Monitoring fuel prices following the excise cut and reintroduction

The ACCC acknowledges the Federal Budget announcement of a 6-month reduction in fuel excise from 30 March 2022 to 28 September 2022.

We closely monitored fuel prices following the cut in fuel excise, and we are continuing to do so following the reintroduction of the full excise from 29 September 2022.

Reintroduction of excise from 29 September 2022

The rate of excise

The nominal level of excise and excise-equivalent customs duty for all fuels except aviation fuels is increased twice a year based on movements in the Consumer Price Index (CPI). This generally occurs on 1 February and 1 August each year. On 1 August 2022, the rate of excise for petrol and diesel increased by 0.9 cents per litre.

The temporary excise cut has ended and the full rate of fuel excise of 46.0 cents per litre was reintroduced on 29 September 2022. Taking into consideration the associated increase in the GST, the impact on petrol and diesel prices amounts to additional taxes of 25.3 cents per litre.

ACCC activities

The ACCC is undertaking a range of activities during this time. These include:

  • engaging with industry to explain our role and responsibilities in this area, seek information, and outline our expectations in relation to both passing on the excise increase and not misleading Australian consumers about the rationale for any price rises following the reintroduction of the full rate of the excise
  • public communication via the media, describing our role and responsibilities in this exercise and our expectations of the behaviour of wholesalers and retailers
  • proactively communicating with consumers on social media, with a focus on communicating to consumers about the best times to buy in their location based on petrol price cycle information, and information available from fuel websites and apps.

Just as we increased our fuel price data collection and analysis when the fuel excise was cut in late March, we will continue this level of monitoring and analysis following the reintroduction of the full rate of fuel excise. We will closely analyse, and regularly report on, price movements.

For information on how the price of petrol in the 5 largest cities has been tracking against the international benchmark price over the last 90 days, see Petrol prices in Australia tracked against the international benchmark.

Expectations on the price of petrol

Following the reintroduction of the full excise, wholesale (terminal gate) prices posted by market participants on 29 September increased by around 25 cents per litre. We are closely monitoring price movements for any uncharacteristic or abnormal retail price increases.

The ACCC will not hesitate to take action where there is evidence of misleading or deceptive conduct, misrepresentation about the excise increase and retail prices, and anti-competitive behaviour (such as price collusion).

Petrol prices at the pump are influenced by a range of fluctuating factors, including the international oil price and the USD/AUD exchange rate. Therefore, the price at the pump is expected to continue to vary over time.

We urge consumers to shop around, continue to look at information about price cycles in capital cities and consult fuel price apps and websites to compare petrol prices. Average prices between various parts of the petrol price cycles can vary by around 20 to over 40 cents per litre.

Our previous research has shown that motorists who fill up at independent chains will often save compared to those who shop only at major-branded petrol stations.

Correspondence with fuel companies

The ACCC wrote a letter to the major wholesalers and retailers (PDF 71 KB) on 15 September 2022 stating that we do not expect to see uncharacteristic and abnormal wholesale and retail price increases in the days leading up to, and on the day of, or after, the reintroduction of the full rate of fuel excise. The letter also stated that we will not hesitate to take action if retailers make misleading statements on price movements or if there is evidence of anti-competitive behaviour (such as price collusion). The letter also sought some information from the companies.

All companies responded to the correspondence in a timely manner. In general, the companies noted:

  • that they would take a similar approach to the reintroduction of the full rate of fuel excise as when the excise was halved in March
  • wholesalers noted passing on the increase in fuel excise to wholesale (terminal gate) prices from 29 September
  • retailers noted that the reintroduction of excise would take time to flow through to retail prices, and that it would be influenced by the speed fuel is sold and restocked at retail sites
  • companies also noted that they had planned ahead to attempt to meet an expected increase in demand prior to the reintroduction of the full excise.

