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Fuel prices are influenced by a variety of factors, including international and domestic elements, and they can change at any time, although it's usually early in the morning. The price of petrol can fluctuate from day to day and week to week, and there are predictable and unpredictable factors that affect the price of fuel. The two biggest factors are the international benchmark price and the strength of the Australian dollar. The price of fuel is not set or controlled by the Australian government.
| Characteristics | Values |
|---|---|
| Petrol price cycle | The cycle varies in size and length in different cities. The cycle only applies to unleaded petrol. |
| Petrol price cycle in Perth | A weekly cycle, with prices lowest on Tuesdays. |
| Petrol price cycle in Adelaide | A shorter cycle, lasting around two weeks. |
| Petrol price cycle in Sydney, Melbourne, and Brisbane | A longer cycle, lasting around seven weeks. |
| Petrol price cycle in Canberra, Hobart, and Darwin | No price cycle. |
| Factors affecting the price of petrol | International benchmark price, strength of the Australian dollar, manufacturing costs, supply and demand, competition, and conflict. |
| Time of day for price change | Usually early in the morning, around 4 am. |
| Process for price change | If prices are going up, change signage first, then the pump price. If prices are going down, change the pump price first, then the signage. |
What You'll Learn
Petrol price cycles
The Australian Competition and Consumer Commission (ACCC) monitors petrol price cycles and provides buying tips for consumers. According to the ACCC, petrol prices usually increase sharply in a shorter period and then gradually decline over a longer period. For example, in 2023, the average duration of price cycles in Sydney and Melbourne was around 6 weeks, while in Brisbane, it was around 7 weeks. Perth, on the other hand, has regular weekly price cycles.
Drivers can use petrol price cycles to their advantage by planning their fuel purchases during the low points of the cycle. This can help save money in the long run, as filling up a tank during the high points of the cycle can be more expensive. Additionally, not all service stations follow the cycle, so shopping around for the lowest prices can be beneficial.
The time of day when gas stations change their prices can vary, but it is often done early in the morning, around 4 am. If prices are going up, the signage is changed first, followed by the price on the pumps. If prices are going down, the opposite is done to ensure customers never pay more than the signed price.
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The impact of global factors
Fuel prices are influenced by a multitude of global factors, which can be grouped into two categories: macroeconomic and microeconomic factors. Macroeconomic factors influence the industry as a whole, whereas microeconomic factors influence the price that consumers pay.
Macroeconomic Factors
Global Weather Patterns and Disruptions
Weather events can cause local states of emergency, which may require retailers to maintain the margin of a previous period, affecting their pricing strategies. Disruptive weather can also cause supply chain disruptions or changes in consumer demand, which can influence fuel price changes.
Geopolitical Crises and International Relations
Events such as conflicts in the Middle East and refinery outages can cause real or perceived supply disruptions, impacting fuel prices. The Organization of Petroleum Exporting Countries (OPEC) significantly influences oil prices by setting production limits among its members. For instance, the decline in oil prices since July 2014 has been attributed to OPEC nations not limiting production, resulting in a global surplus.
Global Demand and Economic Growth
The cost of crude oil, which accounts for a significant portion of the retail price of gasoline, is influenced by global demand. In recent years, world economic growth and increased access to vehicles, particularly in developing nations, have contributed to rising global demand.
Microeconomic Factors
Competitor Prices and Market Dynamics
Retailers closely monitor competitor prices and market dynamics when making pricing decisions. They consider their market position, location, facilities, operations, merchandising, brand, and pricing power relative to their competitors.
Strategic Imperatives and Revenue Goals
Retailers' goals for revenue, cash flow, and profit across their stations or networks can impact fuel price changes. If retailers fall short of their financial targets, they may stimulate growth by adjusting fuel prices.
While fuel prices are influenced by various global factors, it's important to note that local factors, exchange rates, and government policies also play a role in determining fuel prices in specific regions or countries.
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The role of local factors
In Australia, for example, the Australian Competition and Consumer Commission (ACCC) has observed that local factors impact retail prices. These factors can include local competition and the pricing decisions made by wholesalers and retailers in a particular area.
