mortgage belt suburbs be afraid be very afraid, page-29

Rising fuel prices might give the CPI and thus interest rates a kick along.

Things aren't looking too good for the leveraged to the hilt, car reliant, mortgage belt suburbs.

smh.com.au

Petrol prices soar - and no relief in sight
CHRIS ZAPPONE
March 19, 2010 - 10:23AM

Petrol prices have soared to a 16-month high and analysts say drivers can expect little relief in the short term.

Unleaded petrol, which has surged 16 cents a litre to $1.38 since the end of February, is expected to push even higher as the price of crude oil climbs - already double what it was a year ago - on international markets.

Since the start of the month, unleaded petrol prices in Sydney have ranged between $1.159 and $1.389 a litre, in Melbourne prices spanned $1.135 to $1.379 and in Brisbane it was $1.159 to $1.389 a litre.

And the end of a price war between retailers will add even more to the cost of filling up in the weeks ahead.

The price of a litre of unleaded petrol was $1.22 at the end of February, according to the Australian Institute of Petroleum.

CommSec analyst Savanth Sebastian said motorists can expect petrol prices to rise 1 to 2 cents a litre over the next fortnight, as retailers inflate their margins amid what is expected to be continuing strong demand for oil on the global market.

'There was a price war for a month and now ... companies that were selling petrol below cost are now starting once again to inflate those margins to stay profitable," said Mr Sebastian.

Retailers traditionally raise and lower petrol prices on a weekly basis to compete with one another, while staying within a market price range.

At the moment, unleaded fuel prices in Sydney are between $1.15 and $1.38 a litre, in Melbourne they are $1.20 and $1.38 a litre, data from petrol-price tracker MotorMouth shows.

A litre of unleaded in Brisbane costs between $1.20 and $1.38, while the same litre in Perth is currently going for between $1.20 and $1.38.

Mr Sebastian said the strong Australian dollar which has increased 7 per cent since February 1 is one of the key reasons petrol prices have not risen even further. "Effectively it has curtailed the rise in petrol prices to an extent."

The strength in the global economic recovery is adding pressure to crude oil prices, he said, with a barrel of oil at $US82 - double its cost a year ago.

Even if prices do begin to fall as retailers resume the discount cycle, those falls are expected to be moderate, MotorMouth marketing manager Sean Rennick said.

Any short-term falls, helped by a slightly lower price for Singapore unleaded a benchmark for Australian fuel prices - will be "very small," Mr Rennick said.