Fuel excise slashed by half

The Federal Government has halved the fuel excise in an effort to provide motorist’s some financial relief at the petrol pump.

The reduction will be for six months and will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre. Fuel subject to a lower excise rate is expected to flow through to the majority of service stations and Australian consumers within a few weeks as stations replenish their stocks.

The Australian Competition and Consumer Commission (ACCC) has said that it will monitor petrol prices following the reduction.

Under direction from the Federal Government, the ACCC currently monitors fuel prices, costs and profits and reports on these each quarter. The ACCC can compel refiners, importers, terminal operators, wholesalers, and retailers to provide information relating to fuel prices where necessary.

“We expect that fuel retailers will pass on the cut in fuel excise to reduce the price at the bowser as soon as possible, as existing petrol stock levels are used up,” ACCC Chair Gina Cass-Gottlieb said.

“In light of today’s announcement, our petrol team will focus on this price monitoring work for the next six months to determine how retailers are passing through the excise reduction to consumers.

“We will contact petrol retailers to set out our clear expectations that the savings are passed on to consumers and advise them that we will be monitoring their margins. We will also continue to inform consumers of retailer behaviour.

“As these changes flow through to prices at local servos, this is a good time for consumers to look around and shop at those retailers who have already passed on the cut in the excise to their petrol prices,” Cass-Gottlieb said.

The ACCC notes that the full excise has already been paid on existing stocks of fuel which will be run down first. This lag in the adjustment of wholesale prices is shorter in larger cities and sites with large turnover but is often longer in regional locations where lower volumes of fuel are sold and fuel is replenished less frequently.

“If retailers make false or misleading statements to consumers that they have passed on the savings when they have not, the ACCC will not hesitate to take appropriate enforcement action,” Cass-Gottlieb said.

“We encourage consumers in major capitals to also look at the price cycle information on our website, and consumers everywhere to use price comparison sites.”

It is important to remember that the major component of wholesale prices is the international price of petrol, which is largely influenced by the continuing fluctuations in international crude oil prices. The changes in the AUD/USD exchange rate also influences the petrol prices in Australia.

Any change in these factors would mean that the change in petrol prices may differ at certain times from the reduction in excise of 22cpl.