Petrol Prices Top $2 as Fuel Excise Relief Ends 2026

Petrol prices are on track to top $2 a litre as the government's fuel excise relief officially ends, adding pressure to Australian motorists already grappling with rising living costs. The temporary 16-cent per litre discount, introduced in March and halved in July, will expire on 3 August, reverting the fuel excise to its full rate. This change means service stations will likely pass on the increase, pushing unleaded petrol above the psychologically significant $2 mark in most capital cities.

Fuel Excise Relief Ends: What It Means for Your Wallet

The end of the fuel excise relief is a direct hit to household budgets. For a typical 55-litre tank, the 16-cent increase adds $8.80 to every fill-up. With diesel prices already soaring, the impact is even more severe. According to MotorMouth data, Melbourne diesel prices hit 242.7 cents per litre on Saturday, up 68 cents from its June low. Canberra, Darwin, and Hobart are all above 240 cents per litre, and if the full excise is passed on, diesel could exceed 250 cents per litre.

Energy Minister Chris Bowen confirmed the government will not extend the temporary relief, stating, “Our policy decision is clear.” This decision comes as global oil prices remain volatile due to renewed US strikes on Iran and the near-closure of the Strait of Hormuz, a critical shipping lane for crude oil.

How Service Stations Adjust Prices

Fuel retailers typically take four or more days to adjust pump prices to match changes in excise or overseas pricing, according to senior market analyst Tom Woodlock of Argus Media. This lag means the full impact of the excise restoration may not be felt immediately, but motorists should prepare for higher costs over the coming week.

Capital City Price Comparison

Key Takeaways for Motorists

• Expect petrol prices to exceed $2 per litre in most capital cities.
• Diesel could rise above $2.50 per litre in some areas.
• Filling a 55-litre tank will cost roughly $8.80 more than last week.
• Global tensions, especially in the Strait of Hormuz, are driving up oil prices.
• No further government relief is planned, so budget accordingly.

What’s Driving the Price Surge?

The return of fuel excise is not the only factor. The US resumed strikes on Iran in mid-July, leading to increased oil import costs. Iran struck two tankers under US escort on Friday, and the Strait of Hormuz has been almost completely closed to traffic. This disruption in the world’s most important oil chokepoint has pushed wholesale fuel prices higher, and retailers are passing these costs to consumers.

How to Save on Fuel

While you can’t control global oil prices, you can take steps to reduce your fuel expenses. Use apps like MotorMouth to find the cheapest petrol in your area, combine errands to minimize driving, and ensure your tires are properly inflated for better fuel efficiency. Consider carpooling or public transport where possible.

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