Wholesale Pricing

Import parity price is essentially the cost of importing, including freight and wharfage, refined product (as opposed to crude oil) to Australia. 

Why do we use import parity price?

Australian refineries compete with refineries in the Asian region when it comes to fuel. Refined products (such as petrol and diesel) can be purchased at competitive prices from a number of locations in the region. The price that refineries sell fuel at in Australia must compete with the price of imported fuel from outside Australia.   As a consequence, all fuel sold, whether imported or not is priced to reflect the import price.

Further, if the price of fuel in Australia was too low, Australian refineries would have incentive to sell their product into the regional market rather than into the Australian market.

1. Regional benchmark (in the Asia Pacific region, Singapore is a trading hub for refined petroleum products.  The industry uses published daily averages of spot prices of fuel sold as its benchmark for the cost of each fuel);
   
2. Ocean freight (eg from Singapore to Melbourne);
   
3. Insurance;
   
4. Wharfage;
   
5. A quality premia (the fuel quality required under Australia Fuel Standards is higher than typical regional benchmark fuel quality).

1. Import parity price;
2. Tax is set by the Federal Government and includes an excise tax (35-40%) and a 10% goods tax (GST), which is tax on the total price of the fuel;
3. A terminal margin (to cover costs of infrastructure and operation and where competitively possible a small margin).