Fuel prices fall as Australian servos fast-track excise cuts

Petrol prices in Australia’s biggest cities began falling on Wednesday as retailers moved unexpectedly early to pass on the federal government’s 26¢-a-litre excise cut in part or in full, even before most sites had depleted existing stocks and bought new fuel at cheaper prices.

In Melbourne, the average price of unleaded fell 16¢ a litre from nearly $2.60 a litre on Tuesday to $2.43 a litre by Wednesday morning, figures show. Service stations across Sydney had cut average prices by about 13¢ to $2.44 a litre.

Steeper cuts were recorded in other parts of the country: prices fell 15¢ in Brisbane and 18¢ in Hobart on average.

Adelaide led the nation with the sharpest fall, cutting prices by 25¢ to $2.34 a litre, while Perth had the smallest decline of 7¢ a litre to a citywide average of $2.44.

The Albanese government this week announced a temporary halving of the fuel excise – a flat tax that adds 52.6¢ a litre to the cost of petrol and diesel – to help ease cost-of-living pressures on households caused by the war in the Middle East.

In the month since the first US and Israeli attacks on Iran, attacks on oilfields and Iran’s de facto blockade of the Strait of Hormuz have paralysed up to one-fifth of the world’s supply of crude oil – the natural resource that is refined into petrol, diesel and aviation fuel – and sent prices soaring to record levels across Australia.

While the 50 per cent excise cut kicked in on Wednesday, Treasurer Jim Chalmers earlier this week said that the saving could take up to a fortnight to fully work its way through the fuel network.

However, some retailers made the call to start selling their higher-taxed stock at the discounted prices, choosing to take a short-term hit to their bottom line that could be offset once the excise returned to normal.

Viva Energy, which runs Australia’s Shell, Liberty Oil, Reddy Express and OTR petrol station chains, said it had immediately passed on the full 26¢ excise reduction, sending prices at many of its metropolitan outlets below $2.30 a litre.

The cuts “flowed through this morning when our stores were opening”, Viva chief executive Scott Wyatt said.

“In the end, the decision was an easy one,” he said. “We were keen to see the relief provided by the federal government passed on as quickly as possible ... to help people get on and enjoy their [Easter] holiday.”

Ampol also confirmed it had decided to pass on the 50 per cent excise reduction in full across its 1800 outlets. “These rates came into effect [on Wednesday morning] and are already in place at many of our sites, with the reduction to be applied across our entire company-owned Ampol Foodary network progressively throughout the day,” a spokesperson said.

BP said it had reflected the excise cut in its pricing decisions. Price data showed many BP sites in Melbourne and Sydney selling unleaded below the $2.30-a-litre mark.

Diesel prices across Australia have increased more sharply than petrol, a major concern for many critically important industries that depend on the fuel, such as transport, agriculture and mining.

The average price of diesel also fell significantly by Wednesday morning, the figures compiled by the National Roads and Motorists Association showed. The average price in Sydney is down more than 11¢ a litre, and more than 15¢ in Melbourne.

The new capital-city price snapshot from NRMA made clear that some operators had opted to pass on excise cuts immediately.

“Based on these prices, people will start to feel relief today,” NRMA spokesman Peter Khoury said.

However, the figures were citywide averages only, meaning lower fuel prices will not yet be reflected at every service station, Khoury added.

“If you pull up at your local servo, and you haven’t seen a cut yet, they aren’t doing anything wrong,” he said. “They are waiting until they stock their tanks at the cheaper rates – and that could take days or weeks, depending on where the servo is located and how many customers they have.”

Energy Minister Chris Bowen said the fuel price cuts were welcome news, but said motorists should not increase their consumption.

“We continue to remind Australians to buy what you need – no more, and no less so that no one else has to go without,” Bowen said.

The threat of fuel shortages and price spikes caused by the Iran war has ignited panic buying across the country. Service station operators said fuel theft had risen between 10 and 50 per cent, depending on the location.

Motorists have been hoarding fuel for weeks, with many rushing to fill jerry cans and spurring a doubling of demand in many locations, causing hundreds of service stations to run out of at least one type of fuel, particularly in regional areas.

In the early days of the conflict, the rush on demand was worsened by some of Australia’s biggest industrial users of diesel in the mining, agriculture and transport sectors, which also scrambled to fill their huge private fuel tanks, draining fuel from the spot market and leaving independent service stations without their usual supply lines.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.