The federal government has cut the fuel excise in half, effective from Wednesday, April 1st. The excise will be halved from 52.6 cents per litre to 26.3 cents per litre, running through to June 30th, in response to price increases driven by the conflict in the Middle East.
Prime Minister Anthony Albanese announced the measure following a National Cabinet meeting, framing it as relief for households and businesses struggling with escalating living costs. “We’re making fuel cheaper today because we understand that Australians are under serious pressure,” Albanese said.
Treasury estimates the cut will reduce the cost of filling a 65-litre tank by roughly $19.00. For drivers who fill up weekly, that adds up to real money over the three months — though some industry voices have tempered expectations about how quickly the savings will appear at the bowser.
What’s driving it
Australia sources about 80% of its refined fuel needs from overseas, which makes the country particularly exposed to global supply disruptions. The closing of the Strait of Hormuz following conflict involving Iran has pushed the national average pump price for regular unleaded to 253.4 cents per litre, according to the Australian Institute of Petroleum, with diesel sitting considerably higher.
In the week to Sunday, the national average price for regular unleaded rose 6.3% to a record high of $2.53 per litre, while diesel climbed 9.7% in the same period to $3.10 per litre.
The situation has also prompted the government to act directly on supply. Earlier this month, the Australian Government temporarily relaxed the nation’s unleaded fuel standards, raising the amount of sulphur allowed in unleaded petrol from 10 parts per million to 50 parts per million, thereby enabling an estimated 100 million litres of additional fuel supply each month.
The government has also reduced the heavy vehicle road user charge — currently 32.4 cents per litre of diesel — to zero for three months to provide relief for the trucking industry.
Andrew McKellar, CEO of the Australian Chamber of Commerce, said the reduction would help moderate inflationary flow-on effects for food and grocery prices down the supply chain.
Treasurer Jim Chalmers confirmed the excise cut and heavy vehicle relief would cost the federal budget a combined $2.55 billion.
How much relief, really?
The 2022 precedent gives some pause. A similar excise cut following Russia’s invasion of Ukraine was criticised at the time for failing to register meaningfully at the pump, with one industry figure noting that petrol prices had risen about 33 cents per litre in the two weeks before that announcement alone.
The halving of the fuel excise is unlikely to have a positive impact on the panic-buying-induced shortages at some fuel stations across Australia — a separate problem that the government is managing through its National Fuel Security Plan.
Albanese also encouraged Australians who can to use public transport, to help direct available fuel towards industries and areas that need it most.
