Fuel prices in Queensland

November 2012
RACQ monitors automotive fuel prices throughout Queensland on behalf of members. In 2012, RACQ
found the average private car in Australia used $2,070 worth of fuel1. This equated to $40 a week.
Motorists in Queensland typically purchase:
unleaded petrol (regular 91 RON – ULP, premium 95 or 98 RON – PULP)
petrol and ethanol blended fuels (typically E10 – 10% ethanol and 90% petrol, or E85 – 85%
ethanol and 15% petrol)
liquid petroleum gas (LPG)
diesel.

Cost components of fuel in Queensland

RACQ has dissected the cost components in a litre of fuel. The table below shows the costs for ULP
(91 RON), PULP (95 RON) and diesel. The pricing for LPG is significantly different from the other
fuels and will be discussed separately.

180
160
140
120
Cost in cpl

100
80
60
40
20
0
ULP (91 RON) PULP (95 RON) Diesel
Retail margin 9.9 11.6 10.2
Wholesale margin 7.2 7.2 7.2
Refinery margin 2.7 10.3 6.5
Distribution and other costs 5.8 5.8 5
GST (Federal tax) 13.5 14.4 13.8
Excise (Federal tax) 38.1 38.1 38.1
Tapis crude oil (lagged) 70.9 70.9 70.9

Cost components of a litre of fuel – October 2012

As can be seen from this table, the largest cost component in fuel is the crude oil used to produce the
refined fuel. Second to this is excise and GST, which together accounted for 51.6cpl in October 2012.
The remaining costs include transport and the margins added by fuel companies.

1
Assuming average annual distance travelled as 12,880km (CTE 2012, “Australian Transport Facts: AAA
Supplement” Adam Pekol Consulting, Brisbane), average fuel economy of 11.27l/100km (CTE 2012) and
average cost of ULP for 2012 (January to November) of $1.435 (RACQ calculations using
MotorMouth.com.au data).
Retail prices
The fuel reporting and analysis undertaken by RACQ is based on electronic pricing data supplied by
MotorMouth.com.au and FUELtrac2. RACQ’s website has a search function that allows members to
find the cheapest fuel in south-east Queensland by location.3 A link to this service can be found on the
RACQ website homepage: www.racq.com, or on the dedicated fuel price webpage:
www.racq.com.au/fuel.
RACQ also publishes monthly and annual fuel price reports. The monthly reports summarise fuel price
trends in Brisbane and include a comparison of regional prices and Australian capital city prices. The
annual report analyses fuel price movements for the previous year, with a focus on the key Brisbane
capital city market. The monthly and annual reports can be found on the RACQ fuel price webpage:
www.racq.com.au/fuel.

Fuel company margins

Fuel companies make money at three points in the supply chain: refining fuel; wholesale supply; and
retailing to the end user. RACQ monitors the margins and protests when they are unreasonably high.
RACQ uses a model based on the retail price of ULP, the Terminal Gate Price (TGP, the wholesale
price charged by fuel companies), and the price of Tapis crude oil, to estimate the fuel margins.
In 2012, average retailer margins for ULP sold in Brisbane were 9.6cpl, wholesale margins were
7.2cpl, and refiner margins were negligible. The total margin was 16.0cpl. While average retail
margins in Queensland tend to be higher than those in the southern states, Queensland’s cheapest
retailers often sell ULP on a very small margin.

Local competition and retail margins

The price of fuel depends on the competitiveness of the local market. In order to increase sales
volumes, a retailer may lower their bowser price by reducing their retail margin. In response, the
neighbouring retailers are likely to reduce their price. This can be observed on the north side of
Brisbane. Fierce competition between retailers on Gympie and Sandgate Roads often leads to them
offering the cheapest petrol in Brisbane. The same is true in regional Queensland. For many years,
Toowoomba was the cheapest city to buy petrol in Queensland and often in Australia. This was due to
many retailers competing for sales by offering heavily discounted fuel.
Independent retailers often offered the cheapest fuel in Brisbane, but accounted for only 17% of
national sale volumes in 2010/114. Fuel retailing in Queensland, like the rest of the country, is
dominated by supermarkets (Coles and Woolworths). Fuel sold by the supermarkets accounted for
45% of fuel sales by volume in 2010/114. The refiner marketers (BP, Caltex and Shell) accounted for
the remaining 39% of sale volumes.

