Four Dollar Diesel Has Arrived and the Real Scandal Is the One Nobody in Canberra Will Touch

I wrote a piece two days ago about 36 days of petrol, a war in the Gulf and an industry that saw this coming. The thesis was straightforward: Australia's fuel supply is more fragile than anyone in a position of power has been willing to admit, and a single geopolitical shock has exposed every crack in the system.

Forty eight hours later, it got worse. And the bit that should properly anger you is not the prices themselves. It is what the people who are supposed to be fixing this are actually doing about it.

The $4 Wall

Pacific Fuel Solutions is now charging 399.9 cents per litre for diesel at fourteen locations across Victoria. Camperdown. Sale. Nathalia. Goroke. Wodonga. Dandenong South. Donald. Malvern East. Ferntree Gully. Nhill. Park Orchards. Derrimut. Wendouree. Shepparton.

That is not a spike at one dodgy servo on a highway. That is a chain setting $3.999 as its standard diesel price across an entire state, from inner metro to deep regional. And they are doing it openly, because nothing stops them.

Up in Queensland, the Kingfisher Bay Resort on Fraser Island is charging 399 cents. Remote tax, you might call it. But Pacific Fuel Solutions in Dandenong South? That is 30 kilometres from the Melbourne CBD. There is no remoteness surcharge that justifies four dollar diesel in the industrial heartland of Victoria's second largest city.

The ACCC says it is watching. Regional communities would like to know what, exactly, it is watching for that it hasn't already seen.

The Spread That Should Make You Furious

Here is a number that tells you everything about how this market actually works: in Reservoir, a suburb in Melbourne's northern suburbs, the cheapest E10 is 244.9 cents per litre. The most expensive is 350.0 cents. Same suburb. Same fuel. Same day. One hundred and five cents apart.

That is not a market. That is a shakedown.

Every single one of those suburbs is in Victoria. That is not because Victorian servos are uniquely greedy. It is because Victoria's price cycle is the most volatile in the country and the current crisis has stretched that cycle to breaking point. The bottom of the cycle in some suburbs hasn't moved much. The top has gone stratospheric. And the retailers charging 350 cents for E10 in Reservoir know perfectly well that someone a few blocks away is selling it for 105 cents less. They just don't care, because enough people will pay it.

The Quiet Windfall Nobody Mentions

Here is the bit that I think should be the centre of the national conversation and isn't.

The fuel excise is a flat 52.6 cents per litre. It does not change when prices go up. But the GST does. The GST is 10 percent of the final price, and the final price includes the excise. So when unleaded is $2.55 a litre, the GST component is 23.2 cents. When diesel is $3.20, the GST is 29.1 cents. When Pacific Fuel Solutions charges $4 for diesel, the GST is 36.4 cents.

Add excise and GST together. On $2.55 unleaded, the Commonwealth takes 75.8 cents per litre. On $3.20 diesel, it takes 81.7 cents. On four dollar diesel, the government's take is 89 cents per litre.

The higher prices go, the more the government collects. On a 50 litre fill of diesel at $3.20, you are handing the Commonwealth $40.85 in tax. At $4, it is $44.50. The crisis is not costing the government money. It is making them money. And they have decided not to cut the excise.

Now look, there are reasonable arguments against an excise cut. I outlined them in my previous piece. The money funds roads. An excise cut in a supply constrained market might just widen margins rather than lower bowser prices. These are legitimate points.

But the government cannot simultaneously argue that cutting excise would be irresponsible AND refuse to acknowledge that it is collecting a GST windfall from the very crisis it claims to be addressing. That is having it both ways, and the maths doesn't lie. The Parliamentary Budget Office estimates fuel taxation raises about $12 billion a year at normal prices. With unleaded up 50 percent and diesel up 90 percent, the GST component alone adds hundreds of millions in unbudgeted revenue. The Treasurer will benefit from this crisis at the next budget update. He just won't say so.

Where Every State Stands Right Now

Two days on from my last analysis, here is the updated state by state picture as of this morning, 28 March 2026.

* QLD diesel floor excludes two stations reporting anomalously low prices that appear to be data entry errors.

A few things stand out. South Australia now has the highest diesel average at 322.8 cents, overtaking NSW. The ACT has the tightest diesel spread: just 22 cents between cheapest and dearest, which tells you Canberra's relatively small, well supplied market is moving in lockstep. Compare that to the NT, where the spread is 252 cents. Remote Alyangula on Groote Eylandt is still selling diesel at 147.3 cents, presumably old stock, while Darwin servos charge more than double that.

The WA E10 number is misleading: only three stations report E10 there, and at 270.2 cents average it reflects the limited sample more than the state market. WA's real story is PULP95 at 274.4 cents, essentially the same as their diesel average, which is unusual. Normally premium runs well above diesel. The convergence suggests diesel supply constraints are affecting premium grades too.

The Cheapest Fuel in Australia Right Now

For the motorists who are doing the smart thing and shopping around, here is where the genuinely cheap fuel still exists as of this morning.

All Victoria. All E10. The cheapest fuel in the country right now is at the bottom of Victoria's pricing cycle, where a handful of servos in regional towns and outer metro suburbs are still holding below $1.90. These prices won't last. When the cycle turns, and it will, even these stations will push past $2.50. If you are within driving distance of Maffra, Tyers or St Arnaud, fill up now.

