Lead

Australian motorists are facing higher fuel prices as the federal government's fuel excise cut officially ends at midnight on August 3. The temporary reduction, introduced as cost-of-living relief, will revert to its normal rate, adding 16 cents per litre to wholesale fuel prices. The change coincides with a recent jump in global oil prices, which have risen from below US$85 a barrel to about US$90 in the past fortnight, according to ABC Australia.

Coverage comparison

ABC Australia reports that the fuel excise—a sales tax levied by the government on petrol and diesel—was cut from 52.6 cents per litre to 20.6 cents per litre on April 1, a 32-cent discount. The cut was later extended but reduced to 16 cents per litre from July 1, with the rate set at 36.6 cents per litre. From August 3, the excise will revert to its normal amount, which after the twice-yearly indexation stands at 53.7 cents per litre.

The end of the excise cut comes amid global oil market volatility. ABC reports that global oil prices have surged in the past fortnight since a wobbly ceasefire between the US and Iran collapsed, with renewed tensions potentially keeping prices elevated. Australia imports about 90 per cent of its refined oil needs from sources that rely on crude oil movement through the Strait of Hormuz, making it vulnerable to disruptions in that region.

Key claims

The excise cut, part of a broader economic relief package, was introduced in response to the oil crisis caused by the closure of the Strait of Hormuz. The government has confirmed it will not extend the cut. Treasurer Jim Chalmers said the measure "played a really important role helping to take some of the sting out of the cost-of-living pressures," but added that "it was never the government's intention for that to be permanent."

Energy Minister Chris Bowen urged motorists not to stockpile fuel, stating that Australia has several weeks' worth of unleaded and diesel reserves, with more shipments on the way. RACQ spokesperson Ian Jeffreys echoed this, advising that "hoarding fuel will not help the situation and it's dangerous, so there's no need to buy more than you need."

Mr Jeffreys also explained that price rises at the pump may not be immediate. "What we saw back in July when the excise cut was extended by a lesser rate, it took about a week to 10 days before that price flowed through to the retail price," he said. "The excise is charged at a wholesale level, so currently our wholesale price for petrol..."

Prices are expected to increase to about $2.20 a litre for unleaded and $2.60 a litre for diesel, according to Mr Jeffreys. He advised motorists to "fill up as soon as possible" to avoid paying a premium.

Economists have warned that the excise cut was not a good idea over the long term, according to ABC, though specific details of those warnings were not provided in the report. The ACCC, Australia's competition watchdog, can penalise fuel retailers for price gouging, a measure that remains in place.

The fuel supply chain is more resilient than it was when the US–Iran war broke out in February, with Australia having increased its national stockpile of petrol, diesel, and jet fuel, the report states.

Perspectives

The perspectives below reflect the statements of officials and experts as reported by ABC Australia.

Government perspective

Treasurer Jim Chalmers defended the excise cut as important cost-of-living relief but emphasised it was never intended to be permanent. Energy Minister Chris Bowen confirmed the government is not considering an extension, while urging against panic-buying and reassuring the public about fuel reserves.

Expert/industry perspective

RACQ principal economist Ian Jeffreys provided analysis of price expectations and consumer advice, warning of potential further increases if Middle East tensions persist. He urged motorists to fill up soon but avoid hoarding fuel, and noted that price changes take time to flow through to retailers.