The conflict in the Ukraine is being blamed for the hike in prices at the bowser. The general excuse given by oil companies, politicians and anyone who cars to weigh in on the debate is “The conflict between Russia and the Ukraine”.
Russia is the worlds second largest supplier of Crude oil making the explanation easily digestible even if the pricing is putting the average household under financial pressure.
However, the facts are Australia does not buy its Crude oil from Russia. Why then is the Australian fuel market seeing the price hike?
As of 2022 Australia’s main fuel suppliers are Kora, China, Singapore and Mtaylasia. We do refine some of our crude oil within Australia but our home grown efforts can not solely serve the demands of the Australian market.
This was not always the case. Prior to the mass closure of industry in Australia. ( an era that saw a huge part of industry either privatised or shipped off shore to keep costs down) Australia used to refine ninety percent of its crude oil in house.
The accusation then can be made for price fixing. Politicians, fuel companies and any third party involved is under fire for what the consumers believe is unethical or even unlawful business.
This is not actually accurate. First we need to understand how the fuel pricing works.
There are two main factors that determine the price of the fuel at the bowser.
- The international price of refunded oil. (This has been inflated as a result of the conflict)
- Taxes imposed on the oil companies by the Australian Government
This means that whilst we don’t actually by our crude oil and its byproducts from Russia, the supply from Russia does directly effect the cost of crude oil from all countries. (this model of pricing does suggest a mild form of price fixing on a global scale)
The second factor int he pricing is tax. This is something that the Morrison government has verbalised an intention to combat this. Time will tell.