Monthly Fuel Price Report August 2015 3 September 2015 The RACQ monthly fuel price report presents a summary of the fuel price trends in Queensland for August 2015. Key points ULP sold in Brisbane was more expensive than the other state and territory capitals, except Sydney and Hobart. Brisbane was 4.8cpl dearer than Melbourne and 4.6cpl dearer than Adelaide. The average price of ULP in Brisbane was 134.5cpl in August. Considering historic costs and margins, a reasonable price would have been 120.1cpl. The price of Brent fell to a six-year low in late August, before rebounding. The diesel price in Brisbane was 1.4cpl, 2.0cpl lower than July. Adelaide was 7.3cpl cheaper than Brisbane, Melbourne was 5.3cpl cheaper and Sydney was 2.7cpl cheaper. Retailers in Ayr and the Gold Coast had the cheapest ULP (14.9cpl and 2.4cpl cheaper than Brisbane, respectively). Ayr was also the cheapest for Diesel, 7.4cpl cheaper than Brisbane. Indicative total margins for ULP were 33.8cpl, equalling June s record high of 33.8cpl. The Saudi CP, the LPG benchmark price for September is 23.4cpl, an 11 year record low. It was last this low in May 2004. ULP prices and margins in Brisbane The average price of ULP in August 2015 was 134.5cpl. RACQ considers that this was an inflated price. For example, applying average fuel company costs and margins from August 2014, in place of the current costs and margins, the average ULP price ends up 14.4cpl lower, at 120.1cpl. Date ULP Retail Price TGP Brent Crude Oil Singapore MOGAS Price Exchange Rate (A$/US$) Retail Total margins remained elevated in August, at 33.8cpl compared to 19.4cpl in August 2014. Total margins include margins enjoyed by the refiners, the wholesalers and the retailers. Historically retailer margins have been the largest, with wholesaler margins slightly lower and refiner margins substantially lower. RACQ uses a model to calculate indicative margins at these three points of the petrol value chain. retail margins across 2014 were 10.8cpl, average wholesale margins were 7.2cpl and refiner margins were 4.9cpl. In August 2015 average retail margins were 9.6cpl, average wholesale margins were 7.2cpl and refiner margins were 15.0cpl. The chart below shows the cost breakdown for a litre of ULP sold in Brisbane across August. Total Aug 2015 134.5 121.6 65.9 91.3 0.7296 11.6 33.8 Jul 2015 141.3 126.9 77.0 102.5 0.7422 13.3 33.2 Jun 2015 144.0 1.3 82.7 109.0 0.7722 12.6 33.8 Q2 2015 143.8 126.1 81.5 103.6 0.7788 16.6.4 Aug 2014 148.0 136.1 111.4 119.6 0.95 10.8 19.4 2014 Aug 2013 151.4 142.0 122.1 129.5 0.9037 8.3 17.9 Aug 2012 145.3 135.4 107.9 120.9 1.0468 8.8 21.4 Aug 2011 144.7 132.5 104.7 116.1 1.0504 11.1 13.9 Page 1 of 6
150 140 1 120 110 100 90 80 70 60 50 40 20 10 0 01/08/2015 03/08/2015 05/08/2015 07/08/2015 09/08/2015 11/08/2015 13/08/2015 15/08/2015 17/08/2015 19/08/2015 21/08/2015 23/08/2015 25/08/2015 27/08/2015 29/08/2015 31/08/2015 Retail Wholesale Refiner Distribution Costs Excise and GST Brent Crude The recent increase in refiner margins can be observed in the chart below. The solid red line shows the -day rolling average of the indicative retail margin (with the daily prices shown as the dashed red line) and the purple line shows the indicative refiner margin. 