Drivers across Australia are preparing for higher fuel prices as the federal government's fuel excise cut ends at midnight on Monday, August 3, 2026. The excise, initially reduced by 32 cents per litre in March to ease a fuel price spike, was halved to 16 cents in July and will now return to its normal rate, adding 16 cents per litre to wholesale prices.

According to Ian Jeffreys, principal economist at the Royal Automobile Club of Queensland (RACQ), it will take about 10 days for the price increase to be fully reflected at the pump. He forecasts unleaded petrol prices to rise to approximately $2.20 per litre and diesel to about $2.60 per litre. Jeffreys advised motorists to "fill up as soon as possible" to avoid paying a premium.

The end of the excise cut coincides with a recent jump in global oil prices, which have risen from below US$85 a barrel to around US$90 in the past two weeks. Jeffreys noted, "If renewed tensions in the Middle East remain high, we could see these increased oil prices persist and ultimately push bowser prices up further."

The cost-of-living relief from the excise cut was introduced following disruptions to global oil trade caused by the Iran war, which halted naval shipments through the Strait of Hormuz. Jeffreys cautioned against hoarding fuel, stating, "Hoarding fuel will not help the situation and it's dangerous, so there's no need to buy more than you need."

Additionally, it was noted that even with the fuel excise cut, the cost of commuting during this period exceeded $1,000.

The Australian Competition and Consumer Commission (ACCC) is monitoring the situation and has the authority to take action if illegal practices are detected.

Sources