Why are petrol prices rising? If you’ve filled up your car recently, you might’ve noticed they are.
Prices across Australia have returned to above $2 per litre in recent weeks, and in Melbourne and Sydney, prices have been well above $2.10 per litre.
What do we know about the reason?
How petrol prices work
Like most basic goods used all over the world, petrol’s price is set globally.
The price paid in Australia, just like in any other country, is largely shaped by how much petrol is available worldwide and how much is demanded worldwide.
Local petrol retailers also take a cut, but this typically accounts for about 10% of the Australian price.
Petrol prices rising
According to the Australian Institute of Petroleum’s weekly price report, Australian prices have averaged about $1.96 in the past week.
However, this only tells part of the story. Prices in major cities move up and down in waves, and the top of the wave has been comfortably above $2 in the five largest cities.
In Sydney, prices peaked at $2.15 a few days ago. In Melbourne, prices are about to peak at a similar level. Brisbane, Adelaide and Perth have all hit around $2.10 in the last few weeks.
Why are they rising?
The main reason is that a collection of petrol-producing countries have made a deliberate decision to withhold petrol from the world to boost their profits.
That collection of countries is called OPEC (the Organisation of the Petroleum Exporting Countries), led by the world’s largest exporter, Saudi Arabia.
OPEC operates as a ‘cartel’ – a group of sellers working together to maximise their profits. The bad news? OPEC plans to keep withholding oil into 2024, so higher prices might stick around.
When you should fill up
Price ‘waves’ in Australia’s major cities are consistent and predictable and are based on decisions made by petrol retailers.
The government’s consumer watchdog, the ACCC, provides several updates a week on its website advising consumers about when to fill up.
The gap between the top and bottom of Sydney’s latest cycle was 35c a litre.