Petrol prices may hit $2.20 a litre within weeks as service stations raise bowser rates to multi-month highs, motorists have been warned.
Daily average petrol prices across Sydney, Melbourne and Brisbane sit at 191 cents per litre (cpl) after a 23 per cent hike since prices bottomed two weeks ago, according to MotorMouth data.
It is the fastest rise in bowser bills since motorists suffered record-high prices earlier this year, prompting the government to cut petrol taxes.
But that 22.3 cpl fuel tax cut will expire within days, causing another big rise in household petrol bills throughout October.
Retailers are hiking prices even before the tax cut expires to drive profits, general manager of fuel-price tracking firm Fueltrac Geoff Trotter said.
Service stations want to get “as close to 195.9 cpl as they can” in a bid to “lock in higher gross margins” before the fuel tax kicks in, he said.
Motorists are being urged to fill their tanks before the Thursday tax deadline, so demand for petrol is set to soar.
“Post-Thursday [after the tax cut expires] they will add excise plus GST (i.e. 25 cpl) to set a new pump price of 220.9 cpl,” Mr Trotter told TND.
“What a win for the oil companies.”
Treasurer warns retailers
It comes as Treasurer Jim Chalmers warned petrol retailers against hiking bowser prices to reflect the reintroduction of fuel excise straight away.
He said last week there was an estimated 700 million litres of fuel that was taxed at the lower rate that needs to be sold first before prices increase.
This meant it should take a few weeks for the higher tax to be reflected in bowser prices, but Mr Trotter speculated many retailers won’t hold off.
“I doubt they will worry about the fact that all of their existing stock was delivered at the half excise rate,” he said.
“They will attempt to also get a stock profit of 22.3 cpl on that as well.”
Petrol prices soar
The latest rise in petrol prices, which began two weeks ago, came after more than a month of falling prices on the back of the fuel tax cut and an easing in global oil markets during July and August.
Retailers aggressively raised bowser rates across big cities even though wholesale petrol prices continued falling in September.
Average petrol prices rose an astonishing 37 cpl in Melbourne, 35 cpl in Sydney and by 34 cpl in Brisbane over the past fortnight.
The steepest of those rises occurred in the past week, despite new data showing wholesale petrol costs were still falling in those cities.
Australian Institute of Petroleum figures published on Monday revealed national average wholesale petrol costs fell 1.37 per cent to 150.2 cpl last week, despite pump prices rising 6.3 per cent to 173.9 cpl.
CommSec senior economist Ryan Felsman said a reintroduction of fuel taxes is “unfortunately” coinciding with the hike side of Australia’s east coast fuel price cycles, setting the stage for bowsers to hit $2.20 a litre.
“It’s just a matter of the retail [price] cycle playing out,” he told TND.
“It’s not a situation whereby they’ve been jacking up prices ahead of the excise expiring … there’s no untoward reason.”
But Mr Felsman did say the growing gap between wholesale and retail petrol prices was evidence that service stations were protecting profits.
Typically margins expand when prices rise because retailers are trying to recoup losses incurred during periods of discounting, he said.
“There’s a massive gap between the retail and wholesale prices at the moment,” Mr Felsman said.
The consumer watchdog has been tasked with monitoring retailers to ensure motorists don’t get ripped off as the fuel tax holiday expires.