25 20 15 10 5 0-5 -10 01/04/2014 01/05/2014 01/06/2014 01/07/2014 01/08/2014 01/09/2014 01/10/2014 01/11/2014 01/12/2014 01/01/2015 01/02/2015 01/03/2015 01/04/2015 01/05/2015 01/06/2015 01/07/2015 01/08/2015 Retail margin Refiner margin -day rolling average (retail margins) Price cycles There were two partial price cycles and a failed price hike observed in August 2015. The first cycle started on 15 July, the average price then peaked on 17 July and fell to a low point on 4 August. At this point retailers attempted a price hike. At its peak 50% of retailers had moved to a new high price of 149.9cpl. However, many retailers retained a low price and the price hike failed. ULP prices in Brisbane continued to fall reaching a low point on 18 August. The second cycle started on 19 August, prices peaked on 23 August. At the time of writing the Brisbane ULP market was in the discounting phase of the cycle. Diesel prices in Brisbane Date Diesel Retail Price TGP Price Brent Crude Oil Singapore Gasoil Price Retail Total Aug 2015 1.4 114.6 65.9 83.3 14.7.9 Jul 2015 132.4 119.9 77.0 92.3 11.4 26.3 Jun 2015 132.1 123.8 82.7 100.0 7.2 23.9 Q2 2015 131.4 122.2 81.5 98.6 8.1 24.5 Aug 2014 154.8 140.1 111.4 126.8 13.6 26.5 2014 Aug 2013 158.0 147.9 122.1 139.6 9.0 24.8 Aug 2012 145.2 136.7 107.9 125.3 7.4 22.2 Aug 2011 144.4 134.8 104.7 120.8 8.5 16.4 Page 2 of 6
The average price of diesel was 1.4cpl in August. RACQ considers that this price was slightly inflated. For example, applying average fuel company costs and margins from August 2014, in place of the current costs and margins, the average diesel price ends up 4.4cpl lower, at 126.0cpl. Comparison to other capital cities In August 2015, ULP sold in Brisbane was more expensive than the other state and territory capitals except Sydney and Hobart. Indicative retail margins in Brisbane were greater than Darwin, Melbourne and Adelaide. Melbourne was the cheapest capital for ULP, 4.8cpl cheaper than Brisbane. Adelaide was 4.6cpl cheaper than Brisbane, Darwin was 1.5cpl cheaper, Perth was 0.8cpl cheaper, and Canberra was 0.2cpl cheaper than Brisbane. ULP sold in Sydney was 0.4cpl more expensive and Hobart was 6.9cpl more expensive. The table below presents the average August prices and retail margins on ULP and diesel for Australia s capital cities, with the change compared to July in parentheses. City ULP Price ULP Retail * Diesel Price Diesel Retail * Adelaide 129.9 (-6.7) 7.8 (-1.6) 123.1 (-7.6) 6.1 (-3.5) Brisbane 134.5 (-6.8) 11.6 (-1.6) 1.4 (-2.0) 14.7 (3.4) Canberra 134.3 (-6.7) 11.7 (-1.6) 131.0 (-3.9) 20.0 (6.3) Darwin 133.0 (-0.6) 7.5 (4.8) 138.5 (-0.2) 20.4 (5.2) Hobart 141.4 (-1.3) 13.8 (3.7) 142.0 (-0.9) 21.2 (4.3) Melbourne 129.7 (-3.1) 7.5 (2.0) 125.1 (-2.2) 10.0 (3.3) Perth 133.7 (-3.9) 11.9 (1.4) 135.8 (-1.4) 21.1 (4.3) Sydney 134.9 (-3.5) 12.2 (1.5) 127.7 (-2.6) 16.6 (7.6) * The retail margin is the average retail price minus the average local TGP and local freight costs (assumed to be the same as Brisbane: 1.12cpl). The TGP varies between cities. Diesel sold in Brisbane was more expensive than Adelaide, Melbourne and Sydney. All the other capitals were dearer. Adelaide was 7.3cpl cheaper than Brisbane, Melbourne was 5.3cpl cheaper and Sydney was 2.7cpl cheaper. Fuel prices across Queensland Ayr had Queensland s cheapest ULP in August 2015, 14.9cpl cheaper than Brisbane. The Gold Coast was 2.4cpl cheaper than Brisbane, with all other centres more expensive than Brisbane. Ayr also had the cheapest diesel in Queensland (7.4cpl cheaper than Brisbane), followed by