Record diesel prices explained, further price hikes flagged

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Anyone who drives a diesel vehicle knows pump prices are currently at or near record highs, averaging around $2.30 per litre across the eastern seaboard.

Queensland’s RACQ motoring club today offered some bad news – namely, expect prices to climb before they fall.

The club said international factors and spiking demand, rather than rampant gouging from service stations and other suppliers, were to blame, but added that tight retail margins would likely lead to further hikes.

“There’s a misconception that fuel companies are overcharging motorists on diesel, but in fact retail margins are reasonably low,” RACQ spokesperson Lauren Cooney claimed.

“For example, the current average retail margin on diesel sold in Brisbane is 9.5 cents per litre, usually this sits at around 12 cents per litre.”

Ms Cooney added that exceptionally high diesel prices are being experienced across the world.

“Russia is a major manufacturer and distributor of diesel, especially to the European market. With the ongoing war in Ukraine and sanctions against Russian exports, the global supply of diesel has fallen significantly, causing wholesale prices to rise and remain incredibly high,” she added.

When you think beyond private transport, demand for diesel is much higher than the demand for unleaded. That said, Australia’s two top-selling vehicles are the diesel-fuelled Toyota HiLux and Ford Ranger.

“Diesel is an industry fuel and is used far more than unleaded, for example in Queensland we consume more than twice as much diesel as we do petrol,” Ms Cooney said.

“The production cost of diesel is similar to unleaded and both products are processed similarly. It’s supply and demand factors that are pushing up prices, rather than the production costs.

“The current average wholesale price of diesel in Brisbane is 226cpl which is about 50 cents higher than the unleaded wholesale price of 175cpl. In normal times the local wholesale prices and international benchmark prices for unleaded and diesel would be very similar, usually no more than a few cents difference.

“With retail margins currently low for diesel, the bad news is prices are likely to continue to creep a little higher.”




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