Australian fuel retail is a fortnight away from two price shocks landing at once. On 2 August the remaining 16 cents a litre of fuel excise relief expires, returning the full tax rate to every litre sold, and on the same day OPEC+ meets to decide whether another paper increase in output targets can do anything about a Brent price that broke US$100 a barrel last week.
The $100 Barrel
Brent crude passed US$100 on 23 July for the first time since May, after Houthi attacks on two Saudi-linked tankers threatened the Bab el-Mandeb Strait, the second shipping chokepoint after Hormuz. The escalation has been building all month: Iran again declared the Strait of Hormuz closed, a Kuwaiti tanker was struck inside the Strait, and US strikes on Iran continued into a twelfth consecutive night as Brent moved through US$96. Goldman Sachs has warned oil could reach US$120 if the conflict drags on. As a rough industry rule of thumb, each US$1 on Brent adds around one cent a litre at the bowser.
The Paper Barrels
OPEC+ is expected to lift September output targets by a further 188,000 barrels a day at its 2 August meeting, completing the rollback of cuts made in 2023. The catch is that actual production fell to 36.28 million barrels a day in June, from around 43 million before the war. Higher quotas mean little when service station operators cannot pump to the quotas they already hold, which is why the announcements have done little to hold prices down.
The 2 August Cliff
The excise relief introduced on 1 April was worth around 32 cents a litre, with the Commonwealth halving excise and the states funding a 5.7 cent share. It was halved to 16 cents from 1 July, at a cost of around $400 million, and expires on 2 August. From that date the full rate returns: up to 17.6 cents a litre including GST, or roughly $11 on a 65 litre tank. The July step-down has already flowed through; ACCC monitoring shows five-city average petrol rose 18.1 cents and diesel 19.1 cents between 30 June and 15 July. The Australian Trucking Association and rural transport groups are lobbying for a further extension. None has been announced.
The Pass-Through Numbers
The ACCC’s weekly monitoring, backed since March by doubled maximum gouging penalties of $100 million, tells a story at odds with the gouging accusations circulating on forecourts. Wholesale terminal gate prices rose by up to 17.4 cents for petrol and 28.7 cents for diesel in the first half of July, and 84 per cent of regional locations passed through no more than the tax change on petrol. Retailers absorbed part of a wholesale move larger than the tax step itself. Five-city average petrol sat at 169.6 cents a litre in mid July, still marginally below its pre-war February level; diesel at 192.6 cents was 16 cents above it.
The Reserve Response
Fuel security has moved faster than prices. Diesel and jet fuel stocks are being lifted towards 50 days under the $3.2 billion Australian Fuel Security Reserve, national stocks are higher than when the conflict began (41 days of petrol and 37 of diesel as at mid July), and the Prime Minister confirmed on 23 July that the first ship in the government’s strategic fleet is on the water.
A Note for Independent Operators
The fortnight ahead brings a 16 cent tax increase, a rising wholesale market and a public primed to blame the retailer for both. The ACCC’s own data is the best defence: pass-through so far has been at or below the tax change, and that record is worth pointing to when the accusations start. Watch buying prices closely through the changeover, and price stock bought under the discounted rate with the replacement cost in mind.