Excise and taxes

Two taxes are applied to domestically used retail fuel in Australia: fuel excise and GST, no other taxes
are charged. Fuel excise on regular petrol and diesel is 38.14cpl. Excise on E10, at 34.33 cpl, is
slightly lower because excise is not applied to the ethanol component. Excise on LPG is currently
5cpl, although this will increase by 2.5cpl on July of each year until it reaches 12.5cpl in 2015.
GST is charged at 10% for all fuels. In October 2012, the average GST on regular ULP was 13.5cpl.

Price cycles
In Brisbane and most of the other Australian capital cities, the retail price of all petrol blends fluctuates
according to a price cycle. In the chart below, the blue line shows the daily average retail price and the

2
MotorMouth.com.au provides daily retail fuel prices for southeast Queensland, as well as weekly average
prices for regional Queensland. FUELtrac provides RACQ with detailed reporting of prices in regional areas
of Queensland, as well as wholesale price data.
3
Source: MotorMouth.com.au
4
Source: ACCC 2011, “Monitoring of the Australian petroleum industry”, Commonwealth of Australia,
Canberra
red line shows the average terminal gate price of regular 91 RON ULP in Brisbane. A price cycle is
clearly evident at the retail level.
Historically, the Brisbane petrol price cycle has been a week long. As a result, the cheapest and
dearest days for fuel purchases fell on the same day each week. In the past few years, since mid
2010, the length of the cycle has extended. In October 2012, the average cycle length was 14.5 days,
although throughout 2012 the cycle varied from nine to 19 days.
The fuel price cycle in Queensland is contained to the south-east. The area affected by the south-east
Queensland price cycle extends north along the Sunshine Coast to Noosa, south along the Gold
Coast to Coolangatta, and west to Ipswich.

160
155
Fuel cost in cpl

150
145
140
135 ULP (cpl)
130
TGP ULP (cpl)
125
Sat, 6 Oct

Sat, 13 Oct

Sat, 20 Oct

Sat, 27 Oct
Sat, 1 Sep

Sat, 8 Sep

Sat, 3 Nov

Sat, 10 Nov

Sat, 17 Nov

Sat, 24 Nov
Sat, 15 Sep

Sat, 22 Sep

Sat, 29 Sep

Retail and terminal gate ULP prices in Brisbane – September to November 2012
Outside south-east Queensland, the price of petrol remains stable from day-to-day. When prices
change, it is in response to changes in the price of oil and the TGP.
LPG and diesel are not affected by price cycles. Across Queensland, the price of LPG and diesel
remains relatively stable.
Outside Queensland, ULP price cycles occur in Sydney, Melbourne, Adelaide and Perth. The Sydney,
Melbourne and Adelaide cycles are similar in duration and amplitude to the Brisbane cycle. These
cycles often align such that when ULP is cheap in Brisbane it is also cheap in the other cities.
Cycles in Perth are different from the rest of Australia. Perth is the only city with a weekly fuel price
cycle. Prices in Perth are regulated through the state government FuelWatch program. Retailers must
notify FuelWatch by 2:00pm daily of the prices they intend to charge the next day. These prices are
fixed for 24 hours.
Prices cycles occur in a few other countries. For example, Canada has price cycles in medium-sized
towns and cities, but not in the large cities or small towns. The majority of large overseas cities do not
have a price cycle. Price increases (or decreases) only occur when the price of oil changes.

