Oil prices are skyrocketing globally, resulting in record-high prices for petrol across Australia. Petrol prices have been volatile over the past two years, with experts attributing the fluctuation to the pandemic.
“As with many sources of volatility we’re seeing in the economy, it’s the pandemic,” Associate Professor of Economics at Melbourne University David Byrne told Drive.
This week saw the price of US crude oil rise to an eight-year high at $US81.50 a barrel. That totals to an increase of 120 per cent over a 12-month period. Prior to this week, oil had not exceeded $US80 a barrel since October 2014.
“Much of the volatility depends on government lockdown policies, but also individuals’ behaviour and level of risk tolerance with domestic and international travel,” explained Mr Byrne.
2008 was the last year petrol prices were nearly this high, with the global financial crisis massively impacting oil demand and prices.
March 2020 saw a total collapse of oil prices following decreased demand in light of the emerging pandemic. Prices have stayed largely unstable since, with 2021 bringing a new set of circumstances affecting the oil industry.
The strong global oil demand resulting from countries reopening this year following COVID-related lockdowns plays a major hand in rising prices, experts say.
As of Monday, Sydney is experiencing an all-time high in fuel prices, with the average cost sitting at 172.5 cents a litre.
“Compared with the lows of 18 months ago it is costing motorists an extra $56 each time they fill up a 70-litre car with petrol,” said Commonwealth Securities chief economist Craig James.
Cities most affected by lockdowns this year, such as Sydney and Melbourne, have been hit hard. NRMA spokesman Peter Khoury says Sydney residents should prepare for worse yet to come.
“It hasn’t been good news for Aussie drivers all year, and unfortunately, it’s going to keep getting worse,” Mr Khoury said.
“We are bracing ourselves for the worst ever prices on record in Sydney, and based on the numbers [on Monday], we are well and truly on the path to that happening.”
Mr Khoury expressed the potential for relief of soaring prices next month but says it is not yet guaranteed. For prices to go back down, the Organization of the Petroleum Exporting Countries (OPEC) would need to put greater measures in place to meet demand.
“It’s not good news for motorists in 2021, especially heading into Christmas,” said Mr Khoury.