AA PetrolWatch – October 2005
Fuel prices for October
At the beginning of October, the price of 91 octane was around $1.52/litre.
During the month pump prices dropped 3cpl early in the month and importer margins then rose quickly mid month. Towards the end of the month pump prices dropped by 4cpl, 2cpl and then 3cpl for three pump price falls in a week.
Pump prices for 91 octane ended the month around 12c/litre lower for the month. This is very welcome news for motorists.
Whilst prices have eased over the month it is still too soon to predict a longer term trend of price reductions.
Importer margins were above average for the month. The AA recently sought feedback from the oil companies to get a feel for where things are headed. They reported that the market is still very volatile with strong demand. Some said it was now harder to secure fuel cargoes and they were sourcing product from more distant markets. The reasons given were high demand and limited refinery capacity, around 10% of USA refinery capacity is still closed.
“It is very important that whether prices are rising or falling that good information is provided by the oil companies to motorists at the time of price changes to explain the underlying reasons for price movements”, Mike Noon AA’s Motoring Affairs Manager said.
The AA advises motorists to watch service station price sign boards and to look for the best prices.
Diesel versus petrol prices
A notable recent change in the market is that the relative prices of diesel and petrol have reversed on international markets, with diesel on the spot market now more expensive than petrol.
Diesel pump prices broke the $1/litre mark at the beginning of September and unlike petrol prices they have not fallen at all through October. This leads to pressure on the budgets of users of diesel, including freight firms, industrial, fishing and agricultural machinery, bus companies, and small businesses as well as owners of light diesel vehicles.
Diesel is however still cheaper than petrol at the pump. This is because there are less excise taxes on diesel fuel compared petrol but diesel vehicles are also required to pay Road User Charges separately.
Demand for diesel worldwide is currently high and this effecting prices. Demand is being driven by a general worldwide increase in diesel usage and the USA and Europe moving into winter where diesel is used for domestic heating.