Australia Prepares for Petrol Demand Spike as Fuel Excise Cut Ends

Fuel suppliers and the federal government are preparing for a surge in petrol and diesel demand before a 32-cent-per-litre excise discount ends at the end of the month. The discount, introduced in April, halved the fuel excise after prices reached record levels. Average unleaded petrol prices had topped $2.50 a litre in Sydney and Melbourne, while diesel exceeded $3.

Background to the Discount The cut followed Iran’s closure of the Strait of Hormuz on February 28, which reduced global oil supply by about 15 per cent. Motorists responded with panic buying that caused widespread station outages in March. Those outages stemmed from supply-chain bottlenecks rather than an actual fuel shortage.

Demand doubled in some areas, overwhelming tankers, transfer stations and trucks.

Bowen said on Saturday that the discount had always been intended as a three-month measure. He stated it would be extended only under unforeseen circumstances. The government has extended a temporary 20 per cent reduction in the volume of fuel companies must contribute to the national stockpile.

The stockpile now holds 45 days of average petrol use, 39 days of diesel and 32 days of jet fuel. Malcolm Roberts, chief executive of the Australian Institute of Petroleum, said the industry is preparing for a sales spike in the days before the full excise rate returns.

He noted that the country has a large volume of fuel in storage. Ampol chief executive Matthew Halliday said the longer the conflict continues, the higher the risk of further price rises. He pointed to the start of the U.S. summer driving season as a potential additional strain on global inventories.