Junk Explained: Why The Hell Is Petrol So Expensive Right Now?!

The price of fuel has already risen up to $3 per litre in some parts of the country.

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By now, you’ve probably noticed that petrol prices have reached terrifying new heights, and there are fears the price could even hit the big $3 mark. 

So before you panic, let’s take a second to understand how petrol prices work in Australia, and examine our options in the months ahead. 

Why Are The Prices So High???

At the time of writing, petrol prices in metropolitan Sydney are at an average of $2.10 per litre for E10, while a litre of diesel in Arnhem Land currently costs over $3.

Why Australia’s petrol prices are so high at the moment starts with a fun little fact about our nation’s supply of fuel. According to The Latch, Australia is the only country out of the 29 participating members of the International Energy Agency that doesn’t have a stockpile of at least 90 days of fuel in the event our imports of crude oil are cut off. 

At the moment, the nation only has 25 days’ worth of petrol and 21 days of diesel. This means that our fuel economy is pretty volatile, and subject to sudden shocks and fluctuations around price. 

While the global price of fuel crashed during the pandemic — due to the fact that people were stuck inside and therefore driving/using fuel less —  prices have begun to rise as countries begin to recover and remove restrictions around travel.

The invasion of Ukraine by Russia has significantly driven prices up in Europe, with half of Russia’s crude oil exports going to the continent. Australia has since stopped importing Russian fuel and crude oil as a means of protesting the conflict, we never really imported that much from them in the first place (just 1.2 percent of our total crude oil imports).

The shocks to the fuel market, in general, have been enough to affect the global fuel market as a whole, and have led to price increases in fuel almost everywhere. 

What Can We Do About It

Morrison has hinted that he might potentially use the upcoming budget to relieve fuel prices, by making changes to the fuel excise tax. 

The fuel excise tax is basically a tax that’s included within the sale of fuel in Australia, and it’s set at 44.2 cents. This means that if petrol costs you $2.00 per litre, you’d pay $1.55 without the excise tax. 

The money from the fuel excise tax goes to paying for the maintenance of Australia’s roads, something communities pretty desperately need after the east coast floods. 

Despite this, there are calls for the government to cut the excise tax on petrol to try and lower petrol prices for consumers. Economists have warned that this isn’t the best option, with Peter Martin from Australia National University writing in the Conversation that “If we abolished fuel excise altogether, we would only bring the price back to where it was five weeks ago…the government would find it hard to reintroduce it.”

In the meantime, outside of cycling to work where possible or shifting into neutral when going down hills (weeeee!), you can download petrol price apps such as Petrol Spy or FuelCheck to locate the cheapest petrol in your area.