Talking points
- The fuel excise tax has been cut by 22 cents a litre for six months.
- The government claims the cut could save families with two cars $700 over the next six months.
- Economists have warned the cost of petrol will fluctuate for months because of oil supply volatility.
- The fuel excise cut will be immediate but could take several weeks to flow through at the bowser.
The price of a 50-litre tank of petrol will fall by $11 under a six-month cut to the fuel excise tax as the federal government unveils a plan to ease the rising cost of living in the federal budget.
Fuel excise currently adds ¢44 to a litre of petrol, but will be halved from midnight on Tuesday, delivering a saving to motorists at a net cost to the federal budget of $2.7 billion in lost revenue from oil companies.
Petrol prices are expected to fall by $11 a litre as the federal government announces fuel excise tax be halved for six months.Credit:
The cut could take several weeks to flow through at the bowser as supply of fuel bought at the current, higher price is exhausted.
Petrol stations have promised to pass on the excise cut in full and Federal Treasurer Josh Frydenberg said the Australian Consumer and Competition Commission would monitor prices to ensure savings are passed onto motorists.
ACCC chair Gina Cass-Gottlieb said retailers could face fines of up to $10 million for engaging in false or misleading conduct.
The Treasurer said household budgets are being stretched as the cost of fuel, food and freight charges on goods are driven up by disruption in global markets due to sanctions on Russia over its war in Ukraine.
“Higher fuel, food and shipping costs are increasing inflation and stretching household budgets,” Mr Frydenberg said. “Whether you’re dropping the kids at school, driving to and from work or visiting family and friends, it will cost less.”
He claimed the fuel excise cut could save families with two cars $700 over the next six months.
The Australasian Convenience and Petroleum Markets Association, which represents most service stations, said retailers would pass on the savings due to the hot competition for customers following the COVID-19 downturn in road traffic.
However, NSW Motoring lobby the NRMA said this week there is no law to force petrol retailers to pass on the excise cut and argued that the benefit to motorists would be undermined if much-needed roads investment fell along with lost revenue due to the excise cut.
Mr Frydenberg said road funding would not fall due to lost fuel-excise revenue, which is set to receive $12 billion in federal funding over the next 12 months.
The cost of petrol has risen above $2 a litre in capital cities due to a surge in the oil price, which is the major component of the cost of petrol. The cost of oil is being driven up by intense international competition for dwindling supply as sanctions imposed on major oil exporter Russia – imposed after the nation’s invasion of Ukraine – start to bite.
Economists have warned the cost of petrol will remain volatile for months because oil supply is so unpredictable.
Curtin University energy economist Roberto Aguilera said on Monday the oil price could spike if Europe decides to place further sanctions on Russian exports, or Russia if decides to withhold supply.
However, Dr Aguilera said the oil price could fall by the end of the year if the Organisation of Petroleum Exporting Countries and North American producers could expedite plans to increase production.
Jacqueline Maley cuts through the noise of the federal election campaign with news, views and expert analysis. Sign up to our Australia Votes 2022 newsletter here.
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