Soaring oil price hits road, air travel
STUART INNES, PETER VENESS,
AUSTRALIAN motorists and airline passengers face big fuel and ticket price rises after world political tensions pushed crude oil prices past $US87 a barrel yesterday.
Qantas and Virgin Blue last night confirmed ticket prices were under scrutiny as jet fuel hit $US95 a barrel amid fears on global oil markets crude supplies from Iraq could be disrupted.
Turkey's threat to bomb northern Iraq and Russian President Vladimir Putin's visit to Iran yesterday promoting the surge in crude prices.
CommSec equities economist Martin Arnold said the main concern was Turkey's threat to bomb Kurdistan, the northern region of Iraq which is home to the Marxist-Leninist militants, known as the PKK.
"The geopolitical tension is forcing the prices higher and that means there is unlikely to be any stabilisation in the price of oil until there is some resolution," he said.
"It's probably likely to drive (prices) even higher than where it is."
The arrival of Mr Putin in Tehran yesterday also is unlikely to help ease tensions across the Middle East.
Traditionally, a $US1 increase per barrel in crude oil translated to 1c a litre at the pumps in Australia. RAA fuel price analyst Matthew Hanton said yesterday the growing strength of the Australian dollar, now more than US90c, had counter-balanced overseas crude oil price rises.
"Crude oil is reaching levels we have never seen but that has not flowed through to the pumps here because of our dollar," he said. "If our dollar was still worth around 70c a litre, petrol prices would be way past $1.50 a litre."
Predicted tight supply next year has encouraged speculators to buy "oil futures", raising the price.
Meanwhile, diesel fuel buyers could also face steep rises.
A predicted cold northern hemisphere winter has led to record prices and high demand for heating oil.
Usually, if refineries make more heating oil, it is done by producing less diesel fuel, lifting diesel prices.
Motor Trade Association deputy executive director Dennis Boldock said SA motorists were becoming hardened to fuel prices, albeit reluctantly.
Australian Automobile Association research and policy director John Metcalfe said retail prices at service stations would be monitored to watch for oil companies taking advantage of the overseas crude oil rise.
It normally took seven to 10 days before a price rise flowed through to the retail pump.