Oil price surge to hit family budgets as Chris Bowen says no further relief will come for motorists

Families face a double whammy hit of skyrocketing petrol prices — which are heading towards $3 a litre — and a widely-tipped interest rate hike later this month.

With the average price of regular unleaded petrol now at about $2.25 a litre and diesel even more expensive at $2.68 a litre, experts say consumers can expect to devote a bigger portion of their household budgets to filling up the car.

“It’s a bit messy for Australian budgets. It’s not coming at a good time, the Reserve Bank is likely to raise interest rates again this month,” AMP chief economist Shane Oliver told The Nightly.

According to AMP, the average Australian household who has a petrol car is now spending around $127 per week on filling up their car, up $20 a week from pre-war levels.

Motorists pay an extra 10¢ a litre for every $10 increase in benchmark prices, he said.

The price of global benchmark Brent crude oil is hovering around $US108 a barrel, up from about $US106 earlier this week. Meanwhile, West Texas Intermediate — an American benchmark which is usually cheaper than Brent — is about $US105 a barrel.

“The big unknown is how much the oil price goes up. Worst case scenario is that it hits up towards $US150 a barrel,” Dr Oliver said, which in this case would add about 45¢ a litre for unleaded petrol to $2.70 a litre on average.

“Whether it continues to rise depends on how long this situation in the Middle East continues to re-escalate and the oil supply remains disrupted.

“Iran has an incentive to continue disrupting oil supplies because they know it will make life tough for Trump going into the mid-term elections.”

Yemen’s Iran-backed Houthi rebels further jeopardised supplies with more attacks on Saudi Arabia earlier this week after the kingdom’s 1200km crude pipeline was damaged last week.

Gulf states had been using the pipeline to bypass Iran’s blockade of the Strait of Hormuz after the US-Israel strikes on Tehran in late February.

Trucking groups say fuel now accounts for about two-thirds of businesses’ operating costs, and consumers can expect to feel that at the checkout.

“That’s going to be passed on, so ultimately, every business and every consumer is going to feel price increases,” Cam Dumesny, chief executive of the Western Roads Federation — the peak industry body for road transport, logistics, and commercial road users in WA — said.

“We consume, as a nation, around about 90 million litres of diesel a day . . we are dreadfully concerned about the price of diesel going north of $3 a litre.”

NRMA spokesman Peter Khoury echoed Mr Dumesny’s comments.

“When diesel goes up, everything goes up because our economy runs on diesel — farming, agriculture, transport, mining,” he said.

“Not only do you pay for it at the bowser but unfortunately, you also pay for it in the supermarket aisle, at the butcher and everywhere else.”

Federal Energy Minister Chris Bowen has already dismissed the reintroduction of fuel excise relief for Australian motorists.