The ACCC previously wrote a letter to the major wholesalers and retailers ( PDF 233.58 KB ) on 31 March 2022 setting out expectations that the cut in excise flows into wholesale and retail prices as soon as possible.

All companies responded to the correspondence following the reduction in the fuel excise rate in a timely manner, with responses including:

  • wholesalers noted passing on the excise reduction in full to their wholesale prices immediately or as soon as practicable after the Government’s announcement
  • retailers noted that they had reduced retail prices in full or in part within days following the Government’s announcement
  • retailers committed to pass savings on in coming weeks.

Price movements - April to September 2022 

From the middle of April to late June 2022, international benchmark refined petrol and diesel prices generally increased, influenced by the impact of the war in Ukraine on international crude oil prices. This led to increases in wholesale prices which flowed into retail prices.

  • Between mid-April and late June 2022, regular unleaded petrol wholesale prices increased by around 48 cents per litre and diesel wholesale prices increased by around 57 cents per litre.

Diesel prices were higher than petrol prices because the international benchmark prices for refined diesel were higher than those for refined petrol. These higher prices were influenced by higher demand because of the post-COVID-19 economic recovery and fewer supplies from Russia influenced by the conflict in Ukraine. Unlike petrol, diesel has broader use in industrial activity and electricity generation.

Since late June, international benchmark refined petrol and diesel prices have decreased, leading to reductions in wholesale prices.

  • From late June to 28 September 2022, regular unleaded petrol wholesale prices decreased by around 49 cents per litre and diesel wholesale prices decreased by around 43 cents per litre.

Changes in wholesale prices significantly influence retail prices, but the changes can take time to flow through. This is largely because it is generally only when fuel is replenished at a retail site that the lower wholesale price is reflected in retail prices.

This lag in the adjustment of wholesale prices is shorter in larger cities and retail sites with faster turnover, and often longer in regional locations that sell comparatively lower volumes.

Due to a range of factors, including petrol sales volumes at retail sites and petrol price cycles in the largest capital cities, the current reductions vary across locations.

Between 30 June and 28 September 2022, average retail petrol prices have decreased by:

  • between 57 cents per litre and 9 cents per litre in the 5 largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth), noting that these cities have petrol price cycles that also influence price movements
  • 51 cents per litre in Hobart, 41 cents per litre in Canberra and 40 cents per litre in Darwin, noting that these smaller capital cities do not have price cycles
  • around 38 cents per litre on average in regional locations.

Between 30 June and 28 September 2022, average retail diesel prices decreased by:

  • between 37 cents per litre and 29 cents per litre in the 5 largest cities
  • 30 cents per litre in Hobart, 29 cents per litre in Canberra and 30 cents per litre in Darwin
  • around 31 cents per litre on average in regional locations.

Price reductions following the excise cut

After the cut in fuel excise came into effect on 30 March 2022, ACCC monitoring found significant falls in retail fuel prices in all capital cities and most regional locations.

After 6 weeks, the influence of the lag between changes in wholesale prices and changes in retail prices had been incorporated into retail price movements, and the cuts to fuel excise had clearly been passed on to a large extent. By this time petrol stations had likely used up existing stocks of petrol and diesel, and restocked with fuel at a lower wholesale price taking account of the excise cut.

There are other factors that also contributed to price falls around the time of the cuts, such as a decrease in international refined petrol and diesel prices in early April.

Regular unleaded petrol prices

In the capital cities, in the period between 29 March and 10 May 2022, the largest decrease seen in average daily regular unleaded petrol prices was:

  • more than 39 cents per litre in all 5 largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth), where petrol price cycles occur
  • between 25 and 48 cents per litre in Canberra, Hobart and Darwin.

The existence of petrol price cycles in the 5 largest cities means that the impact of the cut in excise on retail petrol prices may not be clear to motorists.

Petrol prices in most regional centres also decreased significantly. The average decrease across all regional locations that the ACCC monitors was over 32 cents per litre.

Diesel prices

The monitoring also found a reduction in diesel prices in many locations.

