Autos are Superior
diesel pain dogs drivers, worse to come chris zappone
april 12, 2011 - 9:18am
drivers of diesel cars face higher costs at the bowser without the benefit of weekly dips in price like petrol, analysts say.
Petrol prices stand at 30-month highs, with more increases expected to come. Diesel, like petrol, is influenced by the global fundamentals of supply and demand, which have been strained recently by the political volatility in the middle east.
Racv general manager of public policy brian negus said the libyan crisis was causing "economic speculation” which affected domestic petrol and diesel pricing.
“normally what drives price is supply and demand. Currently, it's people speculating as to what the strife in (the middle east) might do to the supply in the future.”
in march, the weekly average price of diesel rose by around 9 cents in melbourne while a litre of unleaded petrol rose by about 5 cents, data from petrol price tracking service motormouth shows.
Motoring and services group nrma senior economist wal setkiewicz said the cost of diesel was accelerating more quickly than petrol.
Before the financial crisis hit in 2008, a litre of diesel rose to $1.90 in sydney versus $1.60 for a litre of regular unleaded, he said.
“i would expect that if current trends continue the differential between diesel and unleaded will widen again,” he said.
No 'cheap' days
but diesel's steadily increasing cost comes without the weekly price cycle that can swing as much as 12 cents over seven days, allowing savvy petrol consumers to buy on cheaper days, mr negus said.
“petrol at certain parts of the week comes down in price,” he said. That's because retailers change prices to stay competitive with local rivals. “you don't get the same demand issues for diesel because of the lower volume sold.”
on march 1, a litre of unleaded petrol in sydney was at $1.40 a litre and has fluctuated between about $1.37 and $1.49 since then. Over the same period, diesel has risen from $1.42 to about $1.53.
Rising costs will also hit businesses who rely on diesel-powered trucks and light commercial vehicles.
In addition to the popularity of diesel vehicles in australia, the industrialisation of china and india is helping to drive up diesel prices.
petrol consuming vehicles made up 84.3 per cent of the market in 2006 but only 73 per cent in 2010, fcai data show. Over the same period, diesel vehicles rose from 13.8 per cent to 25.2 per cent.
The quality of the diesel used by motorists has increased in recent years as well, according to racv's mr negus.
From 1994, the european union began raising the standards of diesel production, in successive measures. In the early 2000s, australia adopted the same standards, creating a cleaner, more high-performance fuel.
“the diesel you're buying now is refined at a higher standard,” said mr negus. “it's particularly suited to higher performance diesel cars (people) are buying now.”
historically diesel cars were cheaper to operate than petrol vehicles, said mr negus, both because of lower fuel consumption levels and lower diesel prices.
“but the differential in fuel price increases on diesel means you won't get your money back for the first three years on a new car, based on rising costs.”