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Petrol should be 20c cheaper | report

Petrol should cost closer to $1.10 per litre says AMP chief economist Shane Oliver.

Petrol prices are 20c a litre higher than they should be given the fall in crude oil prices, according to AMP chief economist Shane Oliver.

Sydney's average price was around $1.30 a litre yesterday when it should be around $1.10 a litre, Mr Oliver said.

The inflated pump price has added about $14 to the cost of filling a typical family sedan. Mr Oliver analysed the price of crude oil and pump prices since 2000 and said there has been a major disparity in recent weeks.

You can't justify current pump prices given the price of Tapis oil and the value of the Australian dollar

"Based on the normal relationship between the level of the Asian Tapis oil price in Australian dollars and average Australian petrol prices, petrol prices should be running around $1.10 a litre right now.

"When oil prices fell earlier this year competition pushed pump prices to around $1 a litre but now it seems competition is out of the market.

"You can't justify current pump prices given the price of Tapis oil and the value of the Australian dollar," he said.

Mr Oliver said Tapis oil prices - the benchmark for Australian prices - have fallen from around $US64 a barrel to $US55 a barrel since February but the savings had not been passed on at the pump.

He said refineries were making little money when prices were around $1 a litre in January but now "have gone from one extreme to another".

"I hope an independent retailer will see an opportunity to import cheaper fuel and push prices down," he said.

"Remember world oil prices are still 50 per cent down on what they were a year ago, but $1.30 a litre is not much off the high point pump prices were at back then."

There is some good news for motorists, with several experts believing fuel prices will fall in the lead-up to Easter.