Bowser relief: Why the price of petrol is falling and how low will it go

According to the Australian Institute of Petroleum the average price of petrol in Sydney for the week ending September 22 was $161.3 a litre, a drop of -9.0, in Canberra $178.9 a litre, a drop of -3.8, and in Hobart $1.72, a drop of -2.9.

Melbourne and Darwin were the only markets to see an increase in prices.

The price in Melbourne increased to $191.5, a jump of 0.6.

Regional markets show similar falls.

The average price of petrol for the week ending September 22 for regional NSW/ACT was $173.3 a litre (a change of -4.8), in regional Victoria $179.0 (an increase of 2), and in regional Tasmania $175.6 (a drop of -2.9).

NRMA spokesperson Peter Khoury said prices should continue to fall.

"The wholesale price of petrol had fallen to a two-year low," he said.

"We should see prices continue to fall, there is no indication of anything else. Obviously, the benchmark is what we look at and there have been continuous falls."

Australian retail fuel prices are determined by movements in the international refined benchmark fuel prices (which are driven by international crude oil prices).

Recently crude oil prices have dropped, influenced by weaker Chinese consumption.

Compare the Market's spokesperson Chris Ford told ACM oil prices have also been affected by "some fears" of a broader recession, particularly in the US.

"Our oil benchmarks dropped by about 15 per cent since August through to mid-September, although have bounced back a touch in the last week or so," he said.

Mr Ford said Australia is also seeing a high inventory of fuel that could be a signal of less demand.

He projected most areas could go as low as $1.60 a litre or even mid $1.50 a litre.

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