E10 and E85

E10 and E85 are liquid fuel blends of regular mineral petroleum and ethanol. E10 contains up to 10%
ethanol and 90% petrol, and E85 contains up to 85% ethanol and at least 15% petrol. Ethanol blended
fuels are offered as an alternative to mineral petrol and are used to reduce the amount of mineral fuel
consumed.
Most, but far from all, cars manufactured after 1986 can safely use E10 instead of regular 91 RON
unleaded petrol. A full list of vehicles can be found here on the Federal Chamber of Automotive
Industries website – www.fcai.com.au.
In Brisbane, the price of E10 is usually 2cpl less than regular unleaded petrol. But while E10 appears
a cheaper fuel option, cars use about 3% more E10 compared to regular unleaded petrol. For most
cars, the cost of increased fuel consumption will be greater than the savings from buying E10.
Currently, very few cars sold in Australia are designed to run on E85. E85, marketed as E-Flex, is only
available at a handful of Caltex sites (www.caltex.com.au).
Diesel and LPG
The price of diesel and LPG remains relatively stable throughout Queensland. Prices do not fluctuate
according to a price cycle.
The retail price of diesel is made up of similar components to ULP. Costs include the crude oil, excise
and GST, distribution costs, and refiner, wholesale and retail margins.
Although the price structure of diesel is similar to petrol, diesel margins tend to be higher. In October
2012 diesel retail margins were 10.3cpl compared to 9.6cpl for ULP, refiner margins were 2.6cpl
compared to negligible margins for ULP, and wholesale margins for both were assumed to be 7.2cpl.5
The price structure for LPG is substantially different from ULP and diesel. The retail price of LPG
includes the cost of the propane and butane gas that has been blended to make LPG, as well as
taxes and margins. RACQ is unable to access the data required to calculate LPG margins.

Benchmark prices
Prior to 1998, the wholesale price of fuel in Australia was pegged to the Singapore wholesale price.
Today the price of fuel in Australia is no longer regulated. However, the TGP closely tracks Singapore
wholesale prices of fuel (MOGAS for ULP and GASOIL for diesel). In turn, MOGAS and GASOIL
strongly follow the price of Tapis crude oil. Tapis crude is the Asia-Pacific benchmark crude oil.

150
140
130
120
TGP ULP
110
100 TGP diesel
90
Tapis Crude
80
70 MOGAS
60
50 GASOIL
Wed, 1

Wed, 1

Mon, 1
Sun, 1

Thu, 1

Sun, 1

Tue, 1

Sun, 1

Sat, 1

Thu, 1
Fri, 1
Jun
May

Sep
Mar

Nov
Apr
Jan

Aug
Feb

Jul

Oct

Singapore benchmark and Brisbane terminal gate prices – January to November 2012
The chart above shows the Tapis crude price, the Singapore MOGAS and GASOIL prices, and the
Brisbane ULP and diesel TGP. The difference between the Singapore and Brisbane TPG is the excise
and GST. In the chart, the dark blue line represents the ULP TGP in Brisbane, and the red line the
diesel TGP. The light blue line represents the Singapore GASOIL price, purple the MOGAS price, and
the green line the Tapis crude oil price. All prices have been converted to A$ cents per litre.
The benchmark for LPG is the Saudi Aramco Contract Price (Saudi CP). This price is set monthly.
The Saudi CP is the average of all wholesale contracts for the previous month, negotiated by the
Saudi Arabian, state-owned, Saudi Aramco Company. While this benchmark tends to move according
to the price of oil, it is also strongly affected by seasonal variations. Because propane and butane (the
gases that make up LPG) are also used for domestic heating in the northern hemisphere, the Saudi
CP is usually higher during the northern winter months.

Conclusion
Affordable motoring is important for Queenslanders and the price of fuel is a key component in the
cost of trips. While there is little RACQ can do to influence the underlying price of crude oil, RACQ will
continue to exert pressure on the fuel industry and the ACCC in an effort to keep fuel margins
reasonable, and on government to ensure taxes on fuel excise are not increased.
Contact: RACQ Public Policy Department, 07 3872 8622, policy@racq.com.au

5
It is not possible to differentiate between wholesale and refiner margins. The RACQ model assumes
wholesale margins to be 7.2 cpl.