Petrol prices to stay high until year’s end: Economist

A leading economist expects petrol prices to remain high for the rest of the year, raising concerns about the impact on small businesses, particularly those in regional areas.

CommSec chief economist Craig James told SmartCompany this morning that unless demand for oil around the world starts to drop off, price decreases are unlikely for motorists.

James says with petrol prices reaching as high as $1.45 per litre weeks ago, and now sitting at about $1.40, customers continue to be focused on keeping their fuel costs down.

The Council of Small Business Organisations of Australia says the prospect of fewer car trips and continued crimped expendable income is worrying.

“All of us who drive a car find it [prices] awful,” he says.

“It impacts on low-income people, and I include small businesses in that. I know people who own two to three cafes, employ 10 or so people, and have to do a lot of driving around every day. It’s an expense that comes out of their own pocket.”

Strong was particularly concerned about small businesses in regional areas, where the price of petrol is currently five cents higher than city prices.

“Having a car is essential to getting around in regional areas. If you make it difficult for someone to get to a shop, the shops will suffer,” he says.

James says while there seems to be a price war in Sydney, due to greater competition, it remains to be seen whether operators will cut prices elsewhere.

“Our view is the oil markets are dragging their heels in terms of pricings,” he says, adding that fuel prices are notoriously difficult to predict.