Australians have been warned to expect higher fuel prices as overseas disruptions continue to put global fuel security in peril, with Labor confirming it has no immediate plans to cut the fuel excise.
The average cost for a litre of Unleaded fuel hit $2.35 across Australia, while diesel was $2.80 according to Fuel Radar. However prices still remain below April peaks of $2.60 for unleaded and nearly $3.30 a litre for diesel.
University of Sydney’s chair in supply chain management Ben Fahimnia warned that while Australia’s has successfully secured additional fuel shipments since the US attacked Iran in March, this should “not create a false sense of security”.
He said the latest escalations involving Houthis near the Bab el-Mandeb Strait and Saudi Arabia’s Riyadh airport showed the volatility in alternative fuel pathways following the closure of the Strait of Hormuz.
While Australia doesn’t buy fuel directly from Saudi Arabia, our place at the bottom of the supply chain makes us vulnerable to disruptions, said Prof Fahimnia.
“Australians will initially feel this through higher fuel prices. But if these disruptions continue for another couple of months, the question facing the government could shift very quickly from ‘How much will fuel cost?’ to ‘Can we continuously secure enough fuel?’” he said.
He said that while Australia weathered the initial prices shocks, subsequent upheaval would reduce the number of “alternative pathways” and the capacity of the global system to absorb disruption.
As it stands, Australia has 41 days of petrol, 31 days of diesel and 32 days of jet fuel, with Energy Minister Chris Bowen set to head to Saudi Arabia to meet with his counterpart Prince Abdulaziz bin Salman Al Saud to discuss the continued flow of oil.
Brent crude prices closed at US$103 a barrel on Friday and have remained above US$100 since September 10, prompting the Coalition to announce a re-elected Liberal-National government would halve the fuel excise by about 27 a litre if the price of Brent Crude soared above US$100 a barrel in a two-week period.
The Heavy Vehicle Road User Charge for farmers, miners and other big industry users would also be scrapped.
Angus Taylor on Sunday denied it was inflationary as the policy would be “fully funded” by increased tobacco excise receipts from cuts to their tobacco excise, which would in turn divert customers back to the legal tobacco market.
An excise cut would end in three months and cost about $950m a month.
“This is anti-inflationary and it’s being done in a way which is responsible for the budget,” he said.
NRMA’s Peter Khoury said there was “merit” in the policy as it “provided certainty to motorists but most importantly to industry as well”.
However the budgetary impact needed to be examined given the excise is redirected into “fixing roads”.
Both Anthony Albanese and Treasurer Jim Chalmers ruled out immediate changes to the excise.
Mr Chalmers said it is “not something that we’ve been discussing or considering”.
The Prime Minister said there were “concerns expressed on inflation” around cutting excise, but said he would “would always weigh up the considerations which are there”.
Most economists say reductions in excise would be inflationary and a “bad band aid” amid a stubbornly high Consumer Price Index which was forcing the Reserve Bank to keep rates high.
“It may reduce your browser bill, but that comes at the cost of higher prices for everything else,” he wrote on X.
Extracted in full from: https://www.dailytelegraph.com.au/news/nsw/australia-fuel-price-warning-as-global-supply-disruptions-bite/news-story/d1ebf13f09afbed00814ed4290a8ba8b
