Crude oil prices, AUD and changes in the refining margin to drive Australia petrol pump prices

History suggests that refining margins don't stay abnormally large for too long before a supply boost brings them back in line with longer-run averages. Just as the gasoil margin quickly narrowed this year so too will the gasoline refining margin. 

"It is difficult to know how this will unfold so we have allowed for a steady decline in the margin over the next twelve months to around more average levels", says Westpac.

For crude oil prices, it is clear that a surge in production through the last 12 months has been the main reason for the price collapse. The EIA estimates that supply has been running ahead of demand by around 1mbpd to 2mbpd since the second half of 2014. 

Much of this lift in supply has come out of the US. Via the expansion of shale oil extraction, the US has lifted crude oil production by 1.1mbpd in the year to June building on the 2mbpd gain in the year to June 2014.