From Thursday April 1 until Tuesday June 30, Australia’s fuel excise will be halved from 52.6 cents per litre to 26.3 cents per litre, in response to huge price increases triggered by conflict in the Middle East.
Announced by the Australian Government today, it’s the second time the fuel excise has been cut in recent years, after it was also halved in March 2022 for six months due to the-then emerging conflict in Ukraine.
At the time, the national average pump price for 91-octane regular unleaded was 206.7 cents per litre, a figure which later settled. Due to the most recent conflict in Iran and the closing of the Strait of Hormuz, the Australian Institute of Petroleum lists an average price of 253.4 cents per litre, with diesel being far more expensive.
The halving of the fuel excise is expected to bring the most immediate relief to consumers at the pump, though it is unlikely to have a positive impact on the panic buying-induced shortages at some fuel stations across Australia.
Fears of Australia running out of fuel reserves has triggered panic buying in all states and territories, causing a spike in demand which retailers can’t keep up with, as supply is – as yet – unchanged.
Australian Treasurer Jim Chalmers has estimated the cost of cutting the fuel excise – even temporarily – is approximately $2.55 billion.
The Australian Competition and Consumer Commission (ACCC) recently said it held concerns about fuel supply in Australia, both in metropolitan and regional areas.
“We’re continuing to watch the fuel market very closely and are engaging with the fuel industry, Government, state and territory regulators and consumers through this very volatile period,” ACCC Deputy Chair Mick Keogh said.
“We remain concerned about supply issues for both petrol and diesel impacting a range of locations, including capital city suburbs, regional towns and remote areas. Last week we granted urgent interim authorisation, with conditions, to the Australian Institute of Petroleum and its current members to coordinate as needed to manage supply chain issues.
“Many consumers have contacted us about petrol and diesel prices over the last few weeks and we are assessing those reports. Any potential breaches of our competition and consumer laws will be prioritised and taken very seriously.”
In addition to announcing the fuel excise cut, the government also said it had delayed an impending increase to the heavy road user charge by six months.
Earlier this month, the Australian Government briefly relaxed the nation’s unleaded fuel standards in a bid to increase supply, increasing the amount of sulphur allowed in unleaded petrol.
The sulphur limits in unleaded petrol sold in Australia rose from 10 parts per million (ppm) to 50ppm for the next two months, allowing an estimated 100 million litres of new fuel supply each month.
There should be no concerns about the new higher-sulphur fuel being used in modern vehicle engines, as until December last year the sulphur limit for unleaded petrol in Australia was 150ppm, three times higher than the new briefly-relaxed figure.
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