What’s causing petrol prices to soar

Petrol prices have soared to a seven year high, with motorists slugged about 48c per litre more than they were last year. Here’s why, and when they could fall.

Petrol prices have hit a seven-year high across Australia.

Petrol prices have hit a seven-year high increasing to more than 170c per litre across the capital cities in October.

The Australian Competition and Consumer Commission’s latest petrol monitoring report found the seven-day rolling average in Sydney, Melbourne, Brisbane, Perth and Adelaide came to 172.4c per litre – the highest real term price in seven years.

The report found Australian petrol prices have been increasing since November 2020, after reaching record lows in April 2020 following the initial impact of Covid-19.

In November 2021, motorists in the five largest cities were on average paying about 48c per litre more for petrol than they were a year ago.

“International refined petrol prices and the Australian to US dollar exchange rate largely determine movements in the retail price of petrol in Australia,” ACCC chair Rod Sims said.

“As refined petrol is made from crude oil, movements in the global crude oil price drive the international price of refined petrol.

“Many people are rightly upset about the pressure that the current high petrol prices are putting on their household budget.

“It is important to understand that this is predominantly due to higher international prices and the actions of the OPEC cartel.”

OPEC and other crude oil producing countries, such as Russia, only marginally increased supply after agreeing on major production cuts in the middle of last year.

As a result, weekly average crude oil prices more than doubled from about USD $38 per barrel in early November 2020, to about USD $85 per barrel at the end of October 2021.

As countries began opening up after Covid restrictions were eased, demand for crude oil spiked which was compounded by parts of Europe and Asia turned to oil as an alternative to gas and coal.

“The OPEC cartel’s restriction of oil production is ultimately causing Australian motorists to pay very high prices for petrol at the moment,” Mr Sims said.

“We will continue to keep a very close eye on the petrol market, and now that the international refined petrol price has started falling, we expect to see retail prices here do the same.”

Originally published as What’s causing petrol prices to soar