Monitoring fuel prices following the excise cut and restoration

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

We are continuing to closely monitor fuel prices following the restoration of the full excise from 29 September 2022.

Restoration of excise from 29 September 2022

The temporary fuel excise cut has ended and the full excise rate, now amounting to 46.0 cents per litre, was restored 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.

The increase in excise was slightly higher than the cut in the excise in March because of automatic indexation of the excise rate in August 2022.

Retail price movements after the restoration

After the restoration of full fuel excise on 29 September 2022, ACCC monitoring found that, by 9 November (that is, 6 weeks after the restoration):

  • retail petrol prices in most locations increased by less than 25.3 cpl
  • retail diesel prices in most locations increased by more than 25.3 cpl.

There are other factors that also contributed to these price movements such as:

  • the state of the petrol price cycle in the 5 largest cities
  • changes in international benchmark refined petrol and diesel prices and the AUD-USD exchange rate in October and early November.

Regular unleaded petrol

Six weeks after the full excise restoration (up to 9 November), only one capital city – Perth – had an increase in daily average retail petrol prices by more than the full impact of the restored excise rate.

  • The restoration of the full fuel excise coincided with a rising petrol price cycle in Perth. The Perth price cycle peaked on 5 and 19 October, with prices subsequently decreasing. According to the regular price cycle in Perth, average retail petrol prices often increase by 25-30 cpl during the increasing phase of the price cycle. This is discussed further below.

Between 28 September and 9 November 2022, daily average regular unleaded petrol prices:

  • Increased in Sydney, Melbourne, Brisbane and Adelaide by between about 22 cpl and 16 cpl.
    • These cities also have regular price cycles.
    • Prices in these cities peaked in the days prior to, or just after, the restoration of the full rate of fuel excise.
  • Increased in Hobart by about 23 cpl, Darwin by about 20 cpl and Canberra by about 12 cpl.
    • The smaller capital cities do not have price cycles.
  • Increased by an average of about 18 cpl in regional locations.
    • There have been price increases in 191 monitored regional locations.
    • Prices increased by more than 20 cpl in 82 regional locations.
    • Eighteen regional locations had price increases of more than 25.3 cpl. 

The changes in retail regular unleaded petrol prices between 28 September and 9 November were also influenced by recent changes in wholesale (terminal gate) prices:

  • Between 14 September and 27 September, regular unleaded petrol wholesale prices decreased by about 7 cpl.
  • Following the excise restoration on 29 September regular unleaded petrol wholesale prices increased by about 25 cpl.
  • Between 29 September and 9 November, regular unleaded petrol wholesale prices increased by about 9 cpl in line with changes in international refined petrol prices.

Diesel

Between 28 September and 9 November, daily average diesel prices:

  • Increased in the 5 largest cities by between about 38 cpl and 31 cpl.
  • Increased in Darwin by about 34 cpl, in Canberra by about 30 cpl and in Hobart by about 29 cpl.
  • Increased by about 32 cpl on average in all regional locations.
    • There were price increases in all 192 monitored regional locations.
    • There were 182 regional locations where daily average diesel prices increased by more than 25.3 cpl. 

The changes in retail diesel prices since 28 September were influenced by the significant increases in diesel wholesale prices:

  • Between 14 September and 27 September, diesel wholesale prices decreased by about 14 cpl.
  • Following the excise restoration on 29 September diesel wholesale prices increased by about 26 cpl.
  • After the restoration of the full fuel excise and until mid-October diesel wholesale prices increased by about 24 cpl.
  • Between mid-October and 9 November, diesel wholesale prices have decreased by about 8 cpl. 
    • The changes in diesel wholesale prices have been in line with changes in international refined diesel prices.

The significant increase in wholesale diesel prices was influenced by high international refined diesel prices. These were due to various factors including fewer supplies from Russia influenced by the conflict in Ukraine and higher demand for diesel for heating during the forthcoming Northern Hemisphere winter.

Subsequent price movements

Between 9 November and 30 November, in the 5 largest cities:

  • regular unleaded petrol retail prices decreased by about 21 cpl, largely in line with petrol price cycles in those cities
  • regular unleaded petrol wholesale prices increased by about 2 cpl and subsequently decreased by about 12 cpl in line with changes in international refined petrol prices and changes in the AUD-USD exchange rate
  • diesel retail prices decreased by about 11 cpl
  • diesel wholesale prices decreased by about 23 cpl in line with changes in international refined diesel prices and changes in the AUD-USD exchange rate.

Petrol price cycles following the restoration of fuel excise

Petrol prices move up and down in regular cyclical patterns in the 5 largest capital cities. The existence of these price cycles means that the impact of the restoration of excise on retail petrol prices may not be clearly visible to motorists.

