Explanation of record prices for diesel fuel, warning of further price increases | Biden News


Anyone who drives a diesel car knows that pump station prices are currently at or near record highs, averaging around $2.30 a liter on the east coast.

The Queensland Automobile Club RACQ offered some bad news today, namely: expect prices to rise before they fall.

The club said international factors and buoyant demand were to blame, rather than rampant inflation from service stations and other suppliers, but added that low retail markups were likely to drive further growth.

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“There is a misconception that fuel companies are charging motorists inflated prices for diesel, but in reality retail markups are quite low,” RACQ spokeswoman Lauren Cooney said.

“For example, the current average retail markup for diesel sold in Brisbane is 9.5 cents a litre, normally it’s around 12 cents a litre.”

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Ms. Cooney added that the world is experiencing extremely high diesel prices.

“Russia is a major producer and distributor of diesel, especially in the European market. Due to the ongoing war in Ukraine and sanctions against Russian exports, the world supply of diesel fuel has fallen significantly, which has led to an increase in wholesale prices, which remain incredibly high,” she added.

If we think not only about private transport, then the demand for diesel fuel is much higher than for unleaded fuel. However, the two best selling cars in Australia are the diesel Toyota HiLux and the Ford Ranger.

“Diesel is an industrial fuel and is used much more frequently than unleaded, for example in Queensland we use twice as much diesel as petrol,” Ms Cooney said.

“The cost of diesel is similar to unleaded, and both products are treated the same way. Supply and demand factors drive up prices, not production costs.

“The current average wholesale price for diesel in Brisbane is 226c/l, which is about 50c higher than the unleaded wholesale price of 175c/l. In normal times, local wholesale prices and international base prices for unleaded and diesel would be very similar, usually no more than a few cents apart.

“With the current low retail markup for diesel, the bad news is that prices are likely to continue to rise slightly higher.”


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