Plummeting oil prices may mean doom and gloom for financial markets, but they mean big savings for Aussies at the petrol pump.
Oil prices have tumbled more than 70 per cent from their levels two years ago, driven by a global oversupply and a strengthening greenback, AMP Capital chief economist Dr Shane Oliver said.
The resulting fall in petrol prices is saving the average Australian household around $14 a week compared with two years ago.
That adds up to a saving of $750 per year.
Dr Oliver said the plunge in crude oil adjusted for moves in the Australian dollar shows average fuel prices should be around 90 cents per litre, versus current levels of $1.10 per litre.
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"While prices haven't dropped this far - apparently due to high refinery margins based on Singapore petroleum prices - the price at the bowser is still well down on 2014 levels," he said.
But while it may be good for a consumer's wallet, it's not good for the country's bottom line, Dr Oliver says.
Because Australia is a net energy exporter, lower oil and gas prices means a loss of national income and tax revenue, he said.
The World Bank on Wednesday downgraded its forecast for world oil prices this year to $US37 a barrel from $US51 a barrel just three months ago.
Dr Oliver said while prices could still sink to near 18-year lows of $US20 per barrel, they are likely close to bottoming out.
As a result, worries about slowing emerging world growth and the negative impacts on producers will persist in the short term, he said.
But ultimately it will be positive for economic growth in developed countries and oil-importing countries like Australia.
"The positive impact flowing from reduced business and consumer costs will become evident," he said.
"The bulk of it is likely to show up this year."
