It was Mark Twain who famously remarked that prediction is difficult – particularly when it involves the future.
Mark might well have had some sympathy for market analysts trying to predict the immediate future of Australian fuel prices right now.
As I write this on December 16 fuel prices around the country are still worryingly high, with average prices ranging from $1.59 in Victoria to $1.63 in New South Wales and as much as $1.85 in the Northern Territory.
But they’ve fallen slightly since October, when they were averaging $1.70 per litre.
Back then, the news was all bad. There were predictions that fuel prices would climb even higher as the festive season approached, even as high as $3.00 per litre, which would add thousands to annual fuel bills for families and businesses.
Now, thankfully, the situation is looking more promising, though the cause of that decline is hardly something to celebrate.
According to stock market news site The Bull, global oil prices are coming under pressure because of concerns over rising COVID-19 cases and the uncertain impact of the Omicron variant, which could reduce demand.
On the 9th of October, OPEC and its allies decided to increase production by 400,000 barrels per day by January 2022, though it’s leaving the door open to changing that if demand weakens.
One factor that could boost supply in the long term is the prospect of improved relations between the US and Iran who’ve started talking again about their nuclear deal.
While that’s unlikely to happen anytime soon, it does hold out the prospect of increased Iranian crude oil exports which could weaken global oil prices and relieve price pressure at the pump in the long term.
The Brent crude oil price has been falling recently and in fact notched up the longest run of weekly declines since 2018, which has to be a bit of good news for motorists who were expecting further pain over the festive season.
The price of imported refined petrol makes up around 47 per cent of the price you pay at the pump, with that share of the fuel price determined by the Singapore price for petrol and diesel.
The other 53 per cent is determined by the Aussie dollar/US dollar exchange rate, government taxes, wholesale and retail costs and margins, local competition and the dynamics of the weekly fuel cycle.
Government taxes make up a large proportion of it, with an excise rate of 38.143 cents per litre on petrol and diesel before they sting you a further 10 per cent GST on the retail price when you fill up.
With so much uncertainty surrounding the Omicron variant of COVID and its impact on the demand for fuel, you’d be brave to predict where the price will be at this time next year, or even in six months’ time.
But for now, at least, Australian motorists can look forward to a festive season happy in the knowledge that while those fuel prices are high, they’re nowhere near as high as the worst of those predictions from just a few months ago.
One guaranteed way to always pay less at the pump at more than 4,500 fuel stations across the country, is with a Fleetcare Fuel Card.
It offers discounted fuel from BP, Shell and Caltex/Ampol service stations, a simple monthly invoice to make paying for it easier, driver support around the clock and e-TAG management to track those tollway transactions.
To find out more about the benefits of a Fleetcare Fuel Card, call us today on 134 333.