Pain at the petrol pump promises to get even worse for Australian motorists with the Russian invasion of neighbouring Ukraine threatening to drive already high prices to record levels in the coming weeks.
So what’s driving it, and why is a war in far off eastern Europe sending our fuel prices higher and higher?
Well surprising though it may seem, Russia is the second biggest exporter of crude oil and refined petrol in the world, as well as the biggest exporter of natural gas.
And right now energy markets around the world are expecting major disruptions to supply, and Western sanctions on Russia, which will probably cut off fuel and gas supplies to Europe.
Australia is just as much a part of the world market for oil and fuel as anywhere else. Some 90% of our fuel is imported and we’re now reduced to just two local refineries producing a mere 10% of our needs.
So the fact that we’re not importing fuel directly from Russia doesn’t matter, when the world’s market for oil and petrol behaves as one.
What motorists pay at the pump is a factor of the international price of refined petrol, transport marketing and retail costs, government taxation, and the strength of the Australian dollar.
International price
Right now, as usual, it’s the international price of petrol that’s the driver. In particular, it’s the price of 95-octane unleaded in Singapore that’s determining it.
So how high can those prices go? Well with such uncertainty at the moment, that’s very hard to judge, but Vlado Vivoda, Senior Lecturer in Strategic Studies (Australian War College), Deakin University, thinks we could soon be paying an average of $2.10/litre.
And just how long those high prices will last is hard to figure out, but a lot will depend on the outcome of the war in Ukraine, and the response of other oil producing nations to the global shortage.
But there’s another factor at play too.
All this international uncertainty has caused the Australian Dollar to drop against the US dollar in the currency race to “safe havens”. As international oil is typically priced in US dollars that puts the local price of fuel up, though the price increase can take about a week to pass through to us at the pump.
But if you reckon $2.10/litre is an outrageous price for petrol you may or may not find a little cold comfort in the thought that Australians pay some of the lowest prices for fuel among the OECD nations.
Discounted fuel
There’s very little good news in any of this, but at least Fleetcare customers are enjoying the benefits of discounted fuel from all of Australia’s major service stations with their Fleetcare Fuel Card.
And the benefits of a Fleetcare Fuel Card don’t end at the pump. You’ll also get in-depth reporting tools on a simple monthly invoice, driver support 24/7 whenever you need it, and easy e-TAG management to make toll management a breeze.
You may not be exactly smiling at the fuel pump as you wave your Fleetcare Fuel Card triumphantly in the air, but we reckon you’ll at least be grimacing a little less!
To find out more about the many benefits of a Fleetcare Fuel Card and start saving on your next refill, contact Fleetcare on 134 333 today.