H. Understanding Fuel (FAQ)
I. Fuel quality & measurement
1) Do any retailers sell ‘dodgy’ fuel / How do I know if fuel is ‘dodgy’?
2) Where can I find fuel specifications?
3) Who do I contact if fuel has damaged my car?
4) Who do I contact if I believe the bowser is incorrectly calibrated?
II Economics of fuel
5) How does the price of crude oil affect Australian retail prices?
6) Why do we use a Singapore price as a benchmark?
7) How do international factors affect local retail fuel prices?
8) How does the USA/Australian exchange rate affect retail petrol prices?
9) What sorts of taxes/excise are there on fuel?
III. Wholesale market
10) What is the TGP?
11) Where can I find the TGP?
12) How can some retailers sell below the TGP?
Back to FAQ main page.
I. Fuel quality & measurement
1) Do any retailers sell ‘dodgy’ fuel / How do I know if fuel is ‘dodgy’?
There is very little difference in the quality of fuel sold in WA, no matter where you buy your fuel. BP operates the only refinery in the State and supplies over 90% of the petrol sold in WA.
Also all fuel sold in WA is required to comply with State and Commonwealth quality standards. Occasionally, a small amount of petrol may be imported into WA, however the fuel must still meet with the fuel quality standards.
The main difference in the fuel comes from company marketed additives. If you have concerns about the fuel quality at a particular site, raise your concerns with the site manager in the first instance.
For more information about the fuel standards contact:
• For WA: Department of Environment and Conservation
• For Commonwealth: Department of the Environment, Water, Heritage and the Arts
2) Where can I find fuel specifications?
For more information on fuel specification standards contact the Department of Environment and Conservation.
3) Who do I contact if fuel has damaged my car?
If you believe fuel has damaged your car please contact the Department of Commerce’s Motor Vehicles Branch on 1300 30 40 54.
4) Who do I contact if I believe the bowser is incorrectly calibrated?
If you have an issue with petrol bowsers please contact the Department of Commerce's Trade Measurement Branch on 1300 30 40 54.
II. Economics of fuel (all fuels)
5) How does the price of crude oil affect Australian retail prices?
Crude oil prices quoted in the media usually refer to West Texas or Brent prices. The relevant crude oil for Australia is TAPIS. The price of TAPIS is generally higher than for other crudes, and may not move in conjunction with other crude oil prices.
Crude oil supplied from Australian oil fields to domestic refineries accounts for around 30 percent of crude supplies. Australian refiners must purchase crude oil from international markets for their refineries and are therefore subject to international prices. Because crude oil is used to produce refined petrol, the international prices for both petrol and diesel usually correlate to TAPIS crude oil prices over the long term. In the short term, however, fuel prices may be influenced by other factors including refinery capacity, refinery margins, and demand for a particular product.
In Australia, retail prices for petrol, diesel and LPG in the long term reflect movements in the international prices for each type of fuel. However, in the short term, local competition and marketing strategies can also affect day to day retail prices.6) Why do we use a Singapore price as a benchmark?
Refiners and wholesalers in the Australian petroleum industry buy and sell fuel in international markets. Domestic prices for petrol and diesel in Australia are linked to international prices to ensure that local refiners retain fuel for the local market and not simply sell offshore to obtain higher prices. The Singapore spot prices for petrol (MOPS95) and for diesel (gasoil) are used as the price benchmarks for petrol and diesel because Singapore is close to Australia and is the largest refining centre in the region. The Saudi Arabian Contract Price (Saudi CP) is used as the benchmark price for LPG.
7) How do international factors affect local retail fuel prices?
The international demand and supply of oil and refined fuel products such as diesel or petrol, determines their prices in the international market. As discussed in Q5) retail fuel prices in Australia are closely linked to international prices.
Shortages of supply, such as when Hurrican Katrina affected oil refining in 2005, can place upwards pressure on prices. In this instance, petrol became expensive, as the supply of petrol was greatly reduced by the large number of refineries unable to operate. However, oil did not increase in the same way, as there was a surplus of oil, because with fewer refineries operating, there was less demand for oil. Increased demand for a particular refined fuel product also places upwards pressure on its price. For example, in 2008, there was heavy industrial demand for diesel in Asia. Refiners produced more and more diesel, but were left with a surplus of petrol from the refining process. As demand for petrol had also dropped, the combination of these factors meant at certain stages a barrel of petrol was priced lower than a barrel of oil.
Other international factors that can affect local prices are the Australian / US exchange rate, as international prices are traded in US dollars, and international freight costs.
8) How does the US/Australian exchange rate affect retail petrol prices?
The impact of any price rises in the international market is softened when the Australian dollar exchange rate is high.
9) What sorts of taxes/excise are there on fuel?
There are two taxes applied to petrol and diesel (petroleum) - Excise/Customs duty and the 10 percent Goods and Services Tax (GST).
The Federal Government administers taxation and excise matters through the Australian Taxation Office (ATO). Excise duty is currently payable on petroleum goods manufactured in Australia, while Customs duty is levied on imported petroleum products.
The current rate of both Excise and Customs duty on petrol and diesel is 38.143 cents per litre.
Currently LPG is currently excise free, however on 1 July 2011, excise will begin to be introduced on LPG in five increments of 2.5cpl taking it to 12.5cpl by July 2015.
The States and Territories of Australia do not impose any taxes on refined petroleum products, however they do receive payments from the Federal Government that includes some revenue derived from taxes and excise on petrol.
III. Wholesale market
10) What is the TGP?
Terminal Gate Price (TGP) provides transparency of petrol and diesel wholesale prices in WA. It requires operators of declared terminals to nominate a TGP or base price for fuel sold directly from a terminal. TGP is usually for retailers who buy fuel outside of a contract.
11) Where can I find the TGP?
FuelWatch publishes the TGP on the website. Tomorrows TGP will be published after 2:30pm.
12) How can some retailers sell below the TGP?
TGP is for retailers who buy fuel outside of a contract. Contracted retailers may arrange to buy fuel at a cheaper price than the TGP and pass this on to their customers. Plus the TGP price may seem higher or lower than retailer prices depending on the current day of the price cycle.
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