9 168.0 167.1 166.9 165.6
 Adelaide 170.0 168.1 167.2 167.0 165.7
 Perth 170.6 168.3 167.5 167.5 165.8
 Darwin 173.8 171.9 171.0 170.8 169.5
 Hobart 173.4 171.5 170.6 170.4 169.1

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 and diesel across each of these companies for the day. Brisbane prices are exclusive of the Queensland Government fuel subsidy.





EXPLAINING THE TIME LAG BETWEEN CHANGES IN SINGAPORE PRICES AND CHANGES IN AUSTRALIAN WHOLESALE PETROL & DIESEL 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 01/08/08)144.6    Average: Last Week (to Sunday 03/08/08)153.5
 Average: Previous Week (to Friday 25/07/08)151.7    Average: Previous Week (to Sun 27/07/08)159.5
 Average: Last 4 Weeks153.0    Average: Last 4 Weeks159.9
 Average: Last 12 Weeks152.3    Average: Last 12 Weeks157.7
 Average: Last 12 Months134.2    Average: Last 12 Months139.5


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.
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 3 August 2008

'NATIONAL AND STATE' AVERAGE PRICES (cents per litre $A)
 Weekly Average Weekly ChangeLowHigh
 National Average 153.5 -6.1 151.0 155.4
 NSW / ACT 154.2 -6.7 151.4 156.5
 Victoria 154.5 -6.3 152.0 156.9
 Queensland 148.9 -5.5 146.5 151.1
 South Australia 153.3 -6.2 150.3 157.1
 Western Australia 153.8 -5.3 151.4 156.8
 Northern Territory 170.2 -5.2 166.9 174.7
 Tasmania 162.9 -4.6 159.3 165.3



'METROPOLITAN' AVERAGE PRICES (cents per litre $A)
 Weekly Average Weekly ChangeLowHigh
 National Metro Average 151.2 -6.7 148.7 153.9
 Sydney 151.4 -7.2 148.4 154.8
 Canberra 158.2 -7.4 154.2 164.3
 Melbourne 153.3 -6.5 150.1 156.7
 Brisbane 144.7 -6.9 142.3 146.8
 Adelaide 151.4 -6.4 147.7 156.5
 Perth 149.5 -5.7 147.1 152.8
 Darwin 168.7 -6.1 165.4 174.3
 Hobart 161.5 -5.0 159.3 163.4



'REGIONAL' AVERAGE PRICES (cents per litre $A)
 Weekly Average Weekly ChangeLowHigh
 National Regional Average 157.9 -4.9 155.5 160.6
 NSW / ACT 159.3 -5.6 156.9 162.2
 Victoria 157.7 -5.5 155.7 160.5
 Queensland 152.9 -4.1 150.5 155.4
 South Australia 158.5 -5.6 156.8 161.5
 Western Australia 168.6 -3.6 166.0 171.1
 Northern Territory 173.7 -2.9 166.7 177.7
 Tasmania 164.1 -4.3 159.3 167.5


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 National Average 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 vehicles using unleaded petrol registered in each of these areas.
(2) 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.
(3) The vehicle data source is ABS Motor Vehicle Census, 2005, Cat No 9309.0.
(4) '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.
(5) Weekly Average prices are a straight average of the seven days.
(6) 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

December Quarter 2007

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, Department of Industry, Tourism and Resources



 

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