Wondering Why Petrol Is So Expensive At The Minute? Here’s Why
Filling up your car right now hurts but filling up a tractor could hurt even more.
“Bread costs $5.50 where I am now, and I’m predicting by this time next year bread might be $10 a bloody loaf,” said farmer and TikToker Aussiepete00.
But for those living outside the cities like farmers and low-income families in remote communities they are feeling the extra pinch and the federal government is under increasing pressure to do something about it.
Why Are Prices So High?
Joe Biden’s immediate ban on Russian oil imports sent the international price of oil up by 7%.
Russia is currently the world’s leading exporter of oil, producing 7% of global supply, and in 2021 Russian exports to the US was around 3% of US crude oil imports, which doesn’t actually sound like a lot, but banning Russian oil means the US will lose a bunch of money itself.
Australia has also banned Russian oil and even though we get most of our oil elsewhere we are still feeling the ripple effects.
Basically because, like everything, once you start sanctioning necessities like fuel it goes up in price everywhere.
Petrol prices were already rising towards $1.80 in Australia thanks to the rise in cost of living and inflation sitting at 3.5%.
But since the US oil ban we are seeing prices up to $2.20 a litre.
What Else Will Be Impacted?
Farmers, truck drivers and people living in remote areas are feeling the price hike really hard.
Not only do truck drivers rely on diesel for their work but wheat harvesting needs tractors for everything from fertilising, soil cultivation to sowing which all use diesel.
How To Manage The Costs?
The federal government could temporarily remove or reduce our fuel tax for some relief, a tactic a lot of politicians even those in the Morrison government are calling for.
South Australian premier Steven Marshall urged Josh Frydenberg to commit to reductions in the upcoming budget and Independent Senator Rex Patrick has also asked ScoMo to reduce the fuel excise by half for twelve months.
For context the fuel excise is a flat tax levied by the government on petrol and diesel bought from a petrol pump. Its current rate is 44.2 cents in excise for every litre of petrol purchased and according to the government the tax is used to help pay for building and maintaining Australian roads.
Every year the excise raises around $11 billion for the government.
But with a federal election around the corner Coalition MPs agree that the PM and Treasurer should alleviate costs for those struggling to make ends meet.
Economists on the other hand aren’t all in agreement that cutting the fuel excise will solve the looming problem because by the time it would come into effect fuel prices could have already changed.
Not to mention how difficult it is to get the excise rate back up again.
In 2001 then-Prime Minister John Howard cut petrol excise by 1.5 cents a litre but it took more than a decade for the fuel excise rate to return.
ScoMo began 2022 behind in the polls and wasn’t a crowd favourite when he couldn’t quote the cost of a loaf of bread or litre of milk.
Now that he can will he do anything about it?