What to know about fuel prices after a midterm elections oil price drop

Global oil prices have continued to drop this morning after Donald Trump said new strikes on Iran were "unlikely". But it may take time for the effects to be passed on to consumers here in Australia. 

As of November 10, Brent crude oil prices were around $U93 a barrel down from $US111.9 a week ago. 

"Global oil prices fell significantly last week, hitting a low on Wednesday before a slight rebound at the end of the week," Ian Jeffreys, from Queensland's motor peak body RACQ said.

"Fuel retailers in capital cities should be passing this reduction on to motorists in the coming days, and regional motorists should feel the same relief in the coming weeks."

Why have oil prices dropped?

The drop in prices over the past week showed optimism in the world oil trade by investors off the back of a Democratic majority win in both the House and the Senate in the US midterm elections, according to Daniel Prior, supply chain expert at the University of New South Wales. 

"Back in early October, oil prices were about US$110 a barrel and even slightly more than that," he said.

"Now we're seeing the $90s as sort of the more typical price of trade."

Dr Prior said it was good news that oil prices were down,  but it might take a little while to transfer to consumers in Australia. 

"The suppliers to the Australian market will need to purchase the oil from the spot market at those prices, then pass their own costs down through the Australian oil supply chain," he said. 

"Last time something like this happened earlier in the year, there were certain retailers that were very confident that their own suppliers would be able to pass that cost onto them and so they were able to jump in a bit more quickly than some others."

Dr Jeffreys hopes that was the case. 

"What we've seen is fuel companies are retaining some of those savings and bolstering their retail margins, and what we would urge them to do in the coming days is to pass those savings on to motorists," he said.

He said that while the supply chain needed time to adjust in the regions, metro areas, where they resupply several times weekly, would start to purchase cut prices in the coming days. 

“In our smaller centres, it does take a few weeks for the old fuel to be sold, and the new fuel to come in, and therefore the prices would fall a little later," Dr Jefferys said.

How much is fuel going for right now?

Today, the average unleaded price in each capital city is: 

• South Australia $2.25 per litre
• Western Australia $2.28 per litre
• Victoria $2.28 per litre
• New South Wales $2.30 per litre
• Queensland $2.30 per litre
• Tasmania $2.42 per litre
• Northern Territory $2.65 per litre

Is this temporary?

In October, Treasurer Jim Chalmers said the Ukraine and Iran wars had exposed the fragility of the global economy.  

He warned that oil prices might not drop to a normal level until 2030. 

Dr Jeffreys agreed that despite the latest reprieve, the conflicts in Iran and Ukraine would continue to impact prices in the immediate future. 

"The world still remains highly volatile," he said. 

"The Ukraine war is still ongoing, and that is impacting diesel prices in particular.

"So yeah, there still remains a high degree of uncertainty and high degree of volatility."

How do I shop around for fuel?

The Australian Competition and Consumer Commission urges consumers to shop around for fuel and consult with fuel apps and websites in their state:

• New South Wales: NSW Fuel Check website and app
• Australian Capital Territory: NSW Fuel Check website
• Northern Territory: MyFuel NT website
• Tasmania: FuelCheck TAS website and app
• Victoria: Service Victoria app
• Western Australia: WA FuelWatch website and app
• Queensland: Queensland does not have a dedicated government fuel price app, but you can search for commercial fuel price websites and apps that are supported by data under the Queensland government's fuel price reporting arrangements
• South Australia: Search for commercial fuel price websites and apps supported by data under the South Australian government's fuel price reporting arrangements