At the petrol pump today unleaded petrol was a $1.33 a liter with diesel $1.16 a litre. The past week or so is the first time that unleaded has been more expensive than diesel. Unleaded dropped below $1/litre when the price of oil dropped below $40 per barrel. The current price is $37 per barrel but unleaded is 30% more expensive.
The formula is fairly easy to calculate: price per barrel in Singapore times exchange rate plus profit margin. Given that the exchange rate is about the same as it was when unleaded was under $1/litre then the only variable is profit. Put simply the local oil companies are gouging the local consumers. Diesel is around the correct price based on current oil barrel prices but we are paying 30% more than we should be for unleaded.
The solutions is simple. The government should set a maximum price for each fuel type based on the same formula outlined above. Petrol companies and their stations can vary prices, adjusted dynamically based on current spot price, to the max amount set, but not above. Simple, neat and fair. This would turn Pricewatch, the impotent and useless construct, into something that actually works and benefits the people of Australian.
Once that is up and running the government could really help out the backbone of Australia by making sure that Diesel is always less that unleaded in price.
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