Resources Minister Madeleine King has left the door open to a potential extension of the fuel excise discount, after the government was warned prices “may intensify” if conflict in the Middle East continues.
Ms King, who was in Karratha with Anthony Albanese on Tuesday, told ABC Radio National any possible extension would be decided when the discount is due to expire at the start of August.
The fuel excise – a tax on the wholesale price for fuel that flows on to the bowser – was slashed by 32 cents per litre in April; in July, when it was due to expire, it was cut again for another month but by only 16 cents.
“I know that time is coming right at us, but as we all are aware this conflict in the Middle East – and it appears to be sadly spreading – just continues to cause instability in that global energy market and those oil prices,” she said.
“The government is very much aware of the pressure an increase in fuel prices does put on Australian families, and we have taken action in the past and we’ll continue to monitor how these prices do affect people and seek to deliver that kind of relief as best we can.”
Pressed on any further relief, Ms King said the government “won’t rule anything out”.
“We’ve done so much around fuel security that makes sure there is fuel available for consumers with the fuel and fertiliser security facility, as well as developing the fuel security reserve as well,” she said.
“But, as to the excise, the Treasurer and the Prime Minister and the ASIC team will consider that over the course of the week.”
Ms King said no decision about diesel – on which much industry is reliant – had been made but expected it would go “hand in hand” with other measures.
However, speaking later, Foreign Minister Penny Wong said it was not in their current plan to continue the excise cut.
“Currently the plan is for the fuel excise to step down – as you know, it’s come down, it’s halved and the intention is for that to discontinue as of this weekend,” she told the ABC.
Treasury warning
It comes after a grim warning by Treasury in a Monday night briefing to MPs, which follows Brent crude oil prices rising by 28 per cent since US President Donald Trump declared the Since Donald Trump declared the Memorandum of Understanding between the United States and Iran was “over”.
After the US and Israel launched extensive air strikes on Iran in late February, vehicle fuel prices increased by 32.8 per cent in Australia over March.
The pump surge drove headline inflation up to 4.6 per cent, forcing the Reserve Bank and Treasury to warn inflation could peak as high as 5 per cent by the end of the June quarter.
While drivers got temporary relief when unleaded plunged back to around $1.48 to $1.63 per litre in June, prices have rapidly swung back up.
The price for Unleaded 91 petrol is currently costing Australians living in major cities anywhere from $1.85 to $1.97 per litre.
The 2026-27 Budget did cost estimate for a downside scenario which involved oil prices peaking at $200 USD per barrel in the September quarter 2026.
Under this scenario, real GDP was half of a per cent lower than in the budget baseline in both 2026-2027 and 2027-2028, while inflation peaked at around seven-and-a-quarter per cent through to the December quarter.
Treasurer Jim Chalmers said there was still “so much uncertainty” about the war and the ongoing “costs and consequences”, saying Australians had “already paid to hefty a price” for the conflict.
“From an economic point of view, a proper and permanent end to the war can’t come soon enough,” Mr Chalmers said.
“Like the rest of the world, we are monitoring day-to-day developments very closely because so much hinges on a proper ceasefire and the permanent reopening of the Strait.”
“The longer this drags out the more serious the consequences for inflation and growth here and around the world.”
The grim prediction comes as the federal government prepares for a fresh cost-of-living nightmare for millions of motorists.
With crude oil futures having traded above $US100 per barrel on July 24, prices could continue to soar.
The initial energy price shock arising from the conflict was dealt with through resource redirection to bypass the Strait of Hormuz and strategic reserves being released.
But now, the oil market has now been left with weaker buffers against future supply shocks.
Headline inflation rose 4.6 per cent in the 12 months to March – driven by a 32.8 per cent rise in automotive fuel prices in the months.
It is tipped to rise to 5 per cent through to the June quarter, when accounting for the impact of higher fuel prices flowing onto other goods and services.
In the RBA’s statement on Monetary Policy back in May, the bank forecasts headline inflation to peak at 4.8 per cent in the June quarter, with the higher prices for crude oil and refined fuels leading to significant price increases for vehicle fuel and domestic and international travel.
