Fuel prices on the way down with oil, but shopping around can save you even more
Petrol is especially cheap at some service stations right now because the price of crude oil has just entered a bear market.
That means the prices of Nymex, WTI and Brent crude, which help determine the price Australian motorists pay at the pump, have fallen more than 20 per cent since late April.
Recent heavy selling of the commodity came as government data showed stockpiles of US crude climbed by 6.8 million barrels last week to more than 483 million barrels — the highest level since July 2017.
Rising crude oil stockpiling indicates refineries are not looking for more oil, which points to weaker demand at the consumer level.
“In the US we’re into the driving season now that it’s summer and that’s why markets were quite surprised, because analysts had expected a drawdown actually of 849,000 barrels,” CommSec senior economist Ryan Felsman said.
“So it really does reflect concerns around demand, both domestically in the US but also more broadly globally.”
Front and centre are concerns the US-China trade war will escalate and cause damage to the global economy.
Right now though, it is a win for Australian motorists, because the fall in the price of crude has flowed through to the bowser.
Why the difference between petrol station prices?
As many Australians head into a long weekend, and perhaps a long drive on Friday night or Saturday, Mr Felsman said it was worth knowing where to find the cheapest fuel.
“If you look at [the website] MotorMouth, in the western suburbs of Sydney — quite good conditions as far as those pump prices are concerned — around $1.30 per litre.”
But motoring group NRMA said it wanted drivers to know about another dynamic within Australia’s petrol station market.
Spokesman Peter Khoury said big price differences were emerging within Australia’s capital cities.
“The reality is you can find yourself paying up to $17 more for a full tank of petrol [based on a 50-litre tank], depending on where you fill up, if you happen to fill up at the wrong service station,” he said.
So why are there such big differences in the price of fuel between petrol stations?
Mr Felsman explained petrol stations in high-traffic areas typically had lower prices, while those in low-traffic areas had more expensive fuel.
“So if you’re in Mosman, for example, at the moment at the 7-Eleven there you’re paying around $1.40 per litre, but if you drive across the Spit Bridge and go to Caltex at Manly, you’re paying around $1.20 to $1.25 per litre.”
Perfect storm for cheaper fuel
Several years ago, the NRMA lobbied for a real-time petrol price comparison website in New South Wales.
The Government agreed. The website, known as Fuel Check, showed that on Thursday evening the price of unleaded petrol in Lewisham in Sydney’s inner-west was $1.23, while across town in Paddington it was $1.65.
That is a difference of more than 40 cents a litre.
Mr Khoury said for some families even a few dollars in savings meant a lot.
“In Sydney, for example, your typical family in Western Sydney, about a fifth of their weekly budget goes towards transport costs,” he explained.
“Yes, it hurts — $17 means a lot to people but, from our own experience talking to members, $3 or $4, if you’re a pensioner, means a lot to someone.”
Further complicating the search for cheaper fuel is what is known as the discount, or price, cycle.
In Perth, for example, Monday is generally the cheapest day to buy petrol and Tuesday is the most expensive.
More broadly, petrol stations will choose a series of days every month to discount heavily in an attempt to draw motorists into their driveways.
Mr Felsman said this weekend would see lower oil prices combine with a low point in the monthly discount cycle, making for especially cheap fuel for motorists who could find the right service station.
“The bottoming in the discount cycle appears to be lower than it was previously,” he said.
Both the NRMA and CommSec told PM they believe the price of crude oil and petrol could fall further next week.