What goes into the price of fuel?
At RACQ, we’re often asked when the global oil price drops, why don’t motorists pay less at the bowser? The reality is global oil prices are just one element that goes into what we pay for our fuel. So, what are all the factors?
Cost of Refined Fuel
In Australia, most of the refined fuel we use is imported from overseas. It comes from a variety of places including Indonesia, Malaysia and South Korea, Japan, Singapore, India and Malaysia. We buy this fuel at the Singapore Benchmark Price.
Don’t take too much notice of the oil price you see quoted in the media as it’s a West Texas price. This price isn’t relevant to us in Australia. Tapis is the Asia-Pacific Benchmark and European Brent is the global benchmark. The West Texas price used to be much cheaper than what we pay but since the US ended it’s 40-year-old prohibition on crude oil exports, the price of the different benchmarks is much more similar.
For every litre of unleaded fuel sold in Australia the government adds a tax or ‘excise’ of 40.1 cpl plus 10 percent GST.
Transport costs need to be considered when you think of how the fuel gets to your local service station. This means local freight, terminal costs and insurance fees are added onto the price, not to mention a tidy margin for the retailer.
The price motorists actually pay is ultimately determined by the fuel retailer. In regional Queensland prices vary depending on where you live, but don’t fluctuate too much from day to day.
In south east Queensland it’s a little more complex again, with a price cycle which also affects what’s charged.
A number of years ago the price cycle was almost precisely seven days and ‘cheap Tuesday’ would see lines at most service stations. Now the cycle changes constantly and lasts up to five weeks. This cycle means at the peak prices are extremely high and at the bottom they’re very low sometimes with little to no margin for the retailer.
All of this proves no matter where you live, shop around. Make sure you reward the service stations keeping their prices down. Not only will you be getting the benefit of the best price, but by encouraging other retailers to discount their prices you will be making fuel cheaper for everyone.
To find the fair fuel price in your area, head to racq.com/fairfuel.