One notable local factor is the petrol price cycle, which is influenced by the deliberate pricing policies of petrol retailers. This cycle is not driven by wholesale price changes but rather by the retailers themselves. The cycle typically involves a sharp increase in prices, followed by a gradual decline over several days or weeks. The length of these cycles can vary, and they are most prominent in major cities like Sydney, Melbourne, Brisbane, Perth, and Adelaide.
Additionally, the cost of fuel in different locations can vary due to factors such as transportation costs. For instance, fuel in Alice Springs may be more expensive than in Adelaide due to the extra cost of transporting it through the Australian outback.
Local factors, such as those mentioned above, play a crucial role in shaping fuel prices in specific regions and cities. These factors interact with global influences and exchange rates to determine the price that consumers pay at the pump.
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How to get the best petrol price
Getting a good deal on petrol can be tricky, especially as prices fluctuate and are influenced by a range of factors. Here are some tips on how to get the best petrol price:
Understand the Petrol Price Cycle
Petrol prices are influenced by both international and domestic factors. In some countries, such as Australia, petrol prices move in cycles, with prices steadily decreasing and then sharply increasing. These cycles are the result of pricing policies set by petrol retailers and can be tracked to help you decide when to buy petrol.
Use Price Comparison Tools
Take advantage of fuel price apps and websites that allow you to compare prices across different petrol stations. These tools can help you find the cheapest fuel in your area. Some government-run online tools and apps are also available in certain states or territories, designed to help drivers save money.
Shop Around
Don't be afraid to shop around for the best fuel price. Even within the same city or region, prices can vary between petrol stations. Supermarket petrol stations, for example, often offer great value and convenience. Additionally, consider signing up for alerts or checking dashboards on price comparison websites to stay informed about the latest fuel prices.
Plan Your Refuelling
If you know there are regular cycles or patterns to price changes, try to plan your refuelling accordingly. For instance, if prices tend to be lower on Tuesdays, make that your designated refuelling day. Or, if prices are increasing, consider topping up with smaller amounts instead of filling your tank, and vice versa when prices are decreasing.
Choose the Right Payment Method
Some retailers offer incentives or rewards for specific payment methods. For example, Costco offers exclusive fuel savings to its members. Similarly, Tesco offers club card points on fuel purchases. By choosing the right payment method or retailer, you can maximise your savings or earn rewards.
Check for Updates
Fuel prices can change at any time, but they are usually updated early in the morning. Keep an eye out for price changes, especially if you notice a pattern in the timing of updates. This can help you take advantage of lower prices before they change.
By following these tips and staying informed about fuel prices, you can optimise your refuelling strategy and get the best petrol price.
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The process of changing fuel prices
The specific timing of price changes can vary. Generally, they occur early in the morning, with signage and pump prices updated accordingly. If prices are going up, retailers change the signage first, followed by the pump prices. If prices are decreasing, the pump prices are changed first, followed by the signage. This ensures that customers never pay more than the advertised price.
While there is no universal rule for when retailers change their prices, they often follow the lead of their competitors. Additionally, unexpected events, such as a refinery fire, can trigger a sudden price change due to a significant increase in wholesale prices.
To make informed purchasing decisions, consumers can utilise tools like fuel price apps and websites, which provide real-time or advanced information about fuel prices in their area. These tools leverage data from government fuel price transparency schemes, where retailers are required to report their prices within a certain timeframe of a change. By tracking these cycles and purchasing during low points, consumers can save a significant amount of money over time.
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Frequently asked questions
Typically, fuel prices are changed early in the morning, with 4 am being a common time. Occasionally, a fuel station may change prices at midday, but this is rare and usually due to an unexpected event that impacts the wholesale price of fuel.
There is no universal rule for when fuel prices change. Gas station owners can change their prices whenever they want, but they usually follow a similar schedule to competing stations in the area.
Fuel prices can change daily or weekly, and the cycle varies by location. For example, Perth has a weekly price cycle, while other cities like Sydney, Melbourne, and Brisbane have longer cycles that can last several weeks.
The two biggest factors are the international benchmark price for petrol and the strength of the local currency (in this case, the Australian dollar). Other factors include manufacturing costs, supply and demand, competition, and political stability in oil-producing countries.
By understanding the petrol price cycles in your area and planning your fuel purchases accordingly. You can use tools like the Australian Competition and Consumer Commission (ACCC) website, which provides average price charts and buying tips, or fuel price apps like FuelCheck, Fuel Map, and GasBuddy.
