Why do petrol prices fluctuate, and who decides when and how much the price should increase or decrease?

Answer 1

Stock Market Futures and big oil and government

Answer 2

In theory, the market decides petrol prices based on supply-demand. Governments can also alter the price by changing taxation and other regulatory fees.

Unfortunately the theory goes out the window because there are only a few oil producers that control such a vast market, and they lobby governments so strongly. They all work together to set the price as high as possible without damaging the rest of the economy. This is legal simply because there is no formal or organised collusion - it just makes sense not to compete too strongly.

On a day-to-day basis, petrol prices go up on payday and around public holidays - when most people fill up. It's an artificial increase designed to maximise profit, unrelated to actual demand/supply.

Long term petrol prices however are expected to rise globally because demand is leaping ahead of supply, which is mostly produced in politically unstable regions of the world and has "peaked". Note that in the last few years Australia has become an importer of oil and our government has even less control over the price.