The price of diesel consumers are paying today has substantially increased in recent weeks, and particularly in the past few days. The average daily retail diesel price in the five largest capital cities (that is, Sydney, Melbourne, Brisbane, Adelaide and Perth) has risen by more than 17 per cent in 2008, from 148.7 cents per litre to 174.7 cpl.
The increase in the price of diesel in 2008 has been greater than the increase in the price of unleaded petrol. This year, petrol prices have risen by about 12 cpl on average in the five largest capital cities.
"The ACCC is monitoring these prices closely," Australian Competition and Consumer Commission Commissioner, Mr Pat Walker, said.
The substantial increase in diesel prices in Australia reflects sharp increases in the international benchmark for diesel prices (the Singapore Gas Oil with 50 parts per million sulphur content). In 2008, the international benchmark for diesel prices has increased by about 40 per cent in Australian dollars (the benchmark and retail diesel prices are shown in the charts below).
There have been a number of factors for the most recent increase in the benchmark price of diesel. The devastating earthquake in China has damaged power infrastructure and constrained coal transportation. As a result, there has been an increasing demand on diesel to generate electricity. In addition, China has been increasing its stockpiles of diesel ahead of the Olympic Games.
In recent years, there has also been a greater demand by global refineries for processing diesel, especially diesel refined from low sulphur crude oil. Such crude oil is generally easier and less costly to distil into transport fuels such as diesel.
Source: ACCC calculations based on data provided by Informed Sources and Platts.
The Assistant Treasurer and Minister for Competition and Consumer Affairs, Mr Bowen, has asked the ACCC and Commissioner Walker to "commence a renewed focus on LPG and diesel prices…"*
"Consumers have been concerned about the increased price of diesel and we are monitoring international benchmark prices and retail price movements on a daily basis across capital cities and country towns," Mr Walker said.
* News release dated 16 February 2008.