Key facts
- Petrol prices could exceed $2 per litre and diesel $2.40 after the 16-cent fuel excise discount ends Sunday.
- Energy Minister Chris Bowen confirmed the government will not extend the temporary cost-of-living relief.
- The excise discount was previously halved from 32 cents to 16 cents in July.
- Higher wholesale fuel prices have already been passed on due to resumed US-Iran conflict and rising oil costs.
- Petrol prices are already above 200 cents per litre in most Australian capital cities.
- Diesel prices are exceeding 235 cents per litre in most capital cities.
- Brent crude oil has risen to nearly $90 per barrel amid Middle East tensions.
- Economists warn the end of the discount will increase headline inflation and household fuel costs.
Petrol prices in Australia are on track to exceed $2 per litre, with diesel prices potentially surpassing $2.40, as the government's temporary 16-cent per litre fuel excise discount concludes on Sunday. Energy Minister Chris Bowen confirmed on Saturday that the relief measure, introduced in March and halved in July, would not be extended.
The return to normal excise levels will add 16 cents per litre to wholesale fuel prices. This increase, combined with higher global oil prices driven by renewed conflict in the Middle East and strikes on tankers in the Strait of Hormuz, is expected to push pump prices significantly higher. Brent crude oil has already risen from approximately $70 per barrel in early July to nearly $90.
Analysts predict that if the conflict continues, oil prices could return to $100 per barrel, a level that previously saw Australian petrol prices exceed 250 cents per litre and diesel pass 300 cents when no excise relief was in place. Service stations typically take several days to adjust prices to wholesale changes, but higher import costs have already begun to impact retail prices.
MotorMouth data shows unleaded petrol prices are already above 200 cents per litre in most capital cities, and diesel prices are exceeding 235 cents per litre in most cities except Perth. Economists have noted that the excise discount helped suppress Australia's inflation rate and supported household spending. Shane Oliver, chief economist at AMP, estimates the loss of the discount could push petrol prices to 210 cents per litre, increasing headline inflation and the average household's weekly fuel bill by around $20.
Bowen defended the decision to end the discount and the related heavy vehicle road user charge, emphasizing it was a temporary measure. He urged motorists against panic buying, stating that Australia has sufficient fuel stocks and that numerous fuel ships are en route, consistent with previous delivery levels.