Maryborough and Tully (2.9cpl and 2.4cpl cheaper, respectively). Ipswich, Gympie and the Sunshine Coast were also cheaper than Brisbane. All the other centres were more expensive. The table below presents the average August 2015 prices and retail margins on ULP and diesel for Queensland localities, with the change compared to July 2015 in parentheses. Locality ULP Price Indicative ULP Retail * Diesel Price Indicative Diesel Retail * Brisbane 134.5 (-6.8) 11.6 (-1.6) 1.4 (-2.0) 14.7 (3.4) Gold Coast 132.1 (-6.1) 8.7 (-0.9) 1.6 (-1.8) 14.5 (3.6) Sunshine Coast 135.3 (-4.9) 11.2 (0.3) 129.7 (-1.6) 12.9 (3.8) Atherton 147.6 (-0.3) 21.7 (5.1) nd nd Ayr 119.6 (-2.8) -6.7 (2.7) 123.0 (-3.8) 4.9 (1.9) Biloela 147.5 (-0.6) 21.2 (4.6) 139.9 (0.0) 21.7 (5.2) Blackall 155.8 (-0.6) nd 143.0 (-4.4) nd Blackwater 142.7 (-5.2) 13.8 (0.0) 137.6 (-2.3) 16.9 (2.9) Bowen 147.3 (-0.1) 20.6 (5.4) 135.9 (-0.6) 17.5 (5.0) Page 3 of 6
Locality ULP Price Indicative ULP Retail * Diesel Price Indicative Diesel Retail * Bundaberg 136.7 (-8.6) 10.6 (-3.4) 132.5 (-3.9) 13.6 (1.5) Cairns 148.2 (-0.6) 22.6 (4.9) 141.2 (-0.7) 23.2 (4.8) Charleville 137.2 (0.0) 6.1 (5.2) 143.4 (1.1) 19.5 (6.5) Charters Towers 146.4 (-0.9) 19.7 (4.6) 138.9 (-1.2) 20.5 (4.5) Childers 139.0 (-4.1) nd 1.0 (-6.5) nd Cloncurry 152.4 (0.9) 20.3 (6.4) 146.8 (0.0) 22.9 (5.7) Cunnamulla 149.4 (-7.0) 18.6 (-1.8) 153.9 (0.5).4 (5.9) Dalby 143.8 (-1.2) 19.3 (4.0) 138.0 (-1.1) 20.7 (4.3) Emerald 140.6 (-1.8) 12.9 (3.4) 138.8 (-0.3) 19.2 (4.9) Gladstone 139.5 (-3.5) 13.6 (1.7) 135.9 (-2.4) 18.3 (2.9) Goondiwindi 140.8 (-5.3) 13.8 (-0.2) 133.9 (-5.3) 14.2 (0.1) Gympie 135.9 (-2.0) 11.6 (3.1) 129.1 (-5.4) 12.1 (0.0) Hervey Bay 140.0 (-2.9) 15.2 (2.2) 133.5 (-5.5) 16 (-0.1) Ingham 146.3 (-0.2) nd 137.9 (-1.4) nd Innisfail 147.5 (-0.4) 21.2 (5.0) 139.7 (-0.2) 20.9 (5.3) Ipswich 135.2 (-1.3) 11.8 (3.8) 128.6 (-1.6) 12.5 (3.8) Kingaroy 143.4 (-1.5) 17.9 (3.7) 132.8 (-5.0) 14.5 (0.4) Longreach 151.2 (-0.7) 16.6 (4.5) 145.5 (-3.1) 19.0 (2.1) Mackay 144.5 (-2.6) 18.7 (2.9) 138.7 (-1.7) 21.9 (4.0) Mareeba 145.7 (-0.7) 19.2 (4.7) 137.3 (-0.7) 18.3 (4.9) Maryborough 135.5 (-1.5) 10.5 (3.7) 127.5 (-6.1) 9.8 (-0.7) Miles 144.9 (-1.5) nd 139.9 (-1.7) nd Moranbah 135.8 (-2.0) 6.9 (3.4) 135.7 (-1.3) 15.8 (4.4) Mt Isa 148.0 (-0.5) 15.0 (5.0) 140.0 (-1.1) 15.3 (4.6) Normanton nd nd 139.8 (-1.0) 14.4 (4.5) Rockhampton 145.4 (-1.8) 19.0 (3.4) 133.0 (-6.0) 14.8 (-0.8) Roma 144.9 (0.0) 18.1 (5.2) 137.1 (1.8) 17.5 (7.2) Toowoomba 141.7 (-1.8) 17.7 (3.4) 139.1 (-0.8) 22.3 (4.6) Townsville 144.9 (-2.4) 19.8 (3.1) 137.6 (-2.0) 20.9 (3.7) Tully 147.6 (-0.3) nd 128.0 (-7.5) nd Warwick 136.0 (-4.3) 11.8 (0.9) 138.4 (2.1) 21.4 (7.5) Yeppoon 144.8 (-1.2) 17.7 (4.1) 139.2 (-0.2) 20.3 (5.0) * The retail margin is the average retail price minus the average local TGP and local freight costs. The TGP and freight costs vary between cities. This indicative margin is calculated on the monthly average TGP and retail price. A time lag is not included in this calculation. Liquid Petroleum Gas (LPG) The average price of LPG in Brisbane fell by 0.8cpl in August 2015 to 65.2cpl. The average difference between the Brisbane retail LPG price (excluding excise and GST) and the international benchmark price the Saudi Aramco Contract Price (the Saudi CP) in August 2015 was 19.9cpl, 0.3cpl greater than in July. The new Saudi CP for September is 23.4cpl, an 11 year record low and 3.2cpl lower than August. The Saudi CP was last this low in May 2004 (22.6cpl). In May 2004 the ex-tax difference between the retail price and the Saudi CP was 17.3cpl. The chart below displays the retail price of LPG in Brisbane and Saudi CP. Page 4 of 6
