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Petrol prices ‘nowhere near the peak’

The cost per litre is staying higher for longer. Read what National Seniors Australia wants for older Australians.

  • News
  • Read Time: 5 mins

Fuel excise fact file

The fuel excise is one of the oldest taxes in Australia, applying since Federation in 1901. It is a tax levied by the federal government on petrol and diesel bought at the bowser and is collected from the producers or importers of fuel when fuel leaves their depot or terminal.

  • The fuel excise was originally linked to road funding but today is more of a general revenue-raising tax with only a minor link with the Australian Government’s overall level of road funding.

  • Motorists currently pay 49.6 cents in excise for every litre of fuel they purchase. However, the excise amount is not static and increases biannually in line with CPI.

  • Indexation was introduced in 1983 to maintain the real value of excise collections, abolished in 2001, and then reintroduced in 2014.

More than Forrest Gump’s “life is like a box of chocolates”, a visit to the petrol station is like a game of chance: you can’t be sure what price comes down the pump on any day. Of course, it’s usually going up.

After something of a price drop last quarter, petrol prices across the nation have resumed their relentless upward spiral and experts warn there’s no sign of relief.

The price of crude oil, which is refined into products such as petrol, is at a six-month high. Steel yourself for further price hikes because there’s a two to six-week lag between global crude oil prices and what you pay at the pump.

Mark McKenzie, CEO of the Australasian Convenience and Petroleum Marketers Association (ACAPMA), says the petrol price cycle is in its upward phase and may not come down as is usually the case.

“What’s newsworthy about where we are now is we’ve just started going through the upward phase, so there’s a significant difference between the stations discounting and the stations hiking,” Mr McKenzie said.

International events, including instability in the Middle East, disrupting supply are largely to blame. Combined with this is the fact that the oil-producing nations are trimming production to restrict the amount of oil in the market.

Perversely, more positive global factors – including possible interest rate cuts in the United States, which would boost many economies, and rosier data about the economy of China – could push up prices by increasing the demand for fuel. 

‘Chaotic’ price cycle

Motorists hold off buying fuel when the cycle is up and wait for a price drop but NRMA spokesperson Peter Khoury has described the normal price cycle as “chaotic” and warns we can expect the cycle not to dip for six months.

The motoring body found that price cycles have got longer over the past five years, with prices taking far longer to go down than to increase. So, we’re paying more for longer.

The motoring organisation’s analysis of 51 price cycles in Sydney since January 2019 found motorists have been exposed to some of the highest gross margins – the gap between the wholesale and retail price – for regular unleaded on record.

Since January 2019, prices across 51 price cycles fell by only 1.0 cents per litre per day yet rose at more than twice the daily rate at 2.3 cents per litre.

It took the average price cycle in Sydney 26 days to fall from the top to the bottom of the cycle yet would race to the top of the cycle from the bottom in only 12 days.

Longer price cycles in Sydney, Brisbane, and Melbourne have been a major contributing factor to Australia’s largest cities being among the most expensive.

NRMA spokesperson Peter Khoury said the fact that Brisbane margins in 2024 were almost three times higher than Perth’s, and Sydney’s more than double, highlighted the additional cost-of-living pressure felt by motorists in Australia’s largest capital cities.

“The NRMA has been concerned about families and businesses being over-exposed to higher petrol prices and the inflationary impact this has on our economy is clear. It doesn’t have to be this way.”

NSA viewpoint

National Seniors Australia is calling on the Federal Government to give cost-of-living relief by cutting the fuel excise, which is a tax on petrol.

In our submission to the 2024 Federal Budget process, we say Australians doing it tough would benefit from the government:

  • Temporarily reducing the fuel excise while oil prices remain high 

  • Pausing indexation while oil prices are high, or 

  • Revising the method used to calculate indexation to ensure it is not contributing to inflationary pressures.  

Implementing our initiatives also would combat inflation. Indexation of the fuel excise is linked to inflation. So, as oil prices and indexation from CPI increase, this creates an inflationary spiral.

In addition, rising fuel costs impact the cost of many everyday items at the retail level.

Petrol costs increased by nearly 8% in the 12 months to September 2023 – one of several key CPI categories experiencing high increases over the period (others include rent 7.6%, bread 12.6%, ice cream and dairy 11.2%, postal services 14.2%, electricity 14.5%, and insurance 14.7%).

You can read more about our recommendations on cutting the cost of living in our 2024 Federal Budget submission.

Related reading: ABC, ACCC, Drive, MyNRMA, NSA

Image: Cotonbro Studio


John Austin

John Austin

Policy and Communications Officer, National Seniors Australia

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