Petrol heads towards $1 for Christmas | Cars and Automotive

Nathan Woulfe | 18th November 2008

AS recently as May this year, economists were trumpeting the apparently ceaseless upward trajectory of fuel prices.

Two dollars a litre by 2009, they claimed, and as prices passed the $1.60 mark in July they seemed to be on the money.

Those same economists will be eating their words, and their hats, if they drop into a Coast servo this week, as prices drop back towards the $1 a litre mark.

The Shell service station on King Street in Buderim was selling unleaded for 108.9c a litre yesterday, and most other outlets were below $1.15 a litre. Add in the four-cent shopper-docket discount, and you're scraping very close to $1 a litre - something not seen on the Coast for well over a year.

Diesel was available for 132.9c a litre at Buderim Shell, Liberty at Moffat Beach and Rainbow Fuel on Arthur Street in Caloundra.

Gary Roser, the owner of Buderim Shell, said he expected prices to fall back to $1 a litre in the near future.

“I wouldn't be surprised if we are the first to get to $1,” Mr Roser said. “The pace prices are dropping at at the moment would suggest $1 well before Christmas.

“We should be holding (108.9) right through to the next price change later in the week, then will be $1.06 by the end of the week.”

Mr Roser said he expected the major dealers to keep their prices - and hence their profit margins - higher for as long as possible, but hoped he could put some pressure on them to follow his prices.

“I've never seen so many people happy to buy fuel,” he said.

“It's always a grudge buy, but for the first time in two years people are smiling.”

So what's behind the petrol plunge? Thank, in part, the plunging stock markets.

As the economy recedes, so does demand for fuel, and in turn, fuel prices.

Oil is trading at about US$55 a barrel, down from the record highs of US$147 in July. That drop - of about 62% - has outweighed the negative trend in the Australian dollar, which has fallen about 35% from US$0.9849 to US$0.64.

Basically, since the crude price has dropped more than the dollar, we get cheaper fuel.

Jim Kershaw, from RACQ, said the average south-east Queensland price yesterday was $1.15.

“If prices continue to fall the way they are, we will see petrol selling for a dollar a litre or less during Christmas,” Mr Kershaw said.

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