Just as Aussies start to breathe a sigh of relief at the bowser, there’s a fresh warning that the worst of the cost pain may not be over.
New analysis shows petrol prices are finally easing, but a hidden diesel crunch and a looming tax change could soon hit households where it hurts most.
Analysis by Primara for Fishbowl Inventory, using Australian Institute of Petroleum data, shows petrol wholesale prices have been sliding by roughly 7.3 per cent per week since their peak in mid-March.
However, wholesale diesel prices remain a staggering 59 per cent above pre-crisis levels, and costs are quietly building behind the scenes.
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In fact, modelling shows diesel could have surged past $4 a litre in March if fuel retailers hadn’t stepped in and slashed their own margins to soften the blow.
At the height of the spike on April 9, margins collapsed to just 1.7 per cent, wiping out 83 cents in every dollar of normal profit in a single week to stop prices from spiralling above the $4 mark.
And while margins have since recovered to around 8.5 per cent, they are still well below the typical 9.8 per cent benchmark.
The analyses from Fishbowl indicate that over the eight-week crisis period, retailers have effectively absorbed a 3.8 percentage point hit rather than passing it on to drivers.
Managing Director APAC at Fishbowl, Simon Jupe, warns that those costs don’t simply disappear, and financial pressure is likely to resurface elsewhere.
“The diesel numbers are the ones businesses managing logistics and supply chains should be watching. Retailers have been running margins nearly four points below normal for eight weeks, with wholesale diesel still 59% above pre-crisis,” Simon said.
“When the July excise lands on top, goods prices become the most probable destination for costs that have so far been absorbed, not passed on.”
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Diesel underpins almost every part of the economy, powering trucks, freight and supply chains that keep supermarket shelves stocked. That means the financial pressure is likely to resurface in the price of everyday goods.
And there’s another sting in the tail.
The temporary federal fuel excise cut, introduced during the crisis, is due to expire in July. If it lapses, it could effectively wipe out weeks of falling petrol prices and pile further pressure onto diesel at the same time.
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As a result, experts warn it could create an inflation risk for goods prices rather than just fuel.
Fuel excise on petrol and diesel is currently halved to 26.3, but typically it is set at a rate of 52.6 cents per litre.
This week the average price for E10 petrol and diesel is 187.1 and 266.0 cents per litre. With the government’s fuel excise, that total is still 213.4 and 292.3 cents a litre.