In the days leading up to the restoration of the full rate of fuel excise, the price cycles in Sydney, Melbourne and Brisbane had peaked. In Adelaide, the price cycle peaked on 29 September.

Sydney

The chart below shows daily average regular unleaded petrol prices in Sydney from 1 September to 9 November 2022.

Daily average regular unleaded petrol prices in Sydney from 1 September to 9 November 2022

Source: FUELtrac

  • After the full excise was restored, the peak price in Sydney on 6 November (206.7 cpl) was 16.1 cpl higher than the peak price before the restoration (190.6 cpl on 27 September).
  • The price at the lowest point of the cycle after the excise was restored (on 20 October) was 172.4 cpl, which was 17.8 cpl higher than the lowest price before the restoration (154.6 cpl on 12 September).
  • These increases are less than the additional 25.3 cpl from the excise restoration.

Melbourne

The chart below shows daily average regular unleaded petrol prices in Melbourne from 1 September to 9 November 2022.

Daily average regular unleaded petrol prices in Melbourne from 1 September to 9 November 2022

Source: FUELtrac

  • After the full excise was restored, the peak price in Melbourne on 4 November (211.5 cpl) was 18.3 cpl higher than the peak price before the restoration (193.2 cpl on 25 September).
  • The price at the lowest point of the cycle after the excise was restored (on 18 October) was 175.9 cpl, which was 20.1 cpl higher than the lowest price before the restoration (155.8 cpl on 12 September).
  • These increases are less than the additional 25.3 cpl from the excise restoration.

Brisbane

The chart below shows daily average regular unleaded petrol prices in Brisbane from 1 September to 9 November 2022.

Daily average regular unleaded petrol prices in Brisbane from 1 September to 9 November 2022

Source: FUELtrac

  • After the full excise was restored, the peak price in Brisbane on 7 November (211.9 cpl) was 18.6 cpl higher than the peak price before the restoration (193.3 cpl on 26 September).
  • The price at the lowest point of the cycle after the excise was restored (on 19 October) was 174.7 cpl, which was 17.3 cpl higher than the lowest price before the restoration (157.4 cpl on 12 September).
  • These increases are less than the additional 25.3 cpl from the excise restoration.

Perth

Perth price cycles have been fortnightly since October 2021, increasing to a peak price on Wednesdays. In recent weeks some retailers have been increasing prices after a week, leading to a smaller jump in average prices.

The chart below shows daily average regular unleaded petrol prices in Perth from 1 September to 9 November 2022.

Daily average regular unleaded petrol prices in Perth from 1 September to 9 November 2022

Source: FUELtrac

  • The full fuel excise being restored coincided with a rising petrol price cycle in Perth. Between 28 September and the highest peak price after the restoration (on 19 October), average prices increased by 34.1 cpl.
  • After the excise was restored, the peak price in Perth on 19 October (198.4 cpl) was 20.8 cpl higher than the peak price before the restoration (177.6 cpl on 21 September).
  • The price at the lowest point of the cycle after the excise restoration (on 18 October) was 172.7 cpl, which was 20.2 cpl higher than the lowest price before the restoration (152.5 cpl on 20 September).
  • The increases from peak to peak, and from low point to low point, are less than the additional 25.3 cpl from the excise restoration.

Adelaide

The chart below shows daily average regular unleaded petrol prices in Adelaide from 1 September to 9 November 2022.

Daily average regular unleaded petrol prices in Adelaide from 1 September to 9 November 2022

Source: FUELtrac

  • In Adelaide, the price cycle peaked on 29 September, the day the excise was restored.
  • After the excise was restored, the highest peak price in Adelaide (on 26 October) was 205.4 cpl, which was 28.2 cpl higher than the peak price before the restoration (177.2 cpl on 14 September).
    • While this increase is higher than the additional 25.3 cpl from the excise restoration, it is important to remember that wholesale prices increased by about 5 cpl between the restoration of full excise and late October.

The price at the lowest point of the cycle after the excise was restored was 170.6 cpl on 23 October, which was 22.8 cpl higher than the lowest price before the restoration (147.8 cpl on 21 September).

Shop around

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 about 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 – restoration of full excise

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 restoration 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 restoration 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 restoration 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 restoration of the full excise.

The following sections relates to the ACCC’s observations and analysis regarding the excise cut.

Correspondence with fuel companies – excise cut

The ACCC previously wrote a letter to the major wholesalers and retailersPDF 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 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.

We reported in detail on the movement of prices following the cut in the fuel excise in our March and June quarter 2022 fuel price monitoring reports.

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.

Tags

Topics