Thursday, March 23, 2006
Fuel Prices Explained 3
From the RACV
RACV's guide to petrol
Since world oil prices soared to record highs, Australians have had to dig deep into their pockets at the petrol bowser. Motorists should be aware that roughly half the pump price is tax comprising an excise tax and a GST, thereby slugging motorists with an unfair tax on a tax.
After an unprecedented national campaign lobbying for fuel tax relief in 2000, the Federal Government agreed to review the way petrol is taxed and freeze the Federal excise at 37.7 cents a litre in Victoria. But costs are still high and, with GST on top of excise, if you wanted a $50 tank of petrol at $1 a litre you would be paying $23.40
What does it all mean? In the guide below we have tried to answer some of your questions.
How is petrol priced?
Why do prices fluctuate?
Your guide to petrol prices
How is fuel taxed?
How much are the high petrol prices costing Victorian motorists?
Are we any closer to fuel tax reform?
How is petrol priced?
The price of petrol in Australia is based on import parity, which means that even though the petrol you buy may well have been sourced from Australian oil, it is priced on the product price in Singapore plus freight, wharfage, insurance and converted into Australian dollars.
So the three main contributing factors that move the wholesale price of petrol up and down are the world price of oil, the petrol price in Singapore and the value of the Australian dollar.
By linking the price of petrol to the Singapore price the efficiency of that nations refineries is reflected in the Australian price which can be a good thing. However, increased demand in Asia can also push up our prices.
As Victoria operates under a legislated Terminal Gate Pricing (TGP) system the major oil companies are required to publicise their daily wholesale prices. These are provided on their web sites and by comparing the TGP with the retail price motorists can see when discounted fuel is being sold and should take advantage of the lower prices to fill up.
Why do petrol prices fluctuate?
In the petrol purchasing game not everyone is equal. For instance independent operators who purchase full tanker loads will buy at the Terminal Gate Price while franchised service stations will buy at a higher price.
Most motorists have no brand loyalty and buy purely on price. Large price boards at service stations allow motorists to shop around without leaving their vehicles. So price is all important and service stations that buy at the Terminal Gate Price tend to discount to attract customers.
The oil companies then have to price support their franchised operators so that they can compete. The discount war continues until the oil majors decide to stop price support and signal to the market that they have had enough and prices go up. With no discounts in the market both the oil companies and the service stations receive a very healthy margin.
There is a price cycle in the Melbourne metropolitan market, so RACV suggests motorists regularly monitor this site to see how prices move. If need be, change the day on which you fill your tank and take advantage of the discounts.
By shopping smarter you will save hundreds of dollars in fuel costs over the year.
How is fuel taxed?
There are two components to petrol taxes - petrol excise and GST.
Federal petrol excise was indexed between 1983 and 2001. Until March 2, 2001, it was increased twice yearly in August and February, in line with the Consumer Price Index. Indexation continually pushed the excise rate up. In 1983 it was just 6.2 cents a litre, and by February 2001 it had risen to 39.2 cents a litre in Victoria.
On March 2, 2001, the Federal Government cut the excise by 1.5 cents and abolished the twice yearly indexation. The excise now stands at 37.7 cents a litre in Victoria.
GST was introduced in July 2000 and is a flat tax calculated on the final pump price of fuel, after the 37.7 cent excise is added. Which means you are paying a tax on a tax.
Click here for to find out exactly how much tax you're paying at the pump, our charts will tell you.
How much are the high petrol prices costing Victorian motorists?
Victorians drive, on average, 15,000 kilometres a year, using around 1500 litres of petrol. If petrol prices hover between 90 cents and 99.9 cents a litre, the average person will spend between $1350 and $1500 a year in petrol.
The high cost of petrol tax is graphically outlined in the table below. This table shows the 37.7 cents per litre excise plus the 10 per cent GST that is paid on all unleaded, diesel and lead replacement petrol. Filling the average family car at today's price of around 90.0 cents per litre (cpl) of unleaded costs about $62.93 and puts about $32.11 into the Government. s pockets. Even a small runabout would cost about $36 to fill of which $18.35 goes to the Government.
Are we any closer to fuel tax reform?
The Federal Government has failed to deliver any meaningful fuel tax reform to ease thge burden on motorists. The release of its much anticipated fuel tax enquiry report delivered little. RACV did hold out hope this inquiry would actually achieve major changes and a fairer taxation regime, based on the introduction of a road user charge. Click here to read more about fuel tax enquiry.
