Escalating tension in Europe has sent global oil prices towards $US100 a barrel, which will eventually result in even higher petrol costs at the pump.
Prices hit a fresh seven-year highs on Monday with Brent crude oil above $US95 a barrel as speculation of Ukraine-Russia conflict mounts.
Commonwealth Securities senior economist Ryan Felsman said oil prices have already risen for eight successive weeks on market expectations that crude demand will outpace supply as the global economy rebounds from Omicron variant disruptions:
"Rising geo-political tensions in Eastern Europe could be the major catalyst needed to justify crude oil's potential move above US$100 a barrel."
Meanwhile, rising oil prices are feeding into petrol prices in Australia.
The Australian Institute of Petroleum said on Monday the national average retail unleaded petrol price rose by 5.1 cents in the past week to a fresh record high of 176.9 cents per litre.
The institute said the petrol price hit record highs of 182.3 cents a litre in Melbourne, 185.2 cents in Hobart, 177.3 cents in Canberra and 181 cents in Perth:
"Filling up the car with petrol is one of the single biggest weekly purchases for consumers, with inflation and cost of living pressures a focal point in recent consumer sentiment surveys.
"Assuming the purchase of 35 litres of petrol per week, Aussie households are currently spending $247.66 a month on petrol."
On Friday, Energy Minister Angus Taylor was trumpeting the federal government's intervention to improve national fuel security.
The Government finalisted its first quarter of the Fuel Security Services Payment, with payments well below the maximum support available.
For quarter one of 2021-22, the Department of Industry, Science, Energy and Resources granted Viva Energy will receive $12.45 million, while Ampol will not receive any payment as their payment rate is 0 cents per litre.
The payments secured the ongoing operations of the Ampol Lytton Refinery in Queensland until at least 30 June 2027. The Viva Energy Geelong Refinery in Victoria has extended its commitment until 30 June 2028 – one year more than the minimum period required under the Fuel Security Act 2021. There is an option for both refineries to extend these commitments to mid-2030.
However, the Minister's office conceded in response to questions from FlowNews24 that in retail terms for motorists, the fuel security forms at best were saving 1c per litre:
Modelling has shown that there would be around a 1 cent per litre increase that the bowser if all refineries close in Australia.
The annual rate of inflation rose by 3.5 per cent over 2021 and above the Reserve Bank of Australia's two to three per cent target, led by a 32 per cent increase in fuel prices.
Rising inflation, along with a falling unemployment rate, are key factors behind expectations of an interest rate rise by the central bank this year.
Many economists are predicting a move in the cash rate in August, by which time the RBA would have had time to consider two further quarterly inflation reports.
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