Relief at the petrol pump is in sight for Wollongong residents, but won't come all at once.
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One expert believes the full effect of the federal budget cuts to fuel excise won't be seen until the end of next week.
Australasian Convenience and Petroleum Marketers Association CEO Mark McKenzie explained the thee main factors that affect the price of fuel for consumers.
"The first thing is the excse, which is charged on the wholesale cost of fuel to the service station," he said.
"That's paid by the station when the tanked leaves the terminal.
"At the time the excise was changed about 700 million litres of fuel were already in the ground, and service station owners had paid that excise.
"How long it takes a station to work through that fuel depends on how busy they are, but it can be anywhere from two to 10 days."
As service stations replace the higher-excise fuel with lower-excise fuel, the cost will graudally come down.
The next factor that affects the cost of petrol for consumers is competition.
Fuel prices are not regulated, so the market is driven by competition.
The more cheaply a station sells their fuel, the more customers they will get. The more expensive they are in comparison to their competitors, the les customers they will get.
If they sell their petrol for less than it cost to buy, however, the business loses money.
The business also needs to factor in running costs, like wages.
Some stations may drop prices before they have sold all their higher-excise fuel to attract more customers.
Finally, the cost of the petrol itself, or product cost. This includes the price of obtaining, refining and shipping the oil.
Mr McKenzie said about 85 per cent of cost of fuel to the consumer is product cost, which is affected by the cost of oil cost in US dollars, the exchange rate between Australia and the US, as well as shipping and supply chain charges and tax.
"The product cost was already beginning to drop when the excise was announced, so prices had begin to go down," he said.
"If the government had just cut the excise and everything else stayed the same you would have seen that come through, but it doesn't tend to work like that.
"There's a variance of about 21c a litre in petrol prices across Wollongong, and that's what you tend to see when you have a few abrupt changes like this.
"The good news for Wollongong residents is the price of petrol at the pump should continue to drop for the next week or so."
According to PetrolSpy Australia, in the Illawarra on Thursday the cheapest petrol was 192.9c per litre for E10 at several stations, while the highest was 216.9c per litre in Port Kembla and 215.9c per litre in Wollongong.
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