Australian LPG Gas Pricing Explained
There are many factors that go into determining the price of LPG. These all fluctuate over time. The following should help explain all of these factors.
World LPG Benchmark Pricing
Australian LPG prices reflect the fact that LPG is an internationally traded commodity and influenced by international prices. The international benchmark for the cost of Australian LPG is the Saudi Aramco Contract Price, also commonly called the Saudi CP.
This is the same for all internationally traded commodities. Agricultural and natural resource products are similar to LPG, in that they are subject to the prevailing price in international commodity markets. Australia does not have an influence on LPG price benchmarks, as our production of LPG is small compared to worldwide production. The same is true for the Australian pricing of crude oil and refined products, which are also linked to international prices.
The Saudi CP is expressed in US dollars per tonne. As the international price for LPG is in US dollars, the Australian dollar exchange rate also affects the Australian price of LPG.
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LPG Transportation Costs
Australian LPG is sourced from oil & gas fields, refineries and importers. Transport costs and refinery terminal fees are also a significant part of the overall cost of delivered LPG. As these can vary across the different geographical locations of Australia, LPG pricing can also vary by location and distance from the source.
The seasons can also affect LPG costs, as the worldwide demand is generally higher during the northern hemisphere winter. In general, higher demand results in tightening of supplies and an increase in prices.
The government affects the price you pay for LPG through the application of taxes. GST applies to all LPG sold in Australia. This adds 10% to the price of the LPG.
In addition, LPG used for vehicles -- autogas -- is also subject to an excise tax. Excise tax on LPG started in 2011 and has been increased every year since. It is currently 10.2 cents per litre.
Geo-Political Issues and Supply Interruptions
Embargos, wars and social unrest in LPG producing countries can adversely affect supply and drive prices upward. Natural disasters, like earthquakes and fires, can also have an effect.
While Elgas is the largest marketer of LPG in Australia, we are also dependent on the primary LPG producers for the product and are subject to changes in the international price, taxes, transport and other related costs.
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