Hi , I currently own a diesel vehicle and have always wondered why Diesel fuel is so much more expensive in Australia than Petrol.
I was under the impression that Diesel fuel costs less than Petrol to refine and that the only reason Diesel is so expensive in Australia, was taxation and the international price that has to be paid when importing Diesel into Australia.
I was in Wellington last weekend and I noticed that Diesel was priced at $2.20 NZ and 98 Premium was $2.87 and 91 Octance was $2.53 NZ per litre, The difference is significant, especially as NZ imports all its fuel. So is Diesel expensive compared to Petrol in Aus because of Govt Tax or just plain Greed from the oil companies, or a combination of both, is the question?
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That I cannot say. However diesel has not always been more expensive, there have been times in the past when it was not. If anybody knows the industry please jump in with better information.
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I remember those days to, however they seem like a long time ago now.
It interesting that, as our trucking and farming industry and many others use machines that still need to run on diesel and without them we dont have an economy, it appears they are being exploited, for providing their essential services.
I to look forward to some informed commentary from someone in the industry. who can explain this apparent pricing anomaly.
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NZ taxes petrol through an excise duty on fuel sales. Diesel vehicle users however pay a RUC (Road User Charges) based on kilometres driven.
‘Rates of petrol excise duty and road user charges | Ministry of Transport
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Diesel price is affected greatly by demand for the fuel. When other countries have an increase appetite for diesel, the price goes up. As diesel is also an industrial fuel, the impacts on demand are broader than for petrol. This website explains it well:
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Hi, Thanks for sharing that, as I was not aware of this . Does this make Aus diesel cheaper in real terms than NZ?
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Hi , Thanks for sharing this. It was interesting to see Diesel and Petrol price points over the years. I still think given the current price of a barrel of oil, compared to when we all got squeezed when oil price skyrocketed to $160 US per barrell, we are still being taken for a “ride” by the oil companies and the Govt, when it comes to currently prices at the pumps.
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NZ has been varying the RUC in response to supply price increases. You might like to do the maths yourself. Note it’s a moving target and the RUC varies with the class of vehicle based on a per kilometre rate.
‘https://www.nzta.govt.nz/vehicles/road-user-charges/ruc-rates-and-transaction-fees/
I’ve always found NZ fuel prices when over there to be higher and more variable than in Australia.
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Pricing is dependent on demand (Law of supply and demand). The price of a barrel of oil is only one factor affecting pricing.
Hi, I still reckon we are being gouged. The oil companies talk able pricing cycles, which is just a fairy tale, as far as I am concerned. Oil was $110 US a barrel in 2013 and we were paying $1.50 per litre for petrol. In 2015 Oil was $52 US per barrel and we were paying $1.20 at the pump. 8 years later in 2023 oil is around $65 US per barrel and we are paying $2.20 per litre at the pump. Even with the law of demand and supply it appears excessive. Unfortunately, the oil cartel continues to have us all over a barrel. 
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It is worth reading…
https://aip.com.au/resources/facts-about-international-fuels-market-and-prices
The profit margin for fuel is around 9%. Input/refined product costs (57%) and government taxes (34%) make up the rest.
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Crude oil varies in its make up (ingredients). The percentage of a barrel that can be turned into petrol and diesel is an economic decision. IE Optimisation of the refining costs for a particular crude vs market prices of each product. There are also constraints where older refineries often have less flexible/capable technology. Depending on all the variables refiners typically recover around 1 litre of diesel for every 2 litres of petrol and 1.5-2.0 litres of other products (kerosene, jet fuel, LPG etc).
When demand for any one product increases out of proportion with existing production refiners need to adjust as best they can. Simply producing more diesel if demand increases by processing more crude is not a solution. The refineries would be left with a surplus of petrol, and other products with no customers. The refineries respond by changing the type and source of crude as well as some refining. There are limits to the adjustment based on the feedstocks available (type, quantities, cost), a limit to the total refining capacity and the ability to meet the increased demand. Hence higher prices for diesel due to the inability of supply to meet demand. Which is the end point of the article linked by @phb.
