Motorists across Australia are bracing for a potential surge in petrol prices after the temporary fuel excise cut expired, with Treasurer Jim Chalmers declaring the consumer watchdog will be monitoring service stations "like a hawk" for any unjustified price gouging.
The six-month halving of the fuel excise, introduced by the former Coalition government in March to alleviate cost-of-living pressures, concluded at 11:59 pm on Monday, September 26. The measure saw the excise on petrol and diesel reduced from 44.2 cents per litre to 22.1 cents, providing significant relief at the bowser during a period of escalating global energy prices.
Scrutiny on the Forecourt
Treasurer Jim Chalmers reiterated the government's stance that the excise cut was always a temporary measure, designed to cushion the blow of rising costs "turbocharged by a war in the Middle East." Speaking on Tuesday, Mr Chalmers acknowledged that fuel prices have seen some upward movement recently, but stressed they remain "substantially lower" than when the excise relief was first implemented.
“It was never intended to be permanent,” Mr Chalmers stated. “It’s done a really important job, but we can’t afford to continue it forever.”
In response to concerns about potential profiteering by fuel retailers, the Australian Competition and Consumer Commission (ACCC) has been tasked with significantly stepping up its surveillance of fuel price movements. The Treasurer warned that any price increase that cannot be adequately explained will face "serious scrutiny" from the regulator. The government has also increased penalties for service stations found to be engaging in unfair practices, with potential fines reaching into the millions of dollars.
The Price Lag Effect
Economists and industry experts anticipate that the full impact of the excise restoration may not be felt immediately at the pump. This is due to a lag effect, as service stations typically sell through existing stock purchased at the lower excise rate before restocking at the new, higher rate. This transition period could see price variations across different retailers, depending on their stock levels and purchasing cycles.
The Australian Institute of Petroleum (AIP) reported a national average of 172.9 cents per litre for unleaded petrol in the week ending September 25, just prior to the excise change. While this figure is considerably lower than the peaks observed earlier in the year, particularly after Russia's invasion of Ukraine, the reinstatement of the full excise is expected to add an average of 25.3 cents per litre, factoring in GST.
Budgetary Constraints and Global Factors
The decision to let the excise cut expire was largely driven by the federal budget's precarious position and the unsustainability of continuing the substantial revenue forgo. The measure cost the government an estimated A$3 billion over its six-month lifespan. Continuing the subsidy would have placed immense pressure on an already strained national budget, at a time when the government is grappling with rising inflation and the need to fund essential services.
While the war in the Middle East was initially cited as a primary driver for global oil price spikes, ongoing geopolitical tensions and OPEC+ production decisions continue to influence the international crude market. The return to the full excise rate means Australian consumers will once again be fully exposed to these global fluctuations, underscoring the ACCC's critical role in ensuring market fairness during this period of transition, as reported by The Guardian Australia.
