A year of cheap bush fuel prices below city values

Cheaper regional fuel prices continue to beat city values

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Fuel prices in the bush continue to defy tradition with average petrol costs in regional Australia still holding below city trends.

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Fuel prices in the bush continue to defy tradition with average petrol costs in regional Australia ending last year lower than the five largest state capitals, and extending that trend into 2021.

Petrol prices across 190 regional locations averaged 119.5 cents a litre for the last quarter of 2020, or about 1.9c/l lower than the 121.4c average for Australia's biggest metropolitan markets according to the Australian Competition and Consumer Commission.

Despite a steady lift in fuel prices as coronavirus pandemic restrictions on travel and industry have eased, regional retail petrol continued to track well below metropolitan costs into March.

For the week ending March 7 the Australia-wide regional average for unleaded petrol was 134c/l, but in metropolitan areas the retail price was a full 10c/litre more expensive at 144c.

A year ago regional petrol prices averaged about 137c/l, while in the five biggest state capitals they were about 12c cheaper at 125.6c/l, according to the Australian Institute of Petroleum.

By May last year petrol in the bush had dropped to 105c/l and it remained in the 117c to 121c range until mid January this year, while the average for Sydney, Melbourne, Brisbane, Adelaide and Perth briefly dropped as low as 94c in May, then bounced back to a September high of 134c/l.

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Average major city prices have fluctuated considerably in the past year, climbing to 139c/l in late January then dropping to 128c a month later before hitting 145c/l in early March.

"Petrol prices have traditionally been higher in regional areas with less competition, so a sustained period with average prices below those in the major capital cities is good news for people across regional Australia," said ACCC chairman Rod Sims said.

"All motorists would have liked to see petrol prices remain at the record lows of April last year, but average prices in the December quarter were still about 30c a litre below the 15-year inflation adjusted average."

Depressed diesel

Diesel prices have also been unusually low for the past year, although still marginally cheaper in metropolitan areas than the bush.

The national regional average price fell from 145.4c/l 12 months ago to 120c/l by May and remained in the 119c to 121c range until mid January this year, climbing to 132.2c in the first week of March.

The five biggest state capitals' average diesel price was 143c/l a year ago, falling as low as 117c, and in the past two months gaining about 15c to 131c/l in early March.

According to petroleum institute reporting, regional Victoria had the highest average diesel price at 132c/l ahead of Queensland, Western Australia and NSW in the 131c range.

The ACCC said petrol sales volumes across Australia picked up in the December quarter, but were still on average 6pc lower than sale volumes in 2019.

That compared with 28pc lower in the June quarter.

"Restrictions on travel and economic activity from the pandemic have had an enormous effect on petrol volumes and prices in Australia" Mr Sims said.

Average gross retail margins in the five largest cities fell slightly in the December quarter, after hitting record highs in the September quarter, but remained well above historical levels as retailers compensated for lower turnover volumes.

Taxing times

The ACCC also noted taxes accounted for a larger proportion of the total price of petrol than the refined petrol itself for nine months of last year.

Taxes and Mogas 95, which is the benchmark for refined regular unleaded petrol in the Asia-Pacific region, made up 78 per cent of the average price of petrol in the December quarter.

"The price Australians pay at the petrol bowser can be divided into three components: the petrol that goes in your tank, taxes, and the costs and margins of wholesalers and retailers," Mr Sims said.

"Between April and December last year, a large part of what you paid at the bowser was tax."

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