Petrol prices set to fall

PETROL is poised to get cheaper with wholesale prices already dropping to a sevenmonth low, a leading economist says.

The average retail cost for unleaded fuel is expected to fall about 6c a litre in the next two to three weeks, saving drivers as much as $8 a month.

CommSec chief economist Craig James said the terminal gate price had shrunk by 3c a litre in the past week to 110.5c a litre and was down 5.5c in the past three weeks.

According to the Australian Institute of Petroleum, the national average unleaded price fell by 2.7c a litre in the past week. Mr James said drivers could soon see even further benefits flow through to bowsers.

Hobart motorists pay some of the highest prices for fuel of all capital cities.

Despite sliding wholesale costs, the gross retail margin (the difference between the pump and terminal gate price) hit a three-month high of 16.38c a litre last week, up from an average 12.57c over the last year.

Mr James said there was typically a lag between wholesale and retail price reductions.

“It takes time for cheaper fuel to get from Singapore to Australia, and for more expensive fuel to be exhausted from petrol bunkers at service stations,” he said.

Tracking prices was also complicated because major cities had peak-and-trough price cycles at different times.

“The average household buys about 30 litres of petrol a week and it still ranks as the single biggest purchase,’’ Mr James said.

“So lower petrol prices represent good news for retailers — especially those marketing more discretionary goods and services.”