Understanding What Fuel Price Hike Is And Why It Happens


Have you ever wondered why the fuel prices are always fluctuating? A lot of people have their own theories but what many of them really care about is how much is it going to cost this time to have their tanks filled. But for those who want to understand what affects fuel prices all across the globe, you have come to the right place. Here are the most common causes for fuels to go up and down.

International  Benchmark Prices

This is by far one of the biggest reasons for the long-term price fluctuations of fuel. Other factors affect just a portion of the wholesale price percentage. Global oil prices are changing due to many reasons. This includes the following:

  • Manufacturing costs.
  • Oil supply and demand.
  • Tight competition.

Tax is a Major Factor

One of the main factors that affect the price of fuel is the tax added to it. Aside from the federal tax, an excise tax is added usually per gallon. Plus, the Leaking Underground Storage Tank fee is also added. And on top of all these taxes applied by the local and municipal governments, the sale taxes also adds to the final price of the fuel.

Fuel Price Cycles

This is the regular movement of the fuel prices for a certain number of days or weeks. If you have noticed, the petrol prices might spike one day and then fall the next week or two. And then out of the blue, it will spike again. The petrol price cycle is one of the factors that affect its fluctuating costs that are caused by petrol retailers.

Australian Dollar Value

Remember that the international benchmark prices are set in US Dollars. This means that the buying power of the Australian power will majorly affect the fuels’ retail prices. Just put it this way – if the Australian dollar value is low, the fuel prices are higher. And when the Australian dollar is high, fuel prices are cheaper.

Public Holidays

Another reason for fuel price fluctuations would be the public holidays. Though this is a short period, during these holidays there are higher demands for more petrol. So what retailers do is they peak their prices. And as a result, the fuel cost would be at its highest during the duration of the holidays. Still, these peaks are never higher than the average of the petrol price cycle.

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