Motorists are being warned to expect higher petrol prices from July, with the federal government confirming a temporary fuel excise reduction will come to an end at the close of the financial year.
The measure, introduced in April to ease pressure on households facing rising fuel costs, reduced the price of petrol by around 32 cents per litre. However, the relief is due to expire on June 30.
Energy Minister Chris Bowen said the policy was always intended to be temporary.
“We’ve been very clear, this was a temporary reduction in the excise that was always intended to be temporary,” he told reporters on Saturday.
“The Prime Minister and treasurer have been clear, they will always examine the latest information, but our intention is for it to come off at the end of the month.”
The fuel excise was initially halved before an additional 10.9 per cent rebate was applied after states and territories agreed to forgo windfall GST revenue.
The three-month measure cost the federal budget about $2.55 billion and was introduced as global oil prices surged amid tensions involving Iran and the United States.
At the time, concerns over disruptions to shipping through the Strait of Hormuz, a key route for around 20 per cent of the world’s energy supplies, pushed oil prices higher.
Oil prices climbed from around $US56 ($A80) a barrel in January to as much as $US120 (A$170) a barrel.
Since then, prices have eased to about $US89 a barrel following peace talks between the United States and Iran, reducing some pressure on global fuel markets.
Industry analysts estimate that every $10 increase in the price of oil adds about 10 cents per litre at Australian petrol stations.
While easing geopolitical tensions may help limit further price rises, motorists are still expected to feel the impact of the excise returning from July.
The temporary fuel tax cut also contributed to a decline in headline inflation. Inflation reached 4.6 per cent in March before easing to 4.2 per cent, helped in part by lower transport costs.
Bowen said Australia had avoided the fuel shortages that some had predicted earlier in the year.
“First they said there would be shortages around Easter and then a couple of weeks ago the shadow minister said there would be shortages in June.
“We are now in June and we have record amounts of fuel in this country. While the government has been insuring fuel supplies, the Liberals have been scaremongering but they have gotten basic facts wrong.
“We have avoided rationing, we have avoided shortages, we have more fuel in Australia than we’ve had at any point in the past few years.”
Bowen said the government would continue monitoring fuel supplies.
“We will continue to work in the face of the international uncertainty and ongoing war in Iran to ensure we have as much fuel in Australia as we possibly can.”
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