Petrol prices set to rise

The falling dollar means the cost of imported fuel has risen

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published May 22, 2013 11:42 am AEST

The falling Australian dollar means motorists will pay more for petrol, with prices expected to jump as much as 5 cents a litre in the next couple of weeks.

Petrol prices are currently at discount levels, but because the Australian dollar has lost 5 cents against the US dollar, since the start of this month, the cost of imported fuel is set to rise. The Singapore unleaded fuel price is up over $10 in the past fortnight, in Australian dollar terms, and is expected to flow through to Australian motorists shortly.

The Singapore benchmark price of petrol is the key price benchmark for Australia, with the majority of our petroleum coming from refineries in Asia. Caltex Australia Limited (ASX: CTX) and other petrol importers like Mobil, BP and Shell generally base their wholesale prices on Tapis crude oil, and Singapore refined petrol.

Shell Australia has an agreement with Coles – owned by Wesfarmers Limited (ASX: WES) to operate most of its service stations under the Coles Express banner, while Woolworths Limited (ASX: WOW) has a similar agreement with Caltex.

Over the past 12 weeks, average weekly petrol prices have fallen from over 150 cents per litre, to below 138 cents a litre, according to the Australian Institute of Petroleum. That is likely to change as the effect of the falling exchange rate filters through. It also hasn't helped that US dollar prices for fuel have risen over the past month.

Foolish takeaway

As we've noted previously, some days of the week are consistently cheaper to buy fuel. That may become more important for motorists looking to save some dollars as petrol prices rise.

In the market for high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!