Petrol boss defends Brisbane price surge past $2.40

Brisbane motorists are being warned to brace for further pain at the bowser, with unleaded 91 prices in some suburbs already pushing towards $2.40 a litre and diesel creeping past $2.90 in spots. According to the industry body representing fuel retailers, the current price cycle has not yet peaked.

Rowan Lee, chief executive of the Australasian Convenience and Petroleum Marketers Association, the peak body for fuel retailers nationally, says the increase is not isolated to Queensland. Prices have been rising steadily along the entire eastern seaboard since mid-August, driven by a sharp jump in the cost of refined fuel imported from Singapore, the benchmark market Australian retailers buy from.

Lee said the wholesale price of unleaded, measured against the Singapore Mogas 95 benchmark, has surged from around $98 a barrel in July to $130 in recent weeks. Diesel has moved even more sharply, almost tripling from roughly $27 to $75 over the same period. In just the past week alone, Brisbane's wholesale petrol price has risen by 11 cents a litre.

Asked why bowser prices react so quickly when retailers are technically still selling fuel bought earlier at lower cost, Lee explained that pricing reflects the cost of replacing stock, not the original purchase price. Retailers holding tens of thousands of litres in the ground have to factor in what it will cost to refill those tanks once sold, meaning today's price is effectively tomorrow's replacement cost.

Lee pushed back on the idea that this unfairly shifts risk onto motorists, arguing retailers average their margins over weeks and months rather than adjusting day to day. He pointed to a six-week run of falling prices earlier in the year as evidence that the same averaging works in consumers' favour when the cycle turns down.

He also disputed the widely held perception that prices rise quickly but fall slowly, calling it a myth not supported by the Australian Competition and Consumer Commission, which has monitored fuel pricing for 15 years. Lee said the gap between wholesale and retail prices currently sits at 10 to 11 cents a litre, below the long-term 15-cent average tracked by the regulator. After covering wages, insurance and utilities, he said retailers are often left with a margin of just 1.5 to 3 cents a litre.

Fuel retailing and stevedoring remain the only two industries where the ACCC publishes wholesale and retail pricing data, with reporting now occurring weekly rather than quarterly over the past six months, giving motorists more visibility than in most other consumer markets.

With no clear ceiling to the current cycle in sight, drivers across Brisbane and the wider eastern seaboard are being told to expect further increases before any relief flows through at the pump.