[CommSec Research]Monthly household fuel bill hits $200

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Monthly household fuel bill hits $200

Weekly Petrol Price; Imports

¾ According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.5 cents per litre to 143.2 cents a litre in the week to March 20 – a near 29 month high.

¾ Over the past five weeks the national average price has lifted by 8.4 cents per litre – marking the biggest five weekly gain in two years. Given rises in regional prices there is still risk of a modest lift to petrol prices in the coming fortnight

¾ In seasonally adjusted terms imports rose by 6 per cent in February. The rise in imports was largely due to the sharp increase in global oil prices. The fuels and lubricants component rose $561m (26 per cent) in February. CommSec expects a trade suplus of $1.5 billion for February.

¾ The average household is now forking out $200 a month to fill the car up with petrol – an increase of $25 in just the last four months.

¾ Across capital cities Canberra motorists are paying the highest price for petrol at almost a $1.49 a litre. In contrast Adelaide has the cheapest prices by a huge margin with the average price at $1.35 a litre.

What does it all mean?

· The cost of petrol continues to be the topic of conversation around the water cooler and it is not surprising given that the national average petrol prices has surged by almost 13 cents a litre in the space of 10 weeks and is now holding at fresh 29-month highs. In fact since mid January the weekly national price has only fallen in just once.

· The political instability in the Middle East and North Africa is the key driver of near term prices. And given the military strikes on Libya over the weekend, and escalating unrest in the region, the global oil price is likely to remain volatile – and as such have a further bearing on domestic pump prices.

· Interestingly the debate about oil companies taking advantage of the current turmoil, and lifting petrol prices well above the norm, can be put to rest. Over the past five weeks the wholesale (terminal gate) price has risen by nine cents a litre, while the retail pump prices has risen by a similar 8.4 cents a litre, suggesting that the hike in retail prices is in line with what is taking place on a global front.

· Most of the gains in the wholesale price have filtered through to domestic petrol prices, however looking forward, it is unlikely that motorists are likely to get a reprieve in coming weeks. Over the past week the Singapore unleaded price has jumped by a further $2 a barrel (exacerbated by the weakness in the Australian dollar) and this will be reflected on petrol signboards around the country.

· CommSec expects pump prices to increase by a further 2 cents a litre in the next fortnight, taking the national average price to around $1.45 a litre.

What do the figures show?

Petrol prices:

· According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.5 cents a litre to 143.2 cents a litre in the week to March 20. The metropolitan price rose by 0.1 c/l to 142.9 c/l, while the regional average price rose by 1.2 c/l to 143.8 c/l.

· Average petrol prices across states over the past week were: Sydney (up 0.3 cents to 143.5 c/l), Melbourne (up 0.2 cents to 142.4 c/l), Brisbane (up 0.3 cents to 145.9 c/l), Adelaide (down 6.1 cents to 135.0 c/l), Perth (up 1.5 cents to 143.0 c/l), Darwin (up 1.9 cents to 146.3 c/l), Canberra (up 11.3 cents to 148.6 c/l) and Hobart (up 0.6 cents to 146.1 c/l)

· The national average wholesale (terminal gate) hit a fresh 29-month high of 135.4 cents a litre on March 15, having since eased by 1.1 cents a litre to 134.3 cents today.

· Last week, the key Singapore unleaded petrol price rose by US$1.08 (0.9 per cent) to US$121.90 a barrel. And in Australian dollar terms the Singapore gasoline price rose by $2.23 (1.9 per cent) over the week to $122.70 a barrel.

Merchandise imports

· Imports rose by 6 per cent in seasonally adjusted terms in February according to the Australian Bureau of Statistics. Intermediate goods rose by 12 per cent while capital goods rose by 2 per cent.

What is the importance of the economic data?

· Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum. National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions.

· The ABS figures on imports refer to physical goods such as cars and computers. The figures are not adjusted for seasonal effects. The data is useful in highlighting the strength of consumer and business spending and gives some guidance as to the likely trade position in the month. But analysis can be clouded by currency changes.

What are the implications for interest rates and investors?

· The lift in the price of petrol is further bad news for motorists, taking precious spending dollars out of consumer pockets. Retailers already have to contend with the effects of the weather on seasonal spending, consumer conservatism and higher utility prices.

· The rising fuel prices are likely to entrench the current conservative behaviour of consumers. Our equity analysts are maintaining HOLD recommendations for both Woolworths and Wesfarmers.