Reason for the hike in prices lies with the Saudis more than australian domestic prices. If you wish to see what taxes u pay on lpg per state, have a look at these diagrams at caltex -
http://www.caltex.com.au/pricing_pla_lpg.asp
Also from Autogas Australia -
http://www.autogaschallenge.com.au/A...as/pricing.htm
To understand the fundamentals of LPG prices in Australia, it is necessary to have an appreciation of the history of LPG supply in Australia and an awareness of current international and local LPG supply realities.
Prior to 1970, only relatively small volumes of LPG were available from oil refineries. However in 1970, the Bass Strait producers decided to extract LPG from the oil and gas streams and constructed a world scale LPG fractionation plant at Westernport, Victoria. Local LPG demand in Australia was not adequate to economically justify such a plant but adequate demand from Asia underpinned its economics. Thus the plant was built originally as an export facility.
However, with the growth in local demand over the following decades, the producers installed more local distribution facilities. Local demand now absorbs approx. 75% of Bass Strait LPG supply and it is now mainly butane, which is surplus to local requirements that is exported from Bass Strait. Propane is more widely demanded due to its traditional use in heating in Australia.
Demand has now grown to such a point where local propane supplies on the Australian East Coast need to be supplemented and over 300,000 tonnes per year is imported.
<b>Due to the fact that the Bass Strait producers and other producers in South and Western Australia can export their LPG at world prices (in US Dollars) and that importers of LPG onto the East Coast have to pay world LPG prices including freight to land the propane on the East Coast, Australian LPG prices reflect international price movements. </B>
There is no truth in claims that Australian LPG is exported to Japan at 5 cents per litre. Australian exporters mainly from W.A. achieve better prices than the international benchmark prices listed below because Australia is close to the main consuming countries of Japan and China and the producers can enjoy freight cost advantages.
<b>The major producer and exporter of LPG in the world is Saudi Arabia and major buyers in Asia (eg. the Japanese) purchase their LPG at the Saudi Arabian Contract Price (CP). This price is adjusted on a monthly basis to reflect worldwide supply and demand fundamentals and applies to deliveries of LPG made in the Arabian Gulf. </b>
It therefore represents a base price that would be available to Australian LPG exporters and a base cost to Australian LPG importers to which freight and other handling costs have to be added.
Looking at the average for the 2001 year of the Saudis - $US273
Looking at the average for NOV 2002 - $US327.
Analytically, possible disruption to LPG supplies from conflict in the gulf are forcing prices up. I imagine the australian companies involved have realised this - and are probably stocking LPG to supply demands (at a higher price of course) due to this disruption. What it means to us now is that we are experiencing this uncertainty as well as the miser (stockpiling) position of the petrolium coys.
Also it is interesting to note that Japan is a major influence on prices - given the failure of Japan to recognise Israel during the oil crisis of 1973/4, Japan has for quite sometime been experiencing more favorable prices from oil from the middle east for quite a while. ie it could be worse.....
LPG prices
Linear Mode
