The 26 Cent Question: Is the Excise Cut Actually Reaching Your Bowser?
Ten days ago, the federal government slashed the fuel excise in half. On paper, that's 26.3 cents per litre straight off your petrol bill. In practice? The story is a fair bit more complicated than the press conference suggested, and the ACCC knows it.
Here's what's really going on.
We've Been Here Before
Australia last halved its fuel excise in March 2022, during the Russia Ukraine crisis. Back then, the rate dropped from 44.2 cents to 22.1 cents per litre for six months. The ACCC monitored it closely and found that within two weeks, the majority of Australia's 7,600 service stations had passed the cut through to consumers. Sydney, Melbourne, and Brisbane saw drops of 25 to 27 cents per litre. Adelaide managed 31 cents. Perth led the pack at 35 cents.
But there were 775 stations, mostly in regional areas, that hadn't fully passed it on even weeks later. Slow fuel turnover was the official explanation. Captive markets with nowhere else to fill up was the cynical one.
Four years on, we're running the same experiment. The excise has dropped from 52.6 cents to 26.3 cents per litre from April 1, running through to June 30. The trigger this time isn't eastern Europe but the Middle East, where the conflict involving Iran has choked the Strait of Hormuz and sent global oil markets into a tailspin.
Same medicine. Different crisis. And this time, the patient is sicker.
Day One: A Mixed Report Card
The ACCC published its first snapshot on April 1. Across the five largest capital cities, average retail petrol prices fell 16.7 cents per litre compared to the previous day. Diesel dropped 15.0 cents.
So roughly two thirds of the cut showed up immediately. Not bad, but not the full 26.3 cents either.
There's a reasonable explanation for part of that gap. Fuel excise is charged at the terminal gate before it reaches service stations, so the petrol already sitting in underground tanks was purchased at the old rate. Stations need to sell through existing stock before the cheaper fuel flows in. Give it a week or two, the industry says, and the numbers will catch up.
Fair enough. But ACCC Chair Gina Cass-Gottlieb flagged something less innocent. The regulator noticed that some retailers hiked their prices in the days between the government's announcement and the actual cut taking effect. They'd jack prices up, then drop them on April 1, making it look like they'd passed on the full saving when in reality they'd pocketed several cents per litre in the gap.
That's not illegal, strictly speaking. But it's the kind of thing that makes you wonder who these cuts are really designed to help.
Diesel: The Cut That Wasn't
Here's where the story gets genuinely concerning. While petrol prices dipped, diesel kept climbing. The national average rose from around 310.0 cents per litre to 312.7 cents after the excise cut was supposed to bring relief.
Read that again. The government cut 26.3 cents of tax off every litre of diesel, and the price still went up.
The reason is crude but straightforward. International diesel benchmarks are being hammered by the Strait of Hormuz disruption. Australia imports roughly 70 to 80 per cent of its refined fuel via Asian refineries, and those refineries depend on crude oil flowing through the very chokepoint that's currently compromised. The global wholesale price of diesel has risen faster than the excise cut can offset.
For the truckie running loads between Adelaide and Darwin, or the farmer in Western Australia trying to get winter crops planted, this isn't an academic exercise. Diesel is the lifeblood of regional Australia, and the excise cut was supposed to provide breathing room. Instead, they're watching the price board tick upward while Canberra congratulates itself on a policy that's barely making a dent.
The Regional Surcharge Scandal
And then there are the surcharges. While Sydney and Melbourne motorists debate whether they're saving 16 or 26 cents, communities in remote South Australia, Queensland, Western Australia, and the Northern Territory are dealing with something else entirely.
The ACCC has served legal notices on businesses in those regions demanding they justify hefty fuel surcharges being slapped on deliveries. Some of these surcharges exceed 70 per cent, imposed on small businesses that service remote communities. The justification? Rising fuel costs in the supply chain.
But here's the thing. If the government has just cut fuel costs by 26.3 cents per litre, shouldn't those surcharges be coming down too? The ACCC has given these businesses three weeks to explain themselves. Industry contacts tell me the regulator is genuinely angry about this one, and enforcement action is a real possibility.
Meanwhile, the ACCC is running a parallel investigation into whether major fuel suppliers, Ampol, BP, Mobil, and Viva Energy, have been engaging in anti competitive conduct by restricting diesel supply to independent wholesalers in regional areas. Mobil has already been whacked with $16 million in penalties for misleading representations about fuel quality at nine Queensland stations. The regulator isn't mucking about.
39 Days and Counting
To put all of this in perspective, Australia currently holds about 39 days of petrol reserves, 29 days of diesel, and 30 days of jet fuel. The International Energy Agency recommends 90 days. We haven't met that benchmark since 2012, and we're the only IEA member that doesn't.
The government's response has been to temporarily reduce the Minimum Stockholding Obligation by 20 per cent, releasing up to 762 million litres of additional fuel into the market. Translation: we're dipping into our already thin reserves to keep prices from getting worse.
Prime Minister Albanese has been working the phones across Asia, trying to secure alternative supply routes as the Strait of Hormuz remains disrupted. There's talk of strengthening ties with refineries in South Korea, Japan, and India. But these aren't overnight fixes, and every extra kilometre of shipping adds cost that eventually shows up at your local servo.
The practical upshot is that even with the excise cut, national average unleaded sits around $2.40 per litre. Without it, we'd be staring down $2.65 or worse. So the cut is doing something. Just not as much as anyone would like.
What This Actually Means for Your Wallet
So what should you actually do with this information?
First, the excise cut is real and it is flowing through, albeit unevenly. If you're filling up with unleaded in a capital city, you should be seeing prices roughly 20 to 26 cents lower than they would have been otherwise. If the price at your local servo seems suspiciously high compared to competitors, that's worth reporting to the ACCC. They've set up specific monitoring for exactly this scenario.
Second, diesel is a different story. If your vehicle runs on diesel, or if you're a small business that depends on freight, the excise cut alone won't insulate you from global price movements. Shop around aggressively, and use tools like Petrolmate's interactive fuel map to compare prices across your area. In cities like Melbourne, the spread between cheapest and most expensive diesel can be 30 cents per litre or more on any given day. Suburbs like Dandenong and Frankston often undercut inner city servos significantly.
Third, this cut expires on June 30. When it does, prices will jump overnight by 26.3 cents per litre, just as they did in September 2022 when the last cut ended. If you can plan a full tank for late June, do it. History says retailers won't be slow to add the excise back on.
The Bigger Picture
What most people don't realise is that the fuel excise cut is essentially the government spending $3 billion to subsidise a supply chain it doesn't control. We don't refine enough fuel domestically. We don't hold enough reserves. And we're geographically exposed to disruptions in the very shipping lanes that keep our tanks full.
The 2022 cut was supposed to be a one off response to extraordinary circumstances. Four years later, we're back doing the same thing for the same reasons. The question nobody in Canberra seems keen to answer is: what happens next time? Because with only two domestic refineries left and a fuel security strategy that amounts to hoping the shipping lanes stay open, there will be a next time.
The fuel industry rarely makes headlines until prices spike. But understanding how the excise cut works, and more importantly where it doesn't, puts you in a better position than most. Watch the diesel numbers. Check your local prices against the state average on Petrolmate. And if you're in a regional area paying surcharges that don't make sense, the ACCC wants to hear about it.
Keep an eye on this space. The next ten weeks, before the excise snaps back in July, are going to be interesting.
