Motorists warned of petrol price squeeze. 07/07/2006. ABC News Online


There are warnings for motorists that fuel prices could be as high as $1.50 per litre by next week.
Oil prices in the US reached an all-time high of $US75.40 per barrel this week as a result of global conditions.
Beth Ann Bovino, from Standard & Poor's, says the market has jumped on missile tests by North Korea and political anxiety about Iraq and Iran.
"The geopolitical risk premium that's added to oil prices is now probably between adding about $US10-$US15," she said.
Geoff Trotter, from industry consultants FUELtrac, says the price hikes will flow through to Australian bowsers in about a week's time.
"The full impact of that won't be felt until next week, and that increase should flow through in relation to about a 3- or 4-cent-a-litre increase at the pump," he said.
Price discrepancies
Australian motoring groups say during Hurricane Katrina, which caused the price of crude oil to rise when it hit the US last year, the gap between oil prices and the cost at the pump widened.
Lauchlan McIntosh, from the Australian Automobile Association, says that is happening again.
"When we look at the numbers and look at the data, unfortunately, we're tending to be misled a bit by the general view that it's all because of the oil price rise," he said.
"It's not all because of the oil price rise, it's because the margins are progressively increasing over time - by the wholesalers, the refiners and the retailers."
Motoring groups say rising prices will add to inflation, raising the chance that the Reserve Bank will increase interest rates next month.
Mr McIntosh says it is all the more reason for the Australian Competition and Consumer Commission to take a more aggressive role in the fuel industry.
"They make these general, sweeping statements that there is no anti-competitive behaviour going on," he said.
"That may be the case, but what's clearly happening is the margins are increasing."
Further rises
Ms Bovino says she is concerned that the added impact of demand from China, a shortage of refineries and the American driving season, could see oil prices rise toward more than $US100 per barrel.
But Mr Trotter says that is unlikely to happen without help from speculators.
"The hedge funds do play a very important part," he said.
"There's been speculation by a number of them to try and talk the price up, as it were, in the order of US$100 a barrel.
"They haven't achieved that, but any piece of bad news is good news for them."
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