News Service from House Harris

Fed: Motorists to face rising petrol prices as oil jumps

CANBERRA, May 11 AAP - The past week has seen the biggest fall in petrol prices in five months, but motorists should brace for a sting at the bowser as global oil prices surge.

"Unfortunately for motorists the good news is all but over," Commonwealth Securities economist Savanth Sebastian said.

The Australian Institute of Petroleum's weekly petrol prices report showed the national average price fell by 2.6 cents to 115.5 cents per litre in the past week.

Mr Sebastian said this was the biggest fall in five months.

The average metropolitan price fell 3.1 cents a litre to 114.7, while the average regional price fell 1.6 cents to 116.9.

However, Mr Sebastian expects pump prices to rise by five to seven cents a litre in the next fortnight.

He said the Singapore oil price, which Australian petrol prices are set against, had followed equity markets higher, jumping by 20 per cent in the space of a week.

"Concerns over a swine flu epidemic have taken a backward step and tentative signs of an improvement in the global economy has resulted a rally in commodity prices," he said.

"Not even the sharp gain in the Aussie dollar has been able to significantly buffer the impact that will be felt by motorists."

In Australian dollar terms, oil prices have jumped by almost 16 per cent and as a result pump prices are likely to jump by five to seven cents a litre in the next fortnight.

"The one major risk to pump prices is likely to be any further production cuts by OPEC," he said.

"The oil cartel has reiterated its commitment to further enforce the existing supply cuts, however an additional reduction in supply cannot be ruled out towards the end of this month."