Australia's fuel excise cut ends, raising prices amid Middle East oil crisis
Consensus Summary
Australia’s temporary fuel excise cut, introduced in March to ease cost-of-living pressures during an oil crisis caused by the US–Iran war and closure of the Strait of Hormuz, is ending at midnight on August 3. The cut initially reduced the excise from 52.6 cents to 20.6 cents per litre, a 32-cent discount, but was halved to 16 cents in July and extended to August 2. The excise will return to its normal level, adding 16 cents per litre to wholesale prices, pushing petrol prices toward $2.20 per litre and diesel toward $2.60 per litre. Both sources agree the excise cut was a response to soaring oil prices, which rose from about US$70 on July 2 to nearly US$90 by August 1, and that Australia’s fuel stockpile remains secure with 43 days of petrol and 39 days of diesel reserves. Economists warn the excise cut may have increased inflation and cost taxpayers $2.55 billion, while the government insists the measure was temporary. The Guardian notes that service stations typically take days to adjust prices, while the ABC highlights a delay of up to 10 days observed in July. Despite renewed tensions in the Middle East, the government has ruled out further extensions, urging motorists to avoid panic buying.
✓ Verified by 2+ sources
Key details reported by multiple sources:
- The fuel excise was reduced from 52.6 cents per litre to 20.6 cents per litre on April 1, a 32-cent discount, initially due to end in July but extended to August 2
- The excise cut was halved to 16 cents per litre in July, reducing the discount at the pump to 16 cents per litre
- The excise cut ends at midnight on August 3, adding 16 cents per litre to wholesale fuel prices
- The Strait of Hormuz has been almost completely closed to traffic since Iran and the US resumed fighting two weeks before August 3
- Brent crude oil prices rose from about US$70 on July 2 to nearly US$90 on August 1
- Australia’s national fuel stockpile was increased to 43 days’ worth of petrol, 39 days of diesel, and 34 days of jet fuel as of July 21
- The US–Iran war broke out in February, causing an oil crisis and closure of the Strait of Hormuz
- The excise cut was predicted to cost Australian taxpayers $2.55 billion
- The excise is charged at a wholesale level, with current wholesale prices for petrol around $1.83 per litre and diesel around $2.35 to $2.40 per litre before the increase
- After August’s indexation, the excise rate will increase to about 53.7 cents per litre
- Diesel prices in capital cities were above 235 cents per litre (except Perth) as of August 1, with Canberra at 244.4 cents, Darwin at 244.1, and Hobart at 241.8
- Unleaded petrol prices were above 190 cents per litre in every capital city as of August 1, with Canberra at 205.6 cents, Darwin at 204.4, and Hobart at 200.5
Points of Difference
Details reported by only one source:
- The excise cut was designed to 'take some of the sting out of the cost-of-living pressures' according to Treasurer Jim Chalmers
- The excise cut was extended to August 2, with the rate lifted to 36.6 cents per litre, reducing the discount to 16 cents per litre
- The excise cut was predicted to cost Australian taxpayers $2.55 billion and economists warned it could increase inflation
- The excise is charged at a wholesale level, with wholesale prices for petrol expected to increase to about $2 per litre and diesel to about $2.35 to $2.40 per litre after the excise change
- A motorist in Batemans Bay reported driving three and a half hours to Sydney for two months, spending more than $1,000 on fuel for commuting
- Economists recommended holding off on cutting the excise price of diesel for another month, as long as petrol does not exceed $2.20 per litre
- The US–Iran war broke out in February, causing the oil crisis and closure of the Strait of Hormuz
- The excise cut was not a good idea over the long term, according to economists since March
- The excise cut was implemented in response to the oil crisis caused by the closure of the Strait of Hormuz
- A 16-cent increase in fuel prices would add $8.80 to the cost of filling up a 55-litre tank
- Service stations typically take four or more days to adjust prices at the pump to match changes in excise or overseas pricing
- Iran struck two tankers under US escort on August 1 after the two countries resumed trading strikes
- Shane Oliver, AMP’s chief economist, predicted the loss of the discount could push petrol prices up to 210 cents per litre
- Australia had 44 fuel ships on the way with 3.1 billion litres set to be delivered in the coming month, consistent with previous weeks
- Fuel orders were locked in through up to October, with no cancellations during the crisis
- In March, when oil hit US$100 per barrel and there was no fuel excise relief, petrol surpassed 250 cents per litre and diesel passed 300 cents per litre
Contradictions
Conflicting information between sources:
- The ABC states the excise cut ends at midnight on August 3, while the Guardian states it ends on August 3 but does not specify the exact time (midnight)
- The ABC reports the excise cut was extended to August 2, while the Guardian states the excise cut ends on August 3 without mentioning an extension date
- The ABC mentions the excise cut was extended to August 2 with a rate of 36.6 cents per litre, while the Guardian does not mention this specific extension date or rate
- The Guardian states that service stations typically take four or more days to adjust prices, while the ABC states it took about a week to 10 days for the price to flow through to retail prices in July
Source Articles
Prices to jump at the bowser as fuel excise cut ends tonight
The price of unleaded and diesel will climb in the next week as the government's fuel excise cut officially ends. But experts say prices won't go as high as they did due to increased supply.
Drivers brace for petrol price hikes as fuel excise cut comes to end
Prices are forecast to increase to about $2.20 a litre for unleaded and $2.60 a litre for diesel when the fuel excise returns to its normal rate.
Petrol prices on track to top $2 a litre as Bowen sounds death knell for fuel excise relief
Petrol now costs more than $1.90 a litre in every capital city, with diesel expected to exceed $2.40 a litre Get our breaking news email , free app or daily news podcast Petrol prices could surpass $2 a litre and diesel $2.40 in coming days, after the government’s 16-cent discount ends on Sunday. The 32-cent per litre reduction in fuel excise, introduced in March at the peak of the fuel price spike, was halved to 16 cents in July. Continue reading...