Australian LPG Gas Pricing Explained
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. The Saudi CP is expressed in US dollars per tonne. As the international price is in US dollars, the Australian dollar exchange rate also affects the Australian price of LPG.
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.
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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.
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, transport and other related costs.
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The price of LPG is also impacted by government legislation. LPG is subject to what is commonly called the "Carbon Tax". For more information, please see this page from the Australian government: http://climatechange.gov.au/
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