Aussie motorists urged to ‘shop smarter’ as $2 a litre becomes new normal after Labor winds back excise cut

Aussie motorists have been urged to “shop smarter” and retailers warned not to price gouge after the Albanese government wound back its fuel excise relief on Monday — making $2-a-litre the new normal.

The excise cut and discounts for the heavy vehicle road user charge both lapsed on Monday following the Federal Government decision not to extend their support into August.

The government had introduced a temporary excise cut of 32 cents per litre from April 1 and then halved the discount to wholesale fuel prices to 16 cpl at the end of June.

Price data from motoring group NRMA revealed that retailers had been steadily increasing their prices at the pump over the past month ahead of the excise cut’s expiry on August 2.

The price creep over the past month was also reflected on state-level monitoring sites, such as New South Wales’ FuelCheck, West Australia’s FuelWatch and the Northern Territory’s MyFuel.

NRMA warned prices could continue to rise this week — with their analysis estimating regular unleaded would to rise to 201.5 cents per litre for petrol and $2.43 for a litre of diesel.

“With the excise going up today and the war continuing find smart ways to save at the bowser remain critical for many Australians struggling with cost-of-living pressures,” NRMA spokesperson Peter Khoury said.

Treasurer Jim Chalmers said despite the on-again, off-again war in the Middle East that prices hadn’t skyrocketed similar to the increases seen back across March when the US-Israel-Iran conflict first shocked global fuel supplies.

Dr Chalmers insisted the measure was “never intended to be permanent” but had played a “really important role” to take the “edge off these cost-of-living pressures” after disruption from the war.

“We extended it and tapered it for another month, and we made it very clear that it was coming off. It’s done a really important job, but we can’t afford to continue it forever,” he told ABC’s Radio National on Monday.

Mr Khoury said any additional rises to remain contingent upon developments outside Australia: “If we get good news from the Middle East the price will go down, if it doesn’t, it will go back up again”.

Services stations have faced increased scrutiny since the war broke out in late February and prompted the de facto closure of the Strait of Hormuz, with beefed up fines for retailers artificially inflating prices.

Australia has also expanded monitoring programs to track wholesale-to-retail price margins in real time, including mandating more frequent pricing reports, and appointed Anthea Harris as Fuel Supply Taskforce Coordinator.

Dr Chalmers, who has written to the ACCC to ask the watchdog to increase monitoring of fuel prices in the coming days, also defended the Albanese government’s decision to axe the excise.

“It’s certainly right to say that in the last month or so prices have come up a bit as we’ve seen the escalation and uncertainty in the Middle East,” the Labor frontbencher said.

“That is true but if you compare prices from when we first introduced the excise relief at the end of March to now, petrol prices were in the 250s at the end of March in those major markets, now in the 190s.

“Diesel prices were in the 320s towards the end of March and now in the 230s and 240s in those major markets.

“So, prices have come up a bit but they are substantially lower than when we first introduced this excise relief.”

Adelaide was hit the hardest with an almost 4 cent jump in both categories, while Perth experienced a 5.1 cent increase in diesel.

According to the NT’s MyFuel, retailers in the top end hiked the average cost of diesel from 253.2 cents per litlre on July 9 to 280.4 on August 2.

WA’s Fuel watch showed a similar rise across July, with motorists in the Perth metropolitan area who had been paying 185.7 cents per litre for diesel on July 4 having to spend 234.8 cents on August 1.

After the government’s discount was stripped away over the weekend, WA’s metro diesel average shot up to 240.9 cents on August 3.

Top oil producers ExxonMobil and Chevron last week warned global diesel supplies would remain tight and possibly increase in late 2026 if the Iran war persisted.

It cited declining fuel stockpiles combined with curtailed exports from China and refinery outages in Russia leading to higher margins.

During an earnings call to investors, Chevron chief executive officer Mike Wirth said it would experience “some upward pressure on product pricing” in the “third quarter and perhaps beyond”.

Petrol prices recorded the same increases across Sydney, jumping from an average metro price of 166.2 cents per litre on July 2 and 194.9 cents on August 1.

The NRMA also reminded Australian motorists to consider filling up with “less expensive fuel types if their vehicles allow”.

The price difference between E10 and Premium 98 fuel has also reached a national record high of a 30.5 cents per litre gap.

A difference of 26.5 cents per litre was also recorded between E10 and 98 in Sydney, marking the most expensive gap since 2012.

Premium 95 also broke records when compared with E10, rising by 19.1 cents per litre nationally from the previous record of 13 cents per litre.

“The organisation remains concerned that Australians are paying for premium fuels unnecessarily,” Mr Khoury said.

Mr Khoury said motorists could save up to $17 on a standard 55-litre tank and support locally sourced biofuels by opting for E10.

“It is absolutely critical that Australians understand that they have choice at the bowser,” he said.

“Supporting this industry is an effective way to boost jobs regionally and reduce our dependence on imported oil.”

Data on electric vehicle sales by the Australian Automobile Association in the three months to June 30 also showed Australia has recorded its biggest-ever quarterly surge in EV purchases as motorists seek out cheaper transport.

Nearly one in every two new vehicles sold was either electric or hybrid in the past six months, with the fully electric market jumping from 12.25 per cent to more than 21 per cent.

Deputy opposition leader Jane Hume said the Coalition didn’t support reinstating or extending the fuel excise cut unless the government finds matching spending offsets in the budget to pay for it.

“The Coalition supported the reduction in the fuel excise when it was originally proposed,” she said.

“That was a good thing but we also suggested that the government find offsets in the budget to pay for it because reducing the fuel excise is an expensive exercise.

“We asked for offsets and we even suggested offsets, but again the government has resisted.

“If the government can’t find offsets for its spending, well, then we simply couldn’t support any additional changes.”

However, she raised concerns about the immediate price increases at the bowser for Aussie motorists.

“It’s going to be a tough day for so many Australians today, as the price of fuel increases once again, with the fuel excise coming off,” she said.

“But this is part of a broader problem, isn’t it? Because our country is less resilient than it used to be. It’s more vulnerable to the economic shocks that are imported from overseas.”

She spruiked the Coalition’s proposed “fuel security package” which would double Australia’s fuel reserves up to 60 days by building storage capacity DownUnder and exploring refining opportunities after the nation’s reliance on Asia was exposed by the Iran war.