The humanitarian disaster in the Middle East will also hit Australian motorists at the bowser, with oil prices spiking 7% in the last week, Jim Chalmers has said.
On Thursday the federal treasurer said that, at US$77 a barrel, oil prices are 11% lower than they were a year ago but motorists were likely pay more due to the “escalation of conflict” in the Middle East.
Chalmers said he did not want to “pre-empt” how much of this would be passed on to motorists but the Australian Competition and Consumer Commission kept an “eagle eye on petrol prices to make sure people are doing the right thing”.
According to ACCC quarterly reports, drivers were paying as much as $2 a litre in east coast capital cities in the June quarter.
But tumbling world oil prices have reduced petrol to as little as $1.50 to $1.60 in some capitals. According to a comparison of other quarters when the crude price was at or above US$77, today’s spike could push prices back above the $1.80 mark.
“We are focused primarily on the human cost of the conflict in the Middle East,” Chalmers told reporters in Canberra. “But there are also economic consequences for the escalation of the conflict there.
“We are seeing a spike in oil, prices and that has consequences for motorists, families, and communities here in Australia and right around the world.”
Chalmers said the “rough rule of thumb” was that every 10% increase in the barrel price of Brent crude oil “if it’s sustained for a year takes about 0.1% off our GDP and it adds about 0.4% to our CPI [inflation]”.
Chalmers said the government was “concerned at a time when the global oil price is increasing, we don’t want to see the service stations take Australian motorists for mugs”.
“And we want to make sure that the global price is appropriately reflected in the price that people pay at the browser.
“People are under enough pressure already. We don’t want to see the service stations do the wrong thing by people.”
The ACCC’s chair, Gina Cass-Gottlieb, said its tracking has shown that “generally we do see, with some lag” a correlation between global oil prices and prices paid by motorists.
“But the monitoring does allow very clear scrutiny and an absolute shining of the light for consumers, which is why we put information in local areas on our website.”
Asked if the spike in oil prices could actually help the Australian budget, as the increase in commodities prices did after Russian’s invasion of Ukraine, Chalmers replied: “I don’t see it that way, and I don’t think in those terms.”
“I think what is happening in the Middle East is a disaster and that’s because we are humans first.
“Too many innocent lives are being lost in a dangerous part of the world. So that’s that primary focus, we’re focused on getting Australians out.”
