Explained: Why diesel is still so much more expensive than petrol

While petrol prices have dropped to as low as $1.55/l, diesel drivers are still forking out up to $2.25/l. Here’s what’s going on and why a reprieve might be just around the corner.

DIESEL drivers are being stung 70c more a litre for fuel compared to petrol drivers despite substantial drops in the wholesale price.

Fuel experts say retailers appear to be using the drop in diesel prices to bolster their margins, rather than pass the savings onto the consumer.

Currently in Brisbane, diesel is hitting tops of $2.25 a litre while petrol can be found for as low as $1.55 a litre.

RACQ fuel expert Ian Jeffreys said the war in Ukraine has pushed diesel prices higher for the past six months with the peak of wholesale prices seeing 30c a litre difference between petrol and diesel.

But despite the “good news” that diesel prices appear to be falling substantially in the wholesale market, Dr Jeffreys said he was concerned these reductions weren’t being reflected at the bowser.

“Unfortunately, while we’ve seen substantial falls in the wholesale we haven’t seen large falls in the retail price of diesel. Our concern is that rather than passing these savings onto motorists, the fuel companies have used these falls in price to bolster their margins,” he said.

People filling up their cars with diesel at Liberty Highgate Hill on Sunday. Picture: Jerad Williams

Dr Jeffreys said he hoped Brisbane would see diesel prices drop by 20c a litre in the coming weeks.

“I’m cautious about saying whether that will happen or not. At the moment, diesel in Brisbane is falling by about 7c a week,” he said.

“It should be falling faster than it currently is, and a reasonable price for diesel would be around $2 a litre.”

As of June 2020, Transport and Main Roads recorded more than 1.3 million diesel cars in Queensland, compared to almost three million petrol cars.

Petrol prices are also at the cheaper end of the price cycle, according to Dr Jeffreys who said prices should fall to the $1.65 a litre mark across the board next week.

“There is still a price cycle so eventually prices will hike again, but when they do it should stay below $2 a litre, but there’s no reason why it should exceed $2 in the near future,” he said.

In September, the government’s petrol excise cut which was introduced in the March budget, will come to an end with Dr Jeffreys saying prices are expected to rise further when it ends on September 28.

“On the morning of the 29th, fuel in the tanks at retail sites will still be charged at the old rate, but over the next week, when individual retail sites get their next delivery of petrol or diesel, that will be charged at the fuel rate of excise,” he said.

“We’ll expect that 25c-a-litre increase (be) passed on to motorists.”

For Rachel Niclair, 35, from Marcoola on the Sunshine Coast, filling up her diesel VW now costs around $40 or $50 more than it has in previous years.

“I think the thing that concerns me is the cost of transport going up and then it just really has that overall affect on the cost of living,” she said.

Originally published as Explained: Why diesel is still so much more expensive than petrol