What the return to paying full price on petrol means to you

Regional motorists are set to be delivered a small reprieve from the reinstated fuel excise, which took full effect again from midnight after a six-month discount introduced by the former Coalition federal government.

As of today, the excise charged on every litre of fuel sold in Australia returns to 44.2 cents per litre, up from the temporary 22.1c/l.

It comes as oil prices continue to gently push down fuel prices from their highs of March and April this year. The price of oil now sits closer to $US80 per barrel – down about $US40 – but is offset against a weaker Australian dollar.

There are also warnings that the price of diesel will be frequently higher in the coming months as the energy crisis in Europe intensifies, with gas shortages placing a greater emphasis on diesel for power generation.

According to the country’s peak industry body representing petroleum retailers, the return of the full excise should be gradual and will vary depending on where you choose to fill up.

 “The excise affects the wholesale price, which means that every fuel tanker that leaves to deliver fuel to a service station after midnight last night will be carrying the higher excise fuel,” explained Australasian Convenience and Petroleum Marketers Association (ACPMA) chief executive Mark McKenzie.

“Service stations have different frequency of deliveries, so a high-volume metro station could experience two deliveries a day, whereas a lower-volume outer ring maybe twice a week and a rural site maybe every 10 to 14 days.

“We’re actually going to see that higher wholesale price maybe flow through at different rates across the service station network.”

According to McKenzie, the trend should deliver a longer reprieve for motorists based on the fringes of major metropolitan areas and, particularly, for those in regional areas.

“If we look at what happened when the excise was cut, which is the biggest marker we’ve got, what the ACCC did was to map when service stations passed on the full cut in the excise during April,” he explained.

“Ninety per cent of service stations had passed it through at the end of the second week. Ten per cent took another four weeks to pass it through and the majority of those were located in small regional and rural areas where the turnover is really slow.

“You’d expect a reverse to occur as the excise comes back on.”

Prime minister Anthony Albanese has threatened to clamp down on retailers who take advantage of the reinstated excise by lifting prices prematurely.

The NRMA has also been vocal on the issue, claiming that capital city prices were already too high.

“The averages have gone way above what we expected for the high point of the cycle, and we know that there is more pain to come,” NRMA spokesman Peter Khoury told News Limited.

“To be as high as we are today is unacceptable.

“Petrol is a major cause of concern for families – it is one of the main factors that is driving cost of living pressures in Australia. We cannot afford and should not be paying $1.90 on average anywhere in Australia.”

However, McKenzie refuted the NRMA’s claims, arguing that the competition dynamic will naturally dictate retailers to have the lowest prices possible.

He expected regular unleaded prices to sit at around $1.90-$2.00 per litre at the high end of the cycle for the remainder of the year, with prices dipping as low as $1.65 at the low end of the cycle.

“The NRMA has been out on the airwaves saying they feel the cycle price in the capital cities is higher than it should be. That’s just rolled-gold nonsense and it demonstrates a complete misunderstanding of the way the capital city price cycle works,” McKenzie argued.

“Our sense here is that the competition dynamic will mean fuel retailers will be incentivised to maximise the use of the lower excise fuel to keep their volumes up and keep the throughput in their shops high.

“We actually expect that even those that get the early excise fuel may not decide to pass on the full excise increase because they’re trying to compete with those around them.

“That’s why coming out of this, we expect we’re going to see different decisions taken by different businesses according to when they receive the higher excise fuel but also the nature of the competition dynamic around them.”

Further afield, McKenzie warned that diesel-powered vehicle owners are likely to be subject to higher prices for the foreseeable future, as a result of the energy crisis in Europe.

“We’re not seeing it just yet, but there’s some worrying things going on in Europe at the moment,” he said.

“They’re scrambling for everything they can for home heating and power generation – the issue being that Russia has effectively locked off gas supply, which is what a lot of the western European economies are using for electricity.

“There is a significant risk that we will see an increase of diesel demand for power generation, which is what we saw at the start of the year coming out of the northern hemisphere winter.

“That will spike diesel prices, and is also the reason diesel prices are already tracking about 30 cents per litre higher than the petrol price.”

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