Australia extends fuel excise cut at reduced rate

The Australian federal government has decided to extend its fuel excise cut for an additional month, though at a reduced rate. Starting July 1, the 32 cents per litre discount will be halved to 16 cents per litre. Simultaneously, the Heavy Vehicle Road User Charge will increase to 16 cents per litre. Both temporary measures were initially slated to end on June 30 but will now continue until August 2 before being phased out completely.

Prime Minister Anthony Albanese stated that the extension aims to alleviate financial pressure on Australians, noting that the 16 cents per litre reduction will save approximately $11 on a 65-litre tank of fuel. He cautioned that global factors, including the disruption of shipping through the Strait of Hormuz, could delay the return of fuel prices to normal levels for several months. While Iran claimed to have closed the strait due to Israeli actions, the US military reported continued significant oil transit.

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The 16 cents a litre extension to the fuel tax cut that we've announced today will reduce the cost of a 65 litre tank of fuel by around $11.

The fuel excise, a sales tax on petrol and diesel, was initially halved in March to buffer the impact of rising global oil prices. This cut reduced fuel costs by about 26.3 cents per litre, contributing to a significant drop in retail prices. As of May 27, Australian retail diesel prices had fallen 31 percent and petrol prices 29 percent in major cities. The standard fuel excise is 52.6 cents per litre. Experts believe that the upcoming price increase, while noticeable, will not result in a dramatic jump and will keep retail costs within historical inflation-adjusted ranges.

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Even with the return to higher excise, the retail cost of petrol won't be way out of line with historical levels, at least in inflation-adjusted terms.