Research Note 7 2000-01

Petrol Prices-The Statistics

Greg Baker and Stephen Barber
Statistics Group
29 August 2000

In August 2000 retail petrol prices in some parts of the country moved over the dollar a litre mark for the first time. This triggered widespread concern and questioning of oil company and government policies.

This Research Note provides some of the statistical background to show why retail petrol prices have risen to their current level. An accompanying Research Note Petrol Price Rises: Causes and Consequences provides an explanation of the petrol price rises.

World Oil Prices (US$)

Since 1978-79 Australia has been fully exposed to world oil prices-the so-called import parity pricing.

Graph 1 shows for the period since 1990 the monthly price in US dollars of West Texas Intermediate crude oil-commonly used as an indicator of world oil prices.

Exchange Rates

Oil contracts are usually denominated in US dollars. The Australian price of oil used as a refinery input thus depends not only on world oil prices but also on the value of the Australian dollar against the US dollar.

Table 1 and Graph 2 show the value of an Australian dollar in US cents since the beginning of 2000; by 23 August the dollar had fallen to a low of 0.5705 US cents.

Table 1: Exchange Rate

The decline in the value of the Australian dollar can thus also be seen to contribute to the increase in the price of fuel. It is estimated that a one US cent deterioration in the value of the Australian dollar adds 0.6 cents to a litre of petrol.

World Oil Prices (A$)

Combining the effects of increasing world oil prices and declining value of the Australian dollar gives the dramatic increase seen over recent months in oil prices denoted in Australian dollars. Graph 3 shows the Australian dollar price of oil since the end of 1998. For comparative purposes the US dollar price is shown on the same graph.

Table 2 shows the US dollar and Australian dollar prices since the beginning of August 2000.

Table 2: Price of West Texas Intermediate Crude

Excise Rates

Excises are taxes paid by petrol refiners and passed on to consumers; they are levied per litre of output. Excise rates have been indexed to movements in the Consumer Price Index since 1983-84. Excise on unleaded petrol currently stands at 38.118 cents per litre; excise on leaded petrol is 40.400 cents per litre. Excise rates since 1990 are shown in Table 3. The imposition of GST in July 2000 was accompanied by a reduction in the excise rate.

Table 3: Excise Rates on Unleaded Petrol

Total excise collected on petrol amounted to an estimated $6.5 billion in 1999-2000.

Petrol Prices

Petrol prices at the pump are of necessity affected by the cost of oil and excise duties. It is generally agreed that a one US dollar increase in the price of oil translates to a one cent rise in petrol at the retail level. Table 4 shows the annual average pump price of petrol since 1994. Graph 4 shows the average capital city price of petrol in the period since 1980. Figures for unleaded petrol are only available since 1993.

Table 4: Average City Retail Price of Petrol
Cents per litre

Sources:

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