Motorists have just eight days to fill up their tank before petrol prices spike on September 29 as the temporary 22.1 cent cut to fuel excise is lifted.
Announced in the lead up to the federal election, the fuel tax relief always had an end date but it could deliver a short, sharp shock to household budgets.
While the original cut to fuel excise was 22.1 cents a litre the petrol tax will be increased by 23 cents next Wednesday night.
“Most people understand that the budget can’t afford to keep the excise cut going forever,’’ Treasurer Jim Chalmers said.
“People are preparing to return to the normal setting.”
But the Treasurer warned petrol retailers that prices should not spike by the full 23 cent increase overnight because millions of litres of cheaper fuel were already “in the system”.
“Wednesday night next week, the fuel excise relief comes off and I want to explain why prices should not jump the whole 23 cents overnight,’’ he said.
“Today you would have seen industry estimates that there would be more than 700 million litres of lower (cheaper) excise fuel in the system when the fuel excise is reintroduced.
“This is 700 million reasons why the price should not shoot up by the full 23 cents. We have been working closely with the servos and suppliers to understand that there are hundreds of millions of litres of fuel underground in that was purchased at the lower price and so the ACCC and the Government expect that the price of petrol should not shoot up at the bowser on Wednesday night by the full 23 cents if the normal market pressures are in operation.
“This is why we have maximised the ACCC’s role in monitoring the petrol situation as this petrol price belief comes off.”
Dr Chalmers said it was just one example of the difficult decisions that needed to be made in the budget.
“We are under no illusions that this will be difficult for people. But we put a premium on responsible budget management.”
Petrol Spy managing director and owner Andrey Firsov said there was already a price spike showing up in the data.
“Fuel has been quite cheap for the last three weeks. Since yesterday, it’s gone up by almost 50 cents. So there’s a price spike,’’ Mr Firsov said.
“In all of the capital cities there’s a fuel price cycle. Prices go down over a period of three weeks and then there’s a spike in one day.
“Perth is still cheap. The average price is $1.53 a litre. Brisbane I think is going up. Sydney, Melbourne and Brisbane the prices have gone up every second station is $1.90. The rest is $1.50.
“It is likely that in a few days it will be $1.90 everywhere.”
Australia is also joining a G7-led coalition of countries implementing a price cap on Russian oil in an attempt to put downward pressure on energy prices.
Australia has already imposed a complete ban on importing, purchasing and transporting Russian oil, gas, refined petroleum products and coal.
It’s not yet clear what impact that will have on energy prices globally or how that might flow through to Australia.