Diesel fuel prices at service stations across Australia are now starting to fall below the $3 mark per litre for the first time in weeks, with the federal government’s emergency measure of halving the fuel excise coming into effect.
The Australian Competition and Consumer Commission has confirmed that on April 1, the average retail price of diesel fuel across the five largest Australian capital cities reduced by 15 cents per litre compared with the previous day.
On the other hand, the price reduction ranged between 9.1 cents per litre in Perth and 19.5 cents per litre in Adelaide, where the price reduction was the highest across the country.
The move comes after a National Cabinet meeting on March 30 agreed to halve the amount of excise on fuel by 52.6 cents per litre to 26.3 cents per litre, effective from April 1 to June 30.
Before the tax cut went into effect, the national average price of diesel rose to $3.03 per liter for the week ending March 27. In some places, it was as high as $3.29.
The rise was caused by problems with the global supply of oil after the US and Israeli military strikes on Iran and the closing of the Strait of Hormuz, which is a key chokepoint for crude oil shipments to Asian refineries that provide most of Australia’s fuel.
The effects have been varied, though welcomed, in regional areas.
In Warrnambool, for instance, diesel that was above $3.20 a liter has dropped to just under $3.00 a liter while Unleaded 91 has fallen from record highs of about $2.60 to around $2.30 a liter.
Treasurer Jim Chalmers had said on March 31 that savings won’t immediately materialize at the bowser as excise was paid at the terminal gate before fuel was distributed to service stations.
Many service stations still have stocks that were purchased at higher rates.
However, it seems that competition has forced a quicker pass through than expected, with retailers cutting prices ahead of using up their existing stocks.
There have been warnings from fuel industry analysts that a seven day wholesale forecast for diesel suggests that prices are expected to increase by 30 cents a liter.
ACCC puts retailers on notice
The competition regulator is monitoring the pace at which fuel price reduction is passed on to motorists.
ACCC Chair Gina Cass Gottlieb said that it had written to fuel retailers, advising them that it expected them to pass on the full reduction to motorists.
The ACCC was concerned that fuel retailers had increased prices immediately after the announcement of the reduction, followed by a supposed reduction.
Parliament has also taken steps to ensure that there are tough consequences for anti competitive cartel practices.
It passed a bill that doubles the maximum penalty for cartel conduct and misleading prices to 100 million Australian dollars.
The 32.4 cents a liter road user charge for trucks over 4.5 tonnes gross vehicle mass has been slashed to zero for three months.
This is a huge relief for trucking businesses that are feeling the pinch from increasing fuel prices.
Also Read: Pentagon ousts Army’s top general as 40 nation coalition charts path to reopen Strait of Hormuz
The extent to which that is enough will depend on what happens with the Middle East conflict and how long global oil prices remain high.
For now, drivers leaving home for Easter will at least get a break at the service station.
However, with international oil prices still erratic and supply issues looming for the second half of April, it may not last.
