Brent crude settled above US$101 a barrel in Wednesday's US session, its first move past US$100 since July, after American forces destroyed five Iranian crude tankers in the Gulf of Oman and near Kharg Island. Australian motorists are paying 205.5 cents a litre for unleaded, and that figure has almost nothing to do with it yet.
The national average comes from the Australian Institute of Petroleum's weekly report for the week ending 6 September, up 0.7 cents on the week. Regional drivers averaged 207.9 cents, about 3.6 cents more than metropolitan motorists. The Northern Territory averaged 228.2 cents, the highest in the country.
That reading was taken before the oil move, and Australian pump prices do not track crude directly in any case. They track Singapore Mogas 95, the refined petrol benchmark. On AIP's own numbers, Mogas 95 rose from 102.0 to 110.2 Australian cents a litre in the week to 4 September, a jump of 8.2 cents in seven days against a 12-month average of 92.2 cents.
Then comes the delay. "Generally, there is a short time lag of 1-2 weeks between changes in Singapore prices and changes in Australian prices," the AIP report says, adding that the lag applies in both directions: it slows price rises reaching consumers, and it delays price falls. The ACCC puts it at "around 2 weeks to work their way through the supply chain in Australian cities", and longer in regional areas.
So the bowser has not seen the benchmark spike, let alone Wednesday's crude move. Both are coming.
They arrive on top of a tax increase motorists have already absorbed. The ACCC's 4 September monitoring update records the full restoration of fuel excise on 3 August at 53.7 cents a litre, incorporating the remaining 16 cents of the temporary reduction plus a 1.1 cent indexation adjustment. The regulator puts the overall impact of tax changes on petrol and diesel at up to 18.8 cents a litre.
The same report shows what that has done. Across the five largest cities, average retail petrol was 204.6 cents a litre on 2 September, down 0.9 cents on the week but up 9.3 cents on 2 August. Diesel was 249.3 cents, up 12.3 cents over the same month. Compared with 20 February, before the Middle East conflict began, petrol across those cities was 33.7 cents a litre higher.
The ACCC's weekly fuel price monitoring, directed by the Treasurer as a transparency measure during the conflict, is scheduled to run until 30 September. On the AIP and ACCC lag figures, the international increase lands at Australian pumps in roughly the same fortnight the weekly reports stop.
The Reserve Bank has already flagged the channel. Holding the cash rate at 4.35 per cent on 11 August in a unanimous decision, the Monetary Policy Board wrote that "the disruption to global oil supply is adding directly to inflation and there are indications that higher fuel prices are being passed through to prices of other goods and services, so inflation is likely to remain high for some time". The Board said it would consider increasing the cash rate further if upside risks materialised.
The Bank's August Statement on Monetary Policy was written against a very different oil price. "The price of Brent crude oil is currently around US$80 per barrel," it said on 11 August, "lower than at the time of the May Statement but around 10 per cent above pre-conflict levels." Brent is now roughly a quarter above that working assumption.
Assistant Governor Sarah Hunter set out the arithmetic in a Sydney speech in May. Fuel for cars is about 3.5 per cent of the CPI basket directly, she said, and fuel accounts for "around 2 to 2.5 per cent of the cost of producing and distributing other goods and services in the CPI", with travel, transport, some grocery lines and new dwelling construction most exposed. Hunter added that when capacity is constrained and inflation is already elevated, firms pass cost increases through more quickly and more fully.
The last official reading came before any of this. ABS head of price statistics Rachael McCririck said on 26 August that "automotive fuel prices rose 7.5 per cent in July after falling for three months in a row", driven by higher world oil prices and the partial unwinding of excise relief. Annual CPI was 3.5 per cent in July, down from 3.8 per cent to June.
On the market, the beneficiaries were visible immediately. The S&P/ASX 200 closed Wednesday at 8,911.4 points, down 9.4 points or 0.11 per cent, a six-week low, but the energy index rose 1.72 per cent and materials 1.51 per cent while financials fell 1.03 per cent. Woodside Energy closed at $33.14, up 2.60 per cent. Santos closed at $8.52, up 1.31 per cent. Wall Street fell for a third day, with the Dow down 0.8 per cent, the S&P 500 down 0.5 per cent and the Nasdaq Composite down 0.6 per cent.
For motorists the practical number is the spread, not the average. The ACCC found Melbourne prices ranging from 187.9 to 239.9 cents a litre at 11am on 2 September, a gap of 52 cents on the same day in the same city. The next AIP weekly report is due Sunday, and the ACCC's next monitoring update on Friday.
