It seems that Australian petrol prices are even more volatile than I imagined. Just a week after predictions that petrol prices were likely to remain high during 2007, prices are now tipped to fall by as much as 10 cents a litre (US$0.30 per gallon) after world oil prices dropped to a 19-month low. Oil prices are now a third less, at US$54 a barrel, than their record last July of US$78.40 leading to lower fuel prices for vehicles and jet planes.

Some airlines are expected to hold onto their fuel surcharges despite the oil price falls to recoup lost profits from the price of fuel rising from 14 percent to 30 percent of costs in two years. Expect consumer groups to have some words over that.

As we covered recently, hybrid sales may well fall this year if fuel prices continue to fall. The viability of biofuels producers will also be strained by oil prices coming down. Ironically, the organisations least likely to feel the pinch are the oil companies themselves whose financial break-even point is still far below current prices.


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