Petrol prices on track to top $2 a litre as Bowen sounds death knell for fuel excise relief

Petrol prices in Australia are on track to surge past $2 a litre, with diesel potentially reaching $2.40, as a temporary government discount expires Sunday. The 16-cent-per-litre reduction, initially introduced in March, will end, returning the excise to its normal level.

Energy Minister Chris Bowen stated the government has no plans to extend the cost-of-living relief. "Our policy decision is clear," he told reporters, emphasizing the government's monitoring of the situation but commitment to the policy.

This price hike is expected to add significantly to the cost of filling up vehicles. For a 55-litre tank, the increase could mean an additional $8.80 per fill. Retailers have already begun passing on higher wholesale prices, influenced by global oil costs and geopolitical tensions, particularly renewed conflict between Iran and the US in the Strait of Hormuz.

Analysts note that service stations typically adjust pump prices within four days of wholesale changes. Unleaded petrol prices have already climbed above 200 cents per litre in most capital cities. Diesel prices have seen even steeper increases, with some cities already exceeding 240 cents per litre.

Economists had credited the excise discount with helping to suppress Australia's inflation rate and support consumer spending during a weakening economy. The loss of this relief is predicted to push headline inflation up again and increase the average household's weekly fuel bill by approximately $20.

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Obviously we always monitor the situation and take steps as necessary but our policy decision is clear.