Fuel may hit $1.30 a litre
By MICHELLE WAGNERnewsroom@gladstoneobserver.com.au
GLADSTONE residents could pay as much as $1.30 a litre at the bowser for fuel by the year's end if global demand for oil continues at its current pace, an economist said.
Westpac economist Jonathan Cavenagh said rising fuel prices had the potential to put further pressure on household budgets and dampen spending impetus.
'In an environment of high debt servicing costs and a deflating property market, rising fuel prices will certainly put households on notice to curb spending,' Mr Cavenagh said.
His comments came amid reports that diesel fuel prices peaked above $1.30 in some parts of New South Wales last week, while in Gladstone residents were paying $1.17 per litre as a result of crude oil spiking to US$60 a barrel early this month.
Mr Cavenagh said some relief for consumers had come in the form of the first tranche of the Federal Government's $3 billion worth of personal tax cuts over 2005/06 but he expected households nationally would use this to 'repair already stretched balance sheets'.
He said Westpac's outlook was based on two possible scenarios for oil prices.
Both scenarios were based on a forecast of the Australian dollar at US72 cents by the year's end and crude oil prices at a range of between US$50 and US$65 per barrel, he said.
'In turn, prices at the bowser would rise to around $1.30 a litre on average across the country, representing around a 40 per cent increase on fuel prices in 2004,' he said.
Mr Cavenagh said this equated to an extra $14 per week in household spending.