In the capital cities, in the period between 29 March and 10 May 2022, the largest decrease seen in average daily diesel prices was:

  • more than 30 cents per litre in all 5 largest cities
  • between 29 and 32 cents per litre in Canberra, Hobart and Darwin.

Diesel prices in many regional centres also decreased significantly. The average decrease across all regional locations the ACCC monitors was over 29 cents per litre.

Petrol price cycles following the cut in fuel excise

The existence of petrol price cycles in the 5 largest cities means that the impact of the cut in excise on retail petrol prices may not be clear to motorists.

However, the price reductions can be seen in the lower peaks and troughs of the price cycles relative to those before the excise cut.

Sydney

The chart below shows daily average regular unleaded petrol prices in Sydney from 1 March to 4 May 2022.

The chart below shows daily average regular unleaded petrol prices in Sydney from 1 March to 4 May 2022.

Source: FUELtrac

  • Following the announcement of the excise cut, petrol prices in Sydney reduced by around 40 cents per litre to the next low point of the price cycle.
  • After the excise cut, the peak price in Sydney on 1 May (185.2 cents per litre) was around 32 cents per litre lower than the peak price before the cut (216.8 cents per litre on 14 March).

Melbourne

The chart below shows daily average regular unleaded petrol prices in Melbourne from 1 March to 4 May 2022.

The chart below shows daily average regular unleaded petrol prices in Melbourne from 1 March to 4 May 2022.

Source: FUELtrac

  • Following the announcement of the excise cut, petrol prices in Melbourne reduced by around 40 cents per litre to the next low point of the price cycle.
  • After the excise cut, the peak price in Melbourne on 26 April (187.0 cents per litre) was around 31 cents per litre lower than the peak price before the cut (218.4 cents per litre on 15 March).

Brisbane

The chart below shows daily average regular unleaded petrol prices in Brisbane from 1 March to 4 May 2022.

The chart below shows daily average regular unleaded petrol prices in Brisbane from 1 March to 4 May 2022.

Source: FUELtrac

  • Following the announcement of the excise cut, petrol prices in Brisbane reduced by around 39 cents per litre to the next low point of the price cycle.
  • After the excise cut, the peak price in Brisbane on 29 April (189.0 cents per litre) was around 31 cents per litre lower than the peak price before the cut (220.2 cents per litre on 15 March).

Adelaide

The chart below shows daily average regular unleaded petrol prices in Adelaide from 1 March to 4 May 2022.

The chart below shows daily average regular unleaded petrol prices in Adelaide from 1 March to 4 May 2022.

Source: FUELtrac

  • Following the announcement of the excise cut, petrol prices in Adelaide reduced by around 43 cents per litre to the next low point of the price cycle.
  • After the excise cut, the peak price in Adelaide on 23 April (187.8 cents per litre) was around 33 cents per litre lower than the peak price before the cut (220.6 cents per litre on 11 March).

Perth

The chart below shows daily average regular unleaded petrol prices in Perth from 17 March to 22 April 2022.

The chart below shows daily average regular unleaded petrol prices in Perth from 17 March to 22 April 2022.

Source: FUELtrac

  • Following the announcement of the excise cut, petrol prices in Perth reduced by around 36 cents per litre to the next low point of the price cycle.
  • After the excise cut, the peak price in Perth on 6 April (181.6 cents per litre) was around 32 cents per litre lower than the peak price before the cut (213.1 cents per litre on 23 March).

Our role in fuel monitoring

  • We closely monitor retail fuel prices and regularly report on fuel prices, costs and profits. We do not set fuel prices.
  • Where we see an issue of concern, we will carefully examine. We can compel refiners, importers, terminal operators, wholesalers and retailers to provide information on fuel prices, costs and profits.
  • Where we find enough evidence, we take action to protect consumers against misleading and anti-competitive conduct by fuel retailers.

Learn more about the ACCC's fuel monitoring role.

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