Diesel pumps up the profits
Motorists driving diesel vehicles are propping up profit margins of oil companies as prices fail to tumble in line with unleaded and E10.
The gap between average diesel prices in Perth and petrol has spread to a six-year high, leaving motorists footing the bill.
According to FuelWatch, diesel averaged $1.45 in Perth last month. Unleaded prices averaged 126.4 cents, while E10 users were even better off as prices averaged 121.3 cents.
Separate figures kept by the Australian Institute of Petroleum show the profit margin on diesel - the difference between average wholesale and retail prices - hit 24 cents a litre. The margin on unleaded petrol was 14 cents.
Almost half a million vehicles in WA, about 23 per cent of vehicles, need diesel.
In the past year, the number of diesel-fuelled vehicles in the State rose 10 per cent - but motorists hoping to benefit from better fuel economy are being stung by higher prices.
The gap between diesel and unleaded is now 18.6 cents a litre.
The last time the gap was so big was in August and September of 2008, when oil prices were plummeting towards $US40 a barrel.
Within eight months, the gap had fallen to just 2 cents a litre. But over that period, more motorists began using E10.
The gap between average E10 and diesel prices across Perth this week stood at more than 30¢ a litre. The average also hides the weekly price cycle that has unleaded petrol prices falling sharply at the start of a week. Diesel prices do not have a similar cycle.
CommSec chief equities economist Craig James said the figures pointed towards oil marketing firms trying to make up profit on diesel that was being lost because of the big falls for unleaded.
"The oil companies are trying to expand margins where they can, and in terms of diesel it doesn't get the sort of attention from motorists and the media that unleaded does," he said.
Mr James said there was scope for diesel prices to eventually fall as companies worked through their higher priced stores.
He said because diesel was in less demand than unleaded, it took longer for service stations to bring in cheaper supplies.
Motorists may soon see a sharper fall in unleaded.
Global oil prices will enter the first full week of the year at less than $US55 a barrel.
Oil prices are at their lowest since 2008.
