Warning that diesel price rises will overtake 26c cut in a week as global fuel shipments slow

The 26-cent cut to fuel excise will be quickly overtaken by prices that continue to rise with no end to the Iran war in sight while market analysts warn that deliveries to Australia could dramatically slow from late April.

But the Government has dismissed concerns the excise cut will drive up inflation while barely easing pressure on motorists, and insists its whole focus is on “supply, supply, supply”.

Treasurer Jim Chalmers said it could take a week or two until people saw the effect of the halving of the fuel tax even though it comes into effect on Wednesday.

“People shouldn’t rock up at five past midnight tonight and expect to see the full benefit passed on,” he said.

He’s asked the competition watchdog to set expectations for petrol retailers and keep an eye out for unjustified price increases.

The peak motorists’ body Australian Automobile Association was worried the fuel excise relief wouldn’t be passed on in full.

“But as much as the Australian public hates high fuel prices, it’s possible that motorists will hate government-enforced rationing even more,” managing director Michael Bradley said.

The Treasurer dismissed concerns the excise cut could further increase demand — saying Treasury estimated it could push it up by about 2 per cent — and inflation.

Prime Minister Anthony Albanese also tipped a bucket on economists living “in the academic world” arguing the excise cut would be inflationary and cause people to be hit with more interest rate rises down the track.

“The idea of some of this simplistic analysis that says that somehow this is putting more money into the economy — as your last caller said, because I was on the phone waiting, he’s still spending more money than he was before. So, how is there more money in the economy by reducing the cost?” he told ABC Melbourne.

NSW Premier Chris Minns said there was more than one way of dealing with inflation and demand in the economy, citing the need to cut government spending rather than “doing it at the expense of mum and dad motorists who are just trying to make ends meet”.

Diesel prices across the country rose between 20 and 30 cents a litre over the week to Sunday, Bankwest Curtin Economics Centre head Alan Duncan said, and even with the excise cut there was little relief ahead.

“In some sense, it’s taking us back a week. So that’s essentially the scale of the the excise duty cut versus the progression of, in this case, diesel prices,” he told The Nightly.

“That just tells you the challenge that we’re facing here, and how quickly those excise cuts are exhausted by the continued increase in prices.”

Concerns about the US following through on Donald Trump’s threats to “obliterate” Kharg Island, home to vital oil storage and export terminals, are pushing crude oil prices up even further which will cause more pain at the pump, Professor Duncan warned.

The NRMA on Monday told The Nightly it too was worried about the excise cut being quickly gobbled up by ongoing price increases.

The motoring organisation doesn’t think fuel excise should be cut at all.

Prime Minister Anthony Albanese has insisted governments want to do everything they can to avoid mandatory rationing of fuel.

States reported 462 stations with no diesel and 188 with no petrol as at Tuesday afternoon.

There are 81 shiploads of fuel scheduled to arrive in Australia during April, with 53 of those on their way now.

Energy Minister Chris Bowen told Parliament Australia had secured shipments until the end of April and was working with international partners including Saudi Arabia to ensure further supplies.

Mr Albanese and Singapore’s Prime Minister Lawrence Wong last week issued a joint statement committing to continuing to supply each other with liquid fuel and gas.

But analysts from JP Morgan have warned if Iran continues to strangle the Strait of Hormuz the deliveries could dramatically slow from late April.

JP Morgan’s commodities research team said that a global shift from a flow shock to stocks starting to run dry was already becoming evident, and regional exporters in Asia were increasingly prioritising their domestic markets.

“March has been characterised by preventive measures and efforts to cushion price impacts, but April is likely to bring the first visible demand losses as supply constraints translate into reduced availability and declining inventories,” they wrote.

Dr Chalmers said the JP Morgan research pointed to “huge pressures on the supply chain” and that was why senior ministers and the PM had been chasing international counterparts to secure stocks for Australia.

“Of course, there’s a global scramble underway. We feel like we have equipped ourselves to do the best we can in securing some of that extra supply,” he said.

Mr Albanese told his Labor colleagues during Tuesday morning’s caucus meeting his focus was on “supply, supply, supply”.

“We want to avoid mandating; we’re a nation where we want to look after each other,” he said.

There was both uncertainty over the war and uncertainty about how it ends, which was causing people understandable anxiety compounded by the price rises, he told them.

Opposition Leader Angus Taylor made a similar point to Coalition MPs, saying that Australians were about to go into the Easter period with a fair bit of anxiety about what is happening in the economy and their access to fuel.

“This government hasn’t been up front about anything through this crisis,” he later told reporters.

“What are their plans? What kind of heavy-handed mandate are they working through?

“Everyone in the world wants to see lower fuel prices right now, and we know the pathway to do that is to open the Strait of Hormuz. I think we can over-complicate this. It’s pretty simple.”

NSW has changed freight rules so trucks can carry heavier loads and drive for longer, meaning fewer trips and an estimated saving of 18-30 per cent of diesel over the next three months.

Mr Minns described its as a necessary change that was all about “prioritising what the biggest issue is in our economy, and that is getting access to diesel and making sure our supply chains are strong”.

The Federal Government has also set up a new working group on fertiliser to work on securing supplies and do the same price monitoring now in place for fuel. It’s also deferred the start of a new cost-recovery system for export regulation.

Both moves were applauded by farmers.