Prime Minister Anthony Albanese has announced that the federal fuel excise will be halved for three months, effective immediately. The measure, announced following today’s second emergency National Cabinet meeting on the fuel crisis, will reduce the excise from 52.6 cents per litre to 26.3 cents per litre on both petrol and diesel. The government estimates the cost of the measure at $2.5 billion.
What this means at the bowser
The excise reduction should flow through to pump prices within the coming days, delivering a reduction of approximately 26 cents per litre for customers. For operators, this will bring some relief to the sticker shock that has been driving customers away or reducing the size of their fills. However, it is important to note that this does not change the underlying wholesale cost of fuel, which remains elevated due to the ongoing conflict in the Middle East and disruption to global supply chains.
Heavy vehicle road user charge also suspended
Alongside the excise cut, the government has announced the heavy vehicle road user charge will be reduced to zero for three months. This is a direct support measure for the freight and logistics sector, which has been under severe pressure from diesel price increases. For independent operators who supply fuel to the transport industry or who rely on freight deliveries to keep their own sites stocked, this should help ease some of the cost pressure across the supply chain.
National Fuel Security Plan announced
The excise cut is part of a broader package the government is calling the National Fuel Security Plan. While full details are still emerging, this signals that the government is now treating the fuel crisis as a medium term challenge requiring a coordinated national response, not a short term disruption that will resolve itself. We will provide further detail on the plan as it becomes available.
What to watch
The excise cut is temporary: three months. The same measure was used during the COVID era in 2022, when the Morrison government halved the excise for six months. The key question for independent operators is whether the full excise is reinstated at the end of the three month period or whether it is extended. If wholesale fuel costs remain elevated due to the ongoing Middle East conflict, reinstating the full excise on top of already high prices would create another cost shock for consumers and operators alike.
It is also worth noting that the excise cut addresses price, not supply. The distribution and allocation challenges that have left more than 600 stations across the country without fuel this week remain unresolved. Lower prices at the pump may increase demand further, which could put additional pressure on an already strained distribution system. The Fuel Tsar, state coordinators, and the allocation framework being built around the crisis will need to work alongside this measure to ensure fuel actually reaches independent sites.
ServoPro will continue to monitor the rollout and provide updates as more detail becomes available. If you have questions about how the excise change affects your business, get in touch.