Global commodities: Why does petrol cost so much?

Updated: Oct 9, 2019

Crude oil is the source of Petrol and can be found in all places on the globe.

As #petrol prices continue to #rise across the country, many #consumers are asking why. Most are quick to blame the #petrol stations, while others are blaming the #government.

In #Australia there are three major items that make up the total cost of #petrol at the #bowser; the wholesale cost of refined petrol, applied government excise and taxes, #distribution and other associated costs.

50% of the cost of fuel at the pump is associated with obtaining refined petrol on the international marketplace.

Wholesale cost of refined petrol - Since #Australian #refineries can not meet all of our #petrol needs, the biggest percentage of cost at the bowser is the international price of refined petrol (Singapore Mogas 95). This makes up 50% of the #cost and can #vary depending on the fuels current #trading price (traded in US Dollars) on the Singapore #market.

Only 12% of the cost of fuel covers distribution and storage.

Applied government excise and taxes - The second biggest percentage of cost at the bowser is #federal government taxes. At present fuel #excise and #GST is set at 38%. While this may seem high, it is one of #lowest fuel excises in advanced #economies.

Fuel cost at the bowser is a combination of 3 factors.

Distribution and other associated costs - The third biggest percentage of cost at the bowser is the associated #expenses relating to the #refining, #storage, #distribution and #delivery of the fuel. This makes up the remaining 12% and includes other overheads like #wages, #rent & #retailing.

For more information on fuel prices in Australia check out this useful document from the #ACCC (Australian Competition & Consumer Commission)

Further Reading -


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