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Just for another perspective, I’m in Canada & Diesel is more expensive here than Leaded & Unleaded Fuels also. For a look at pricing around the glove you could have look at this site though I don’t know it’s veracity:
Cheers Ross
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Perhaps time for an EV then?
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I have some financial notes that I made previously about the price of diesel in Australia that might be of interest. I don’t record where I get such information from, so I can’t tell you that. Here it is anyway…
• Diesel prices are higher than petrol because transport, industry and agriculture use it and the wholesalers and retailers know they have no alternative. Diesel is actually cheaper to produce because it is less refined than petrol. Diesel prices are also affected by the prices of other fuels used for heating and electricity generation, with prices rising when these other fuels become too expensive. When mining or agriculture are booming, they use more diesel, leading to higher demand and prices. Diesel is also the main fuel used in Asia, including China, with these countries’ high growth also resulting in higher demand for diesel. Diesel prices in Australia tend to go up during summer, due to the increased demand in the northern hemisphere for diesel used in heating during their winter. Diesel and petrol prices can go up if there is high demand for other refined fuels, such as avgas, since refiners will produce more of those fuels if prices are higher. Wholesale diesel prices closely follow Singapore prices, as 60% of our diesel comes from there. Australian wholesale prices (TGP – Terminal Gate Price) tend to lag Singapore prices by 1-2 weeks, longer in regional areas. The value of the Australian dollar relative to the US dollar also affects fuel prices.
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Not for nothing the big oil companies refer to Australia as ‘Treasure Island’.
It could assist understanding to clarify the context and source of the assessment and how they derived the comment.
Doubtless there are many things to treasure about our wonderful country. It’s not the first time this phrase has been used to describe corporate greed.
‘Australia known as 'Treasure Island' by health giants
Looking to the link @ross2 offered on global petrol (gasoline) and diesel prices might be worthwhile. Across the globe our fuel prices appear very reasonable compared to many European nations. They are cheaper than NZ and approx 12% more expensive than the USA on the data sampled. For that comparison note most of Australia’s fuel is imported over water while the USA produces most of its own needs, supported by imports from Canada. It’s nearly 9,000km from Singapore to Sydney by sea. Approx twice the distance from LA to New York.
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In addition, the conversation in this thread leads one to consider advancements in EV technology and the fact it seems all passenger and industrial manufacturers (particularly for Mining) are producing EV vehicles… with good reason. Perhaps the thought now is why am I in a Unleaded, Diesel or EV vehicle and the considerations definitely now include “what vehicle” along with “which power source” for a specific use… both in an urban or country environment. Ford’s new F-150 Lightning is reported all over as a game changer and possibly an OK inclusion in this conversation. Anyway, I’m taking us away from the main question that was asked, but heard this on Australia’s very own Big Ideas recently and found it fascinating: Big Ideas: Electrify everything: a blueprint for decarbonising Australia on Apple Podcasts
For those interested in the alternatives there are opportunities to further those thoughts in other topics. Some suggestions.
On EV’s
- National Electric Vehicle Strategy
- Would you buy an electric vehicle - Why or why not?
- Buying the Best Electric Vehicle - for your needs
- Electric vehicle news
- Home Electric Vehicle Chargers
For Energy
- The future of energy
- Electricity or gas heating
- What to consider when switching from gas to induction
Our household is not a large user of diesel. At most a few hundred litres each year. It has been an added shock to the budget. There are many small scale users in the community. The investments from backup generators to small scale property plant and equipment can have very long lifetimes, 25+ years. Enough reason to expect an ongoing demand for diesel fuel and consumer interest in the price.
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It has application beyond just a fuel as I am sure you are aware.
I used small amounts of diesel for some herbicide applications as some herbicides are oil soluble and diesel fits the bill as the solution.
Even the NSW DPI include instructions on its use for the purpose.
Price rises are therefore affecting more than transport.
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