The fuel excise cut has been extended. Here's how much by — and why there's a catch

Prime Minister Anthony Albanese said he knew Australians were still "under pressure".

Fuel prices have eased since the beginning of the conflict in the Middle East. Source: AAP / Jay Kogler

In brief

• The fuel excise was due to expire 30 June but has been extended by another month.
• The current 32 cents a litre discount will be reduced to 16 cents a litre.

Cost relief at the bowser has been extended for another month, although the savings won't be as substantial.

Prime Minister Anthony Albanese has announced a limited extension of the fuel excise, making petrol and diesel 16 cents per litre cheaper than the full price in July.

The current saving is 32 cents a litre after it was cut three months ago, following the outbreak of war in the Middle East and ensuing strangulation of global oil supplies.

That discount is scheduled to expire on 30 June, by which time it will have cost the federal budget an estimated $2.9 billion in foregone revenue.

A tapered excise

Speaking to Sky News on Sunday morning, Albanese said the decision to halve rather than scrap the discount was about giving motorists and businesses some certainty.

"We know that families are still under pressure, and we also know that the impact of this conflict on the other side of the world will have a long economic tail to it," Albanese told Sky News.

"There's still some uncertainty that oil prices come down this week. We want to see that flow through, but it will take some time."

"This will enable some certainty going forward, and for confidence to remain in the system."

"We'll continue to do what we can to shield Australians from the worst impacts of this conflict, including securing additional fuel from our partners."

Albanese said a "step down", rather than a full removal of the excise was the "sensible thing to do".

States and territories — who have effectively funded their share of the scheme by forgoing a GST windfall gain over the last three months— are expected to come on board with the excise extension.

Treasurer Jim Chalmers said he hoped the temporary support would still take some of the sting out of petrol prices and help with the cost of living.

"Despite the welcome and substantial drop in the price of petrol recently, we recognise people are still under pressure," he said.

"This extra month of fuel discount will help Australian motorists and businesses with the cost of living as this support tapers off."

Is this the last extension?

Pressed on whether further extensions were possible should the US-Iran deal collapse, Albanese stopped short of guaranteeing anything.

"We do live in a volatile world, so were there to be a massive global shock again, my government will always respond," he said.

"But this is about providing some certainty going forward into the future."

He also pointed to broader cost-of-living measures landing on 1 July, noting "every Australian worker will get a tax cut" as further relief arriving alongside the reduced fuel discount.

Labor 'copied' Coalition, Taylor says

Opposition leader Angus Taylor welcomed the extension and said he understood the logic of a graduated taper to the excise, but attributed the initiative to his party.

"We have been supportive of cuts to the fuel excise from the start," Taylor told Sky News.

"In fact, we proposed it in the first place and Labor copied us."

He instead broadened his critiques to what the government wasn't doing.

"The top priority of the government should be to get the price reductions that we've seen in recent weeks through to the bowser," Taylor said.

"I hear nothing about that from the Prime Minister. He simply doesn't understand what's going on."

He framed the underlying problem as one of Labor's own making, telling Sky News people were living through a "homegrown crisis that Labor has driven", adding that the Albanese government had "failed" to beat inflation.

Where reserves and prices stand

The much anticipated confirmation of the ongoing albeit reduced saving coincides with a reopening of the Strait of Hormuz and associated agreement between the United States and Iran to cease hostilities.

How long the waterway stays open, though, remains unclear.

Iran's military said overnight it was going to close the strait again due to what it called ceasefire violations by Israel in Lebanon.

Australia currently has 44 days' worth of petrol in reserve, or about eight days more than when the US first bombed Iran in late February.

Diesel stocks are running at 39 days and jet fuel at 32 days.

There are 51 tankers on the water and headed to Australia, with 3.9 billion litres of fuel contracted for delivery in the next month.

The federal government confirmed on Saturday that the second week of June marked the highest level of fuel held in Australia since the minimum stock obligation came into force in 2023.

Last week was the second highest at 6.3 billion litres.

According to the Australian Competition and Consumer Commission, average capital city bowser prices for petrol are hovering between $1.65 and $1.92 per litre.

— With additional reporting by Australian Associated Press.

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