Petrol cost on way up
GEO-POLITICAL instability, increasing demand for oil and early impacts of the carbon tax will see unleaded petrol prises soar in the lead-up to Easter, a Goonellabah-based economist warns.
Adjunct Professor Lawson Savery said the three factors would see the price of unleaded petrol increase to between $1.50 a litre and $1.53.
But he said there were obvious reasons to explain the increase.
He said global demand for oil increases as the northern hemisphere moves into its summer and motorists become more active.
But, most significantly, instability in the Middle East posed a significant threat to supply, against which oil refiners and nation-states were taking out insurance, he said.
"On July 1, Europe will ban all oil imports from Iran, and Iran has responded by saying it will block the Straits of Hormuz," Prof Savery said.
Iran sits to the north of the Straits of Hormuz, which is the only passage to the open ocean for Persian Gulf oil exporters to ship their goods.
"If they block it there won't be any oil coming through and about 30% of oil comes through that part of the world," he said.
"If (Iran) do block (the Straits), that will be the start of a hot confrontation - the US won't take that lying down.
"So that is leading the US and others to start buying oil on the off chance there is a need for them to have reserves."
Seven-day rolling average unleaded fuel price as at March 1 (cents per litre):
Tweed Heads South 145.3
Sydney (Parramatta) 140.1