Diesel margins hurting the bush

The gap between the wholesale and retail price for diesel sales have sky-rocketed to almost 20 cents per litre (19.6 cents) so far in 2020, with the diesel-reliant regional areas worst hit.

Analysis conducted by the NRMA has found that the gap between the wholesale and retail prices for diesel in 2020 are among the highest on record at 19.6 cents per litre. These margins have ballooned from last year (11.2 cents per litre), 2017 (13.1), 2016 (11.8), 2015 (10.2) and 2014 (12.4).

While most public attention has been on the average price of regular unleaded throughout the Coronavirus crisis and the delays in oil price falls being passed on to Australian motorists, the gross margins of diesel sales across Australia have been among the highest on record.

The wholesale price for diesel has fallen 34c over the last 10 weeks. While some regional locations across NSW like Bathurst and Cobar and have enjoyed falls of over 35c since early March, many areas in regional NSW have not passed on the discount to diesel drivers.

Average prices fall in regional areas:

Highest Falls
Bathurst 36.5c; Cobar 36.0c; Orange 35.3c; Blayney 34.0c; Moruya 32.7c.

Lowest Falls
Central Darling 14.0c; Harden 14.6c; Moira 17.4c; Lachlan 17.8c; Bourke 18.6c.

Over 40 per cent of all fuels sold to the public at service stations across Australia is diesel. That percentage is even higher when looking at regional communities as diesel is the fuel used in agriculture, mining, manufacturing and for the transportation of goods and services. Two-thirds of diesel consumption in Australia is for industrial purposes. 

Australia’s international benchmark price for diesel (Gasoil) fell from a high of $US83.86 a barrel at the start of 2020 to a low of $US22.92 a barrel before rising to $US32.94 today. By contrast the average price of diesel has only fallen 33.8 cents per litre over the same period.

Since the Coronavirus pandemic took hold of Australia the gap between the wholesale price for diesel in Sydney has widened from eight cents per litre on 1 March to over 20 cents per litre in April, before narrowing this week to 17 cents per litre.

The price cycles that apply to petrol in many Australian cities’ prices do not apply to diesel. Diesel prices do not fluctuate to the same extent as petrol and the spread of prices across capital cities is not usually as wide.

According to the myNRMA App the cheapest price for diesel in the bush is 98.7 cents per litre and most expensive is 172.9 cents per litre.

NRMA spokesperson Peter Khoury said the higher gross margins of diesel prices throughout the Coronavirus crisis particularly impacted regional communities who are heavily reliant on diesel for their livelihood.

“Regional Australia runs on diesel so when average prices for diesel are higher than they should be – as has been the case throughout much of 2020 – it means communities who are already doing it tough through drought, bushfires and COVID-19 are even worse off,” Mr Khoury said.

“Country drivers have been consistently over-charged for fuel across the board but the current prices being charged for Diesel in just excessive and shows many retailers care more about profits than their customers.      
       
“Not nearly enough attention has been paid to the rising gap between wholesale and retail prices for diesel across Australia and that stops now. It’s time for diesel prices to fall and fall fast.”