Understanding the Breakdown of Costs at the Petrol Pump

In Australia, petrol prices are determined by a mix of global and local factors. The price you see at the pump is influenced by the cost of refined petrol, taxes, and industry operating costs and margins.

Global Factors

• Benchmark Prices: Global benchmark prices for petrol, like Singapore Mogas 95, are a major influence on Australian petrol prices. Changes in these benchmark prices can take around two weeks to flow through to Australian cities and even longer in regional areas.
• Australian Dollar: The Australian dollar also affects petrol prices. A weaker Australian dollar means imported petrol becomes more expensive.

Local Factors

• Refined Product Cost: This includes the cost of shipping refined petrol to Australia from refineries or import terminals in Singapore, South Korea, Malaysia, and India.
• Taxes: Australian petrol prices include excise and GST which make up around a third of the price at the pump.
• Industry Operating Costs and Margins: These include the costs of wholesaling, retailing, and marketing petrol, as well as the profits made by service station operators.

Breakdown of the Petrol Pump Price

The typical Australian petrol pump price breaks down into the following components:

Refined product cost or landed cost (57%)

Singapore petrol price (MOGAS 95)

Shipping cost

Other costs (including quality premium, insurance and loss, wharfage costs)

Taxes (31%)

• Excise (47 cents per litre)
• GST (10%)

Industry operating costs and margins (11%)

• Wholesale operating costs
• Retail operating costs
• Land transport costs

Regional Variations in Petrol Prices

Petrol prices tend to be higher in regional areas than in capital cities. This is because of the additional transportation costs of getting petrol to regional areas.

Australia Compared to Other OECD Countries

Despite regional variations, Australian petrol prices are generally lower than those in other OECD countries in the Asia-Pacific region, even after accounting for taxes.

Sources

Australian Institute of Petroleum Australian Institute of Petroleum

Australian Competition and Consumer Commission Australian Competition and Consumer Commission