Lower fuel prices

This week has seen the national average terminal gate price for diesel in Australia drop below $1.40 per litre for the first time in well over a year. The price fell to 139.8 cents last Friday and has stayed down below $1.40 in the week since.

 

This is part of a general trend over the past few months which has seen a steady fall in terminal gate prices, since the price peaked in the early weeks of 2014 at 152.5 cents per litre, and stayed relatively high until just two or three months ago. Unlike trends in prices in the past the steady decline has been sustained, it has seen very few blips where the price climbed back up for short period.

 

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For the trucking industry steady trends like this create a stability and give operators a certainty in cash flow. Problems associated with wild fluctuations in fuel prices tend to come from the trucking operator’s method of calculating and imposing a revised fuel levy lagging behind sharp rises in fuel costs, creating cash flow problems.

 

A relatively stable world oil market seems to be less jumpy than in the past. Major political and economic crises in areas involved with fuel production, in the Middle East and Russia have seen small fluctuations occur, but no spikes in pricing to seriously interrupt a general downward movement in the price of fuel to the trucking operator.

 

These figures vary greatly from the kind of instability and uncertainty evident several years recently. After the terminal gate price for diesel stood at just 87.5 cents per litre in January 2004, the economic mayhem which followed saw the price peak at well over 180 cents per litre six years ago. This was followed by a sharp fall, as economic activity slowed, followed by a steady rise throughout 2010 to 2013.

 

The trend in the last 12 months has seen a sustained and steady decline in prices, unaffected by short term considerations. Fuel prices are never going to return to pre-GFC prices, but at least steady numbers gives operators an opportunity to worry about other business considerations outside of short term cash flow issues caused by fluctuating fuel prices.

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Author: Tim Giles

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