Petrol Price Update

by Stubborn Mule on 21 October 2009 · 2 comments

Another five months on since my last petrol price update and oil prices have continued to rise, but so has the value of the Australian dollar. So while crude oil prices in US dollars are up around 75% since their lows in February, they are only up 29% in Australian dollar terms.

WTI Prices - USD and AUDWest Texas Intermediate Oil Prices

The Australian dollar has been rising steadily for the last six months, pushed along by the Reserve Bank of Australia which has started raising their target cash rate. Higher interest rates in Australia make it more attractive for offshore investors to buy Australian securities and they have to buy Australian dollars to do so. Australian investors holding foreign assets may do the same.

A$ Exchange Rate

Australia Dollar/US Dollar Exchange Rate

So what does all of this mean for prices at the petrol pump in Sydney? The Australian Automobile Association reported average prices in Sydney of just over $1.20/litre. Based on my simple regression model, the latest crude oil prices and exchange rates indicate that October prices should be about 10 cents/litre lower.

Petrol Model (Oct 2009)More details on this model can be found in earlier petrol posts.

Data source: Bloomberg and the Australian Automobile Association.

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{ 2 comments… read them below or add one }

1 Deb Kidwell October 24, 2009 at 7:53 am

Dear Stubborn Mule, this is not really a comment about your blog, just that as a mule breeder, I appreciate your lovely photo of my favorite longear, although I personally would not put “stubborn” in front of the word “mule”. All the best to you and it was interesting reading some of your posts:-) Deb and the longears at Lake Nowhere Mule and Donkey Farm in the US. http://www.elitemulesandjackstock.com

PS – when I do a search using the word “mule”, the most interesting things pop-up…however, yours came up in a search of Dubai…LOL

2 stubbornmule October 24, 2009 at 11:07 am

Deb: I think that it is safe to say that I am the stubborn one and the longear who does such good service as my site’s mascot is the good looking one. I had a look at your site and now I am thinking that I should write a post honouring the noble mule.

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