What's affecting current prices?

Following the volatility experienced in prices in the second half of 2008, average Australian retail petrol prices have experienced a period of stability, fluctuating narrowly between 110 cents per litre (cpl) and 130cpl since early 2009.

However, the Singapore price for petrol, MOPS95, which is the benchmark for Australian regular unleaded petrol pricing, is currently at its highest level since October 2008.

Oil industry analysts expect that product demand will increase with an economic recovery, but suggest that the market will remain bearish for the short term. The International Energy Agency recently cut its estimate of world oil demand growth in 2010, saying         that despite recent rises in prices and global stock markets, there was little firm evidence so far of the global recession ending, and that world oil stocks remained high in the face of weak demand.

The recovery of China and India is likely to impact regional petrol prices, which will flow through to Australia.

Updated: September 2009

The Singapore price factor

The price of all fuel sold by Caltex is calculated using an import parity price as a basis - that is, what it would cost to land fuel from Singapore refineries into Australian terminals. This includes the Singapore benchmark price for refined petrol or diesel, the addition of a quality premium to take into account Australia's high fuel standards, plus shipping costs and cargo insurance. This is then converted from US dollars per barrel into Australian cents per litre. Australian refineries must compete with this import parity price.

How Caltex calculates petrol prices

	US$ PER BARREL (12/6/2009)	AUSTRALIAN CENTS PER LITRE
Price of petrol from Singapore refineries	76.81
Add negotiated quality premium	2.75
Add shipping costs Singapore to Australia	2.04
Add cargo insurance	0.28
Subtotal - convert to Australian cents per litre	81.88	65.19
Add Australian port costs		0.2
Import parity price		65.39
Add government fuel excise		38.14
Subtotal - import parity price + excise		103.53
Add wholesale margin		varies
Subtract wholesale discounts		varies
Add freight		varies
Add retail margin		varies
Subtotal (indicative only)		114.55
Add 10% GST		11.45
Retail price (indicative only)		125.9

Notes to chart:
* One barrel holds 159 litres
* The Singapore refinery price is estimated daily by Platts, an international information service
* The margins above are inclusive of operating costs, wages and any loan payments and are not indicative of profit margins

Don't forget the fuel excise

For every litre of petrol or diesel, whether it is imported from overseas or made here in Australia, an excise of 38.14 cents is collected by the Australian government.

The wholesale level

Once the import parity price plus excise is determined, Caltex adds a wholesale margin, which allows us to stay in business and continue to invest in the future, as well as the cost of any freight to deliver it to customers. From here, wholesale price discounts may be offered to meet competition.

At the bowser

In a Caltex-branded network of about 1700 service stations, Caltex sets the price at less than 300 sites. Woolworths sets the price at more than 500 Caltex-Woolworths and Caltex-Safeway co-branded stations, and franchisees, resellers and independent retailers set the price at the remainder of retail sites. When setting prices, retailers need to consider the wholesale price they paid and price competitively according to other retailers in the local market. The final price also includes 10 per cent GST.