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The rise and rise of fuel prices

It may have come to your notice as it has mine; but what is with the price of fuel?

Petrol prices have moved into record territory and it seems that it is not likely to ease anytime soon. This leaves us wondering what is driving the price of petrol/fuels generally and will it ever start coming down again with Australia’s current booming dollar value?

We are now paying almost the same amount for fuel as we did in mid ’08 when our dollar was at US$0.60 and crude oil prices were $135 per barrel.

Just recently you can see that in Nov ’10 the average price of fuel at the pump was $1.24 per litre and now in Feb ’11 it is averaging $1.35 per litre. The largest difference now is the Aussie dollar and the US dollars’ are at parity and the cost of crude per barrel is only $98 per barrel.

With those statistics we should be paying $0.90-$1.00 per litre.

The question is who is making the money? Where does your hard earned money go? The Middle East and the oil companies, that’s where.

Unfortunately crude oil is only one of a string of components the push up the pump price of fuel. There are taxes (everywhere – state and federal), refining costs, marketing, distribution and the most costly factor – China.

China’s demand for fuel is so great that the old school lessons of supply and demand are applied. Add to that the rest of the world, political instability, production interruptions (refinery explosions and bad weather) and the limit of the resource itself; and you have consumer price rise.

So don’t look seeing any great price cuts in the near future even if TV tells you of decreasing crude oil prices, the fact is the cost of today’s fuel is in the hands of the few. Who said the cost of the many outweighs the cost of the few???

For the positive spin, you must remember one thing the cost of bottled water is higher than fuel…and we all buy that without whinging. My husband’s contact lens ‘water’ comes in at around $40 a litre. Surely it is easier to add a little salt to some water and bottle it than it is to refine oil into petrol. Who is making the money there!!  Maybe some perspective is in order.