Australian petrol prices to skyrocket after fuel tax cut ends

Petrol prices at the pump will soon rise by 25 ca liters as the fuel tax cut ends after Labor refused to extend it.

But drivers have to bear the financial pain of the astronomical prices seen earlier this year when the Russian invasion of Ukraine began, pushing the average unleaded price above $2 per liter.

Consumers should expect prices to rise within days of the fuel tax cut ending at 11:59pm on Sept. 28, NRMA spokesman Peter Khoury told Daily Mail Australia.

The former Morrison government cut fuel taxes in half from 44.2 cents in March to 22.1 liters in March for six months as prices skyrocketed, but the Labor government of new Prime Minister Anthony Albanese has refused to extend the exemption, which cost $3 billion.

Mr Khoury said GST would add another 3c-a-litre to the cost, increasing prices at the bow by 25c-a-litre.

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“The excise tax is added at the wholesale level so we won’t see an increase right away, retailers need to buy more inventory and pass the increase on to customers,” he said.

“It depends on how quickly retailers sell what they have, it could be a few days to two weeks.

‘Urban areas are moving through their product faster and regional areas are following.’

The cost of refueling a unleaded car with a 60-litre fuel tank would increase on average from $98.40 in Sydney to $113.40, based on Monday’s price.

In Melbourne it would go from about $99 to $114 and in Brisbane from about $103.80 to $118.80.

NRMA’s Peter Khoury said that while prices will rise, they should not reach early to mid-2022 levels (file image)

Mr Khoury said the consumer watchdog, the ACCC, would keep a close eye on gasoline prices to ensure retailers are not raising prices too early and by too much.

Federal treasurer Jim Chalmers said Tuesday there was “no reason” for gas stations to “pull up their prices” on the same night excise taxes go up again.

He pointed to 700 million gallons of fuel stored across the country that had been purchased at a lower price.

“Prices don’t have to skyrocket right away,” said Dr Chalmers.

“We don’t want gas stations to treat Australians like mugs, so we’re keeping a close eye on this.”

dr. Chalmers promised that the Australian Competition and Consumer Commission would look to push prices.

“The reason we’ve maximized the ACCC’s role in all of this is because we want to make sure there’s no untrustworthy behavior,” he said.

Mr Khoury said it was a “difficult decision” not to extend the tax cut, but his focus was on “responsible budgeting”.

“We have no illusions that it will be difficult for people (but) I think most people understand that the budget cannot afford to keep the tax cut going on forever,” he said.

Federal Treasurer Jim Chalmers (pictured) said on Tuesday it had 700 million gallons of fuel stockpiled at a lower price so retailers shouldn’t “inflate” prices too quickly

Mr Khoury said prices would rise but they should not reach the levels seen earlier this year when fuel rose to over $2.20 a litre.

“There is a positive trend with the international benchmark price,” he said.

“It was $160 a barrel and now it’s down $60 a barrel in a few months to $100 a barrel.”

What drove prices up was that global supply was impacted by Covid supply chain issues, along with the Russian invasion of Ukraine and associated sanctions on Russian oil.

“There’s no shortage of fuel for Australia, it’s just expensive, the market is volatile, but those spikes earlier this year came down pretty quickly.”

Some economists criticized the fuel tax credit when it was introduced into the federal government’s budget, citing the massive loss of revenue estimated at $3 billion by the Treasury.