How the rise in fuel prices is impacting Australians beyond the bowser

Australians are paying more now for fuel than they have in years. But the rise in prices isn't just hitting hip pockets at the petrol pump.

A person putting fuel into their car

(AAP)

Russia’s invasion of Ukraine has contributed to fuel prices skyrocketing all around the world.

In Australia, the cost of petrol on Monday exceeded $2.20 a litre in some suburban areas and more than $3 in the regions.

The Australian Competition and Consumer Commission's (ACCC) latest petrol monitoring report showed February prices in Australia’s five largest cities had risen to an eight-year high.
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Prices have risen further in the first two weeks of March, with the cost of diesel also on the up.

But what other impacts are the increases having beyond the price we pay at the pump?

Increased financial pressure on truck and delivery drivers

The Transport Workers Union (TWU) said the rise in the price of fuel is having “a devastating impact” on the already-small profit margins of truck and delivery drivers across Australia.

TWU National Assistant Secretary Nick McIntosh told SBS News those who own and operate their own businesses are among the hardest hit, with some unable to make any profit from their work.

“We're seeing long-distance drivers having to spend $300 or more every time they fuel up, we're seeing gig economy workers - who we rely on to now get us food, get us groceries - they're not earning any more money, they're just having to absorb all of these costs,” he said.

“That, of course, means that they have to forego something - whether it be maintenance to their truck, whether it be food for their family, whether it be mortgage repayments - they simply can't keep up with these ever-rising fuel costs.”

Mr McIntosh said in many instances, they don’t get any compensation from those higher up in the supply chain if fuel prices increase.
He said that’s resulting in some people going bankrupt.

“The gig economy, where people are already paid much below the minimum wage, with no real rights and protections - clearly those people are having to absorb those costs, and you go all the way up to people with big rigs that are driving all corners of the country and they can't recover the cost either.”

Higher costs of groceries

The increase in the price of fuel and other costs across supply chains means Australians can expect to pay more for their groceries and other goods.

The executive director of supply chain consultancy TMX Global, Marcus Carmont, told SBS News that companies would previously have been able to absorb most of those costs.

“It’s now at a point where it’s not economic for this to be absorbed and it’s having a major impact in terms of the business profitability,” he said.
Shoppers queuing at the registers at a Coles supermarket in Sydney
Shoppers queuing at the registers at a Coles supermarket in Sydney Source: AAP
Mr Carmont said consumers can expect to be spending around 10 to 20 per cent extra at the checkout for a while.

“If the fuel price reduces, that could lessen the blow. In any case, we’ve seen the increases in freight, international shipping and labour,” he said.

“As Australia’s a net importer, we’re exposed to volatility in supply chains and given the distance we are from a lot of these centres, we generally do feel the pinch.”

Will cutting the fuel excise help?

There have been calls both outside and inside the government for the fuel excise to be cut to ease the pressure on Australians’ purse strings at the pump.

The excise is currently set at a little over 44 cents per litre, with the revenue raised from the tax - around $11 billion per year - largely reinvested in transport infrastructure.

Independent Senator Rex Patrick last week called for that to be halved for 12 months, meaning a drop in the cost per litre of fuel of about 22 cents.

The last time the fuel excise was cut was in 2001 when John Howard reduced it by 1.5 cents and paused half-yearly indexation.
Senior Lecturer in Strategic Studies at Melbourne's Deakin University, Vlado Vivoda, told SBS News that while that would help consumers in the short-term, the volatility of the market means it’s not a sustainable solution.

“What happens if international oil prices head up to $150 a barrel? Then you’ve got that really taken off immediately,” he said.

“In the longer term, it doesn't encourage a switch to alternative fuels in the transportation sector and it keeps us continuously dependent on foreign oil supplies and at the mercy of international oil markets.”

There are also concerns that a cut to the fuel excise could mean less money for road maintenance.

“The government has a responsibility to make roads safe for all Australians to use,” Dr Vivoda said.

“I think that should be the primary objective rather than having cheaper fuel.”
Prime Minister Scott Morrison said on Monday that any decision from the Australian government to ease pressure on fuel prices won’t be announced until the federal budget is handed down on 29 March.

“I don't intend to engage in pre-Budget speculation on this matter or any other matter," he said.

The TWU said the government needs to provide deliberate, targeted support for drivers and transport operators so they can maintain safe and sustainable businesses.

“We're open to working with the government as to what that is, but the real answer is not short-term Band-Aid solutions,” Nick McIntosh said.

“These external shocks are always going to happen at some point in the economy; they've always happened, they always will.”

What are other countries doing?

France will introduce a rebate of 15 euro cents (22c) per litre to help drivers deal with rising prices at the pump.

French Prime Minister Jean Castex said in an interview with daily newspaper Le Parisien that it will run for four months from 1 April and is expected to cost the government about two billion euros ($3.01 billion).
New Zealand Prime Minister Jacinda Ardern
New Zealand Prime Minister Jacinda Ardern Source: AAP
New Zealand Prime Minister Jacinda Ardern announced on Monday that her government would reduce fuel excise and road user charges from midnight to make it cheaper to fill up.

The measure will see an NZ25 cent (23c) per litre drop in the cost of petrol and diesel for three months.

Public transport costs will also be halved for three months, beginning 1 April.

It is estimated the fuel tax increase will cost the government NZ$350 ($327 million) in lost revenue while the public transport measure will cost between NZ$24 and 40 million ($22.4 and $37.4 million).

Additional reporting from Monique Pueblos

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6 min read
Published 14 March 2022 at 7:12pm, updated 14 March 2022 at 8:51pm
By Amy Hall
Source: SBS News