Why is the price of fuel in Australia affected by international events like hurricanes in the USA, a cold European winter, terrorist attacks in Nigeria or refinery maintenance in Asia?
Events in other parts of the world that affect either the supply or demand of crude oil or refined products can lead to changes in the price of refined products in the Asian region and Australia. Around 25 per cent of petroleum products used in Australia are imported. Wholesale prices are based on import parity prices, which are a calculation of the cost of importing products to Australia. The USA is the among the world’s biggest users of refined products, so if a natural disaster like Hurricane Katrina in 2005 affects a large number of the refineries that normally produce products for domestic use, more imports are needed which can be drawn from other regions around the world. This can reduce the supply of refined products available in the Asian region, pushing up prices. Similarly, demand for refined products could increase in other parts of the world such as Europe caused by an unusually cold winter leading to increased diesel and heating oil consumption. This in turn could mean mor
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