With food prices rising due to the recent floods, big increases in energy bills even before the impact of the proposed carbon tax, big increases in other areas such as private healthcare and education, and the flood levy due to kick in soon, consumers already are in no mood for spending.
The major retailers reported extremely difficult trading conditions during the recent profit-reporting season. Any additional squeeze to the household budget from petrol will only make us even more cautious.
As Macquarie Bank senior economist Brian Redican explains, the price of petrol has a big impact on consumer sentiment.
”Fuel represents about 3 to 4 per cent of consumer spending, but when we see petrol go to $1.40 or $1.50 a litre, it has much more of an impact than that,” he says.
Whether it’s because we see petrol prices advertised every time we pass a petrol station or because petrol is a grudge purchase at the best of times, higher petrol prices make us feel disproportionately poorer.
But higher petrol prices are something we need to get used to, according to AMP Capital Investors chief economist Shane Oliver.
He says that even if the oil price falls back when the Libya situation eventually resolves – and the country’s 1.6 million barrels a day of oil production, worth 2 per cent of global output, is restored – it won’t fall back far.
Dr Oliver predicts global demand for oil will increase substantially over the coming year as the US economy recovers to add to continued China-driven growth in Asian oil consumption. This will keep a floor under the oil price not far from where it is now, according to his estimates. ”In many ways, we have just got there sooner rather than later,” he says. ”We are going to have to get used to petrol at $1.40 to $1.50 a litre.”
As an indication of what is to come, the oil price did not fall back far during the recent global economic downturn, so now that economic demand is picking up again, the oil price is set to ride higher from a much higher starting point.
The US is particularly important in the global oil market because its consumption is enormous – they still use oil for heating and for fuelling relatively large motor vehicles.
The US consumes 25 barrels of oil per year per person, against 15 barrels a year per person in Australia and three barrels a year per person in China, according to Dr Oliver. So the economic recovery in the US has a huge impact on the global supply and demand balance for oil. In time, China’s per capita consumption will also rise, putting further pressure on the global oil market.
The upshot, says Dr Oliver, is that we need to get used to oil at over $US100 a barrel.
St George Bank chief economist Besa Deda is not quite as pessimistic. She is looking for oil to be back at $US93 a barrel by the end of the year. Even so, she says it will have a negative impact on exporters and lead to an increase in business costs.
This is from increased transportation costs and increased input costs – oil is a key component in products such as plastic and polystyrene – and because a higher oil price will act as a brake on global economic growth. All up then, little respite ahead for motorists or retailers – but great news for Australia’s $28 billion-a-year oil and gas industry.
Tag : will fuel prices crash market, graph of market fuel, palm oil, food prices, global commodity price, global oil demand 2011, oil consumption 2011, oil prices, petrol prices February 26, 2011 For the latest updates PRESS CTR + D or visit Stock Market news Today
Related Post:
Commodity
- Wheat, Gold, oil, Corn, Copper Prices dec 11 2012
- Greek worries weigh on shares, commodities market today nov 13 2012
- MCX commodities prices expected october 23 2012
- Corn, soybeans market forecast week october 22-27 2012
- U.S. grain futures down october 10 2012
- corn, soybeans futures prices 10-2-2012
- London copper futures outlook october 1 2012
- soybeans, wheat , Corn futures prices for 9/27 2012
- How will Wheat Crop Insurance in 2013
- soybeans futures prices down 9-24-2012
- Wheat, corn, soybeans prices down 9/24/2012
- Grain futures prices forecast september 24-28 2012
- Corn, soybeans futures prices 9/21/2012
- food prices expectation 2013
- Corn, soybeans, wheat prices september 17 2012
- corn, soybeans futures prices september 11 2012
- grain futures prices september 10 2012
- grain futures prices forecast september 10-14 2012
- Corn, soybeans futures prices sept 5 2012
- U.S. soft futures prices 9/5/2012
- Grains prices forecast sept 3-7, 2012
- USDA forecast Agricultural Exports 2013
- Grain futures prices outlook 8/31/2012
- Ahead Russian Agriculture Ministry meetings 8/31/2012
- Grain futures prices 8/30/2012
oil
- crude oil futures prices today have advanced
- WTI Crude Oil prices expected october 23 2012
- Crude oil futures forecast week oct 15-19 2012
- Crude oil futures prices october 2 2012
- Technical prediction Crude oil october 1-5 2012
- Crude oil futures prices september 28 2012
- Crude oil futures prices september 27 2012
- Crude oil futures prices down september 26 2012
- crude oil futures prices for 25/9/2012
- Why Crude oil futures down september 24 2012
- Crude oil prices for week september 24-28 2012
- India fuel consumption august 2012
- Crude oil futures prices for 9/21/2012
- Why Crude oil prices down september 18 2012
- Crude oil prices forecast september 17-21 2012
- Crude oil futures fell september 11 2012
- Crude oil futures down september 10 2012
- Crude oil prices for september 10-14 2012
- Crude oil futures september 3 2012
- Crude oil futures prices forecast september 3-7, 2012
- EIA expects oil prices for 2012 - 2013
- Crude oil price forecasts 2012 - 2013
- Brent crude futures ahead of Bernanke speech 8/31/2012
- Crude oil futures prices outlook 8/31/2012
- Crude oil futures prices outlook 8-30-2012
No comments:
Post a Comment