80 70 60 50 40 20 10 0 /08/2015 23/08/2015 16/08/2015 09/08/2015 02/08/2015 26/07/2015 19/07/2015 12/07/2015 05/07/2015 28/06/2015 21/06/2015 14/06/2015 07/06/2015 31/05/2015 24/05/2015 17/05/2015 10/05/2015 03/05/2015 26/04/2015 19/04/2015 12/04/2015 05/04/2015 29/03/2015 22/03/2015 15/03/2015 08/03/2015 01/03/2015 LPG Saudi CP Global trends, oil price and the benchmark petrol price The graph below displays the average Brisbane retail and wholesale ULP prices, the daily Brent crude oil price, the weekly Tapis crude oil, the weekly MOGAS price, all in cents per litre (A$), and the US$/A$ exchange rate (plotted against the right-hand axis in A$ per US$) 160 150 140 1 120 110 100 90 80 70 60 50 40 /08/2015 23/08/2015 16/08/2015 09/08/2015 02/08/2015 26/07/2015 19/07/2015 12/07/2015 05/07/2015 28/06/2015 21/06/2015 14/06/2015 07/06/2015 31/05/2015 24/05/2015 17/05/2015 10/05/2015 03/05/2015 26/04/2015 19/04/2015 12/04/2015 05/04/2015 29/03/2015 22/03/2015 15/03/2015 08/03/2015 01/03/2015 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 ULP TGP ULP Brent Crude MOGAS Tapis Crude US$/AU$ Exchange Rate The price of Brent crude oil in Australian dollars fell to a six low in August. Brent started August at A$70.7/bbl (US$51.8/bbl), falling to a low of A$59.4/bbl (US$42.7/bbl) on 25 th August, before rebounding strongly and ending the month at A$76.0/bbl (US$54.2/bbl). Brent was last selling for below A$60/bbl in early 2009. The low oil price was due to an oversupply of oil and softening demand. China s economic slowdown has resulted in falling commodity prices, most notably for Australia, iron ore and coal, but also oil and gas. As the oil price has fallen below the breakeven price for some oil extraction (estimated to be between and 60 US$/bbl) oil production has slowed. The effect has been greatest in the US where extraction of expensive shale oil has fallen considerably. The price of MOGAS compared to Brent softened slightly in August but remains high compared to the historic difference. This elevated price difference is reflected in the higher refiner margins observed in Australia. Outlook Despite substantial falls in August, the price of Brent started and ended August at a similar point. Oil production is likely to remain greater than demand so any substantial increase in the price of oil is unlikely. Page 5 of 6
There are increasingly vocal calls to end the US prohibition of oil exports. Allowing exports of US produced oil would bolster US shale oil producers and could lead to an increase in the WTI price. It may also lead to a softening of the Brent and Tapis price as global oil supplies increase. While there may be further fluctuations in the Brent oil price, the price is likely to remain close to US$50/bbl. The next monthly fuel price report will be released in early October. For more information about recent movements in retail fuel prices, please view RACQ s Fair Fuel Price service at www.racq.com.au. Data sources All data presented in this report are RACQ calculations using MotorMouth.com.au, FUELtrac, RBA, ATO, AIP, Bloomberg.com, BP, Viva Energy, Caltex, Mobil, United, Freedom and Puma data. Page 6 of 6