RACV's guide to petrol
Since world oil prices soared to record highs, Australians have had to dig deep into their pockets at the petrol bowser. Motorists should be aware that roughly half the pump price is tax comprising an excise tax and a GST, thereby slugging motorists with an unfair tax on a tax.
After an unprecedented national campaign lobbying for fuel tax relief in 2000, the Federal Government agreed to review the way petrol is taxed and freeze the Federal excise at 37.7 cents a litre in Victoria. But costs are still high and, with GST on top of excise, if you wanted a $50 tank of petrol at $1 a litre you would be paying $23.40
What does it all mean? In the guide below we have tried to answer some of your questions.
How is petrol priced?
Why do prices fluctuate?
Your guide to petrol prices
How is fuel taxed?
How much are the high petrol prices costing Victorian motorists?
Are we any closer to fuel tax reform?
How is petrol priced?
The price of petrol in Australia is based on import parity, which means that even though the petrol you buy may well have been sourced from Australian oil, it is priced on the product price in Singapore plus freight, wharfage, insurance and converted into Australian dollars.
So the three main contributing factors that move the wholesale price of petrol up and down are the world price of oil, the petrol price in Singapore and the value of the Australian dollar.
By linking the price of petrol to the Singapore price the efficiency of that nations refineries is reflected in the Australian price which can be a good thing. However, increased demand in Asia can also push up our prices.
As Victoria operates under a legislated Terminal Gate Pricing (TGP) system the major oil companies are required to publicise their daily wholesale prices. These are provided on their web sites and by comparing the TGP with the retail price motorists can see when discounted fuel is being sold and should take advantage of the lower prices to fill up.
Why do petrol prices fluctuate?
In the petrol purchasing game not everyone is equal. For instance independent operators who purchase full tanker loads will buy at the Terminal Gate Price while franchised service stations will buy at a higher price.
Most motorists have no brand loyalty and buy purely on price. Large price boards at service stations allow motorists to shop around without leaving their vehicles. So price is all important and service stations that buy at the Terminal Gate Price tend to discount to attract customers.
The oil companies then have to price support their franchised operators so that they can compete. The discount war continues until the oil majors decide to stop price support and signal to the market that they have had enough and prices go up. With no discounts in the market both the oil companies and the service stations receive a very healthy margin.
There is a price cycle in the Melbourne metropolitan market, so RACV suggests motorists regularly monitor this site to see how prices move. If need be, change the day on which you fill your tank and take advantage of the discounts.
By shopping smarter you will save hundreds of dollars in fuel costs over the year.
How is fuel taxed?
There are two components to petrol taxes - petrol excise and GST.
Federal petrol excise was indexed between 1983 and 2001. Until March 2, 2001, it was increased twice yearly in August and February, in line with the Consumer Price Index. Indexation continually pushed the excise rate up. In 1983 it was just 6.2 cents a litre, and by February 2001 it had risen to 39.2 cents a litre in Victoria.
On March 2, 2001, the Federal Government cut the excise by 1.5 cents and abolished the twice yearly indexation. The excise now stands at 37.7 cents a litre in Victoria.
GST was introduced in July 2000 and is a flat tax calculated on the final pump price of fuel, after the 37.7 cent excise is added. Which means you are paying a tax on a tax.
Click here for to find out exactly how much tax you're paying at the pump, our charts will tell you.
How much are the high petrol prices costing Victorian motorists?
Victorians drive, on average, 15,000 kilometres a year, using around 1500 litres of petrol. If petrol prices hover between 90 cents and 99.9 cents a litre, the average person will spend between $1350 and $1500 a year in petrol.
The high cost of petrol tax is graphically outlined in the table below. This table shows the 37.7 cents per litre excise plus the 10 per cent GST that is paid on all unleaded, diesel and lead replacement petrol. Filling the average family car at today's price of around 90.0 cents per litre (cpl) of unleaded costs about $62.93 and puts about $32.11 into the Government. s pockets. Even a small runabout would cost about $36 to fill of which $18.35 goes to the Government.
Are we any closer to fuel tax reform?
The Federal Government has failed to deliver any meaningful fuel tax reform to ease thge burden on motorists. The release of its much anticipated fuel tax enquiry report delivered little. RACV did hold out hope this inquiry would actually achieve major changes and a fairer taxation regime, based on the introduction of a road user charge. Click here to read more about fuel tax enquiry.
# posted by Scratchie @ 3/23/2006 02:07:00 am 
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