Weak Aussie dollar and politics conspire to push up fuel prices

MOTORISTS are facing another round of high petrol prices as the Australian dollar slips against the US dollar, forcing crude oil prices up.

Analysts are tipping that prices will reach $1.30 a litre in metropolitan areas and higher in country regions over the next few weeks.

The Australian dollar has moved downwards over the past two weeks by three cents against the US dollar, which is good for exports but not good for imports. The dollar is now around US71 cents, which represents an 18-month low against the US dollar.

The shift and any sustained subsequent pressure on crude oil prices is likely to be a concern for Australian car manufacturers as they gear up for the arrival of their new large six-cylinder sedans.

Toyota and Holden will launch important new models later this year with the Aurion and VE Commodore respectively.

Changing buyer patterns, largely brought on by higher fuel prices, have pressured the large-car segment with sales off 15.5 per cent so far this year, according to VFACTS industry figures.

Last year large-car sales slumped 15.7 per cent, but many car-makers put this down to an ageing of the large car offerings, with only the Mitsubishi 380 being a fresh new offering.

Added to the petrol price woes are global fears of sanctions by the US against Iran over its nuclear program and continuing unrest in Nigeria. Both Iran and Nigeria are vital oil-producing states with Nigeria responsible for most of Africa’s crude exports. Iran is OPEC’s number-two oil producer.

The latest round of petrol price hikes comes as a recent Australian Automobile Association (AAA) survey found the national average petrol price in January of 121.9 cents a litre was 21.5 cents a litre higher than at the same time last year.

In that period the world price of oil increased by 16.4 cents a litre.

AAA executive director Lauchlan McIntosh said the survey showed that regional motorists continue to pay the highest prices – the top 10 prices all coming from regional areas. The five highest average prices recorded in January 2006 were: Eucla, WA (136.9 cents a litre), Coober Pedy, SA (135.7), Tennant Creek, NT (133.1), Alice Springs, NT (131.4) and Carnarvon, WA (129.7).

"We were pleased to note that the average margin between the state and territory capital city and regional prices decreased from 6.7 cents a litre in October 2005 to 3.7 cents a litre in January 2006," Mr McIntosh.

Several factors affect prices from place to place, including state and territory subsidies. The Queensland Government provides the largest subsidy to motorists of 8.4 cents a litre.

Mr McIntosh said the AAA would continue to monitor regional prices closely throughout the year, particularly when the Federal Government discontinues its Fuel Sales Grant Scheme on July 1.

The scheme, which is designed to address the disparity between city and regional prices by a one, two or three cents a litre subsidy to regional retailers, is being discontinued because the Government found it difficult to ensure the scheme’s benefits are actually passed on to consumers.