Shell's Reddy Express stores at Altona Meadows and Forest Hill at 189.9 are notable because they are genuinely metro: western and eastern suburbs of Melbourne respectively. That puts sub $1.90 E10 within reach of a huge chunk of Melbourne's population, if they know where to look. This is exactly why checking real time prices before you drive matters more now than at any point in the last decade.

The Taskforce That Isn't a Taskforce

On 20 March, the Prime Minister announced a Fuel Supply Taskforce led by Anthea Harris, former CEO of the Australian Energy Regulator. This sounds decisive. The government appointed a person with a serious title to coordinate a response to a serious problem.

But look at what the taskforce actually does. It sits inside the Department of Prime Minister and Cabinet. It coordinates. It monitors. It liaises between industry and government. It has no regulatory power. It cannot direct supply, set prices, or compel disclosure. It is, functionally, an information desk with a senior public servant attached to it.

Compare this to what other countries have done. The IEA coordinated a collective release of strategic reserves among member nations. Japan, which actually maintains its 90 day reserves, released supply within 72 hours of the Hormuz closure. South Korea did the same. The United States tapped its Strategic Petroleum Reserve and authorised emergency waivers on fuel transport regulations.

Australia released 762 million litres of reserves. Except they are not reserves in the way most people understand that word. They are commercial stockholdings that companies were already planning to use. The "release" amounts to the government telling importers they can temporarily draw down below their Minimum Stockholding Obligation. It is permission to run the tank lower, not the delivery of additional fuel.

The honest framing is this: Australia does not have a strategic fuel reserve. What it has is a regulatory minimum on how much fuel the private sector must keep in the system at any given time. When a crisis hits, the government's lever is to lower that minimum. That is the plan. That has always been the plan. And the reason it feels inadequate is because it is.

The Excise Debate Gets Louder

Yesterday, the PM was again urged to cut fuel excise. Angus Taylor wants it halved. Five crossbench independents are demanding it. The government says no.

Here is my controversial take on this, and it will annoy both sides. The government is probably right that a blanket excise cut is bad policy in a supply crunch. But it is almost certainly wrong to offer nothing in its place. There is a middle path that nobody in Canberra seems willing to explore.

What about a targeted rebate for essential users? Farmers, truckies and transport operators whose costs have doubled and who cannot simply choose not to drive. What about temporary GST relief on fuel, which unlike excise actually scales with price and directly reduces the government's crisis windfall? What about accelerating the diesel reserve release to regional areas where independent distributors have been locked out of supply by the majors?

The Morrison government halved excise in 2022. It was messy, expensive and probably didn't pass through fully to bowser prices. The lesson the Albanese government took from that was "don't do it." The lesson they should have taken was "do it better." Instead, they have chosen to do nothing material on the demand side and hope the supply side sorts itself out before the next election.

For a family in Dubbo or Townsville filling up the family car and the work ute, the distinction between good policy and adequate policy is academic. Their fuel bill has nearly doubled in a month. The government is collecting more tax from every litre they buy. And the official response is a taskforce that coordinates and an ACCC investigation that might produce results in 2028.

What Comes Next

The Strait of Hormuz situation remains unresolved. The US military operation to reopen the strait began on 19 March and progress has been slow. Oil analysts are now pricing in a longer disruption than initially expected, with Brent crude holding above US$100 and the Dallas Fed warning of annualised GDP impacts if the closure extends into Q3.

For Australian motorists, the practical outlook is this:

• Diesel stays above $3 nationally through April. There is no scenario where diesel comes back below $3 before May, and the four dollar diesel we are seeing in Victoria will likely spread to other states if wholesale margins remain compressed.
• E10 and ULP will settle between $2.40 and $2.70 in most metro areas. The price cycle will continue, and the troughs will offer brief windows of relative value. Use price trend tools to time your fill ups.
• The dirty fuel exemption runs until 31 May. Your catalytic converter will cope. The additional 100 million litres per month of supply is marginal but real.
• The ACCC investigation will take months. Do not expect enforcement action before mid year at the earliest. The weekly monitoring reports are useful for price transparency but they do not change the supply dynamics.
• Watch the IEA's April oil market report. If the agency downgrades global supply forecasts further, that will signal another leg up in crude prices and corresponding pain at the bowser.

The Question That Matters

This crisis will end. The strait will reopen. Prices will eventually fall. And when they do, every person in a position of power will claim credit for managing through it and quietly move on.

The question that matters is whether anything structural changes afterward. Do we finally build a genuine strategic reserve? Do we reform the fuel supply chain so independent distributors are not left to the mercy of four majors when supply tightens? Do we acknowledge that a country which imports 90 percent of its refined fuel and holds 36 days of supply is not energy secure by any reasonable definition of the term?

My suspicion, based on twenty years of watching energy policy in this country, is that we will not. We will have the inquiries. We will get the reports. Someone will commission a feasibility study on a strategic reserve. And then oil will drop back below $80, prices will normalise, and the political urgency will evaporate like petrol fumes on a hot day.

I would genuinely love to be wrong about that. But the track record is not encouraging.

In the meantime, check prices before you fill up. The difference between the cheapest and most expensive station in your suburb could be saving you $50 a tank. That is not financial advice. That is just maths.

All price data sourced from Petrolmate's real time monitoring of over 10,000 Australian and New Zealand service stations. Figures current as of 28 March 2026, 10:00 AM AEDT.