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Posted: 2022-07-07 04:27:08

Australian motorists have been suffering pain at the bowser this year, with petrol prices pushing past $2 a litre. 

That's despite a move from the previous federal government in March to half the fuel excise in a bid to reduce the financial pressure on drivers. 

But that cut was not forever and the reduced rate is set to expire soon.

So what does that mean for drivers when they're again slugged with the full excise in about three months? 

What is the fuel excise? 

Every time Australians buy petrol, they contribute towards a pool of funds that the federal government uses for roads and infrastructure. 

Put simply, you usually pay a tax of 44.2 cents for every litre of fuel you buy — included in the price at the bowser.

The excise was halved on March 30 to 22.1 cents per litre.

Why did the Morrison government cut the fuel excise? 

The move was aimed at countering surging petrol prices to ease cost-of-living pressures.

The government estimated the cut to the fuel excise would save the owner of a mid-sized car about $13 when filling it up, while businesses with fleet vehicles were expected to save thousands.

Then-treasurer Josh Frydenberg said the competition watchdog would monitor retailers to make sure the savings were passed on in full.

"This temporary reduction in fuel excise will not come at a cost to road funding, which will see more than $12 billion spent in the coming year," he said. 

federal treasurer josh frydenberg speaks at a lectern covered in microphones in front of australian and aboriginal flags
Former treasurer Josh Frydenberg had hoped the cost of oil would come down by September, when a cut to the fuel excise would expire. (AAP: Joel Carrett)

How long was the cut put in place? 

The excise for petrol, diesel and all other fuel and petroleum-based products, except aviation fuels, was halved for 6 months from 12.01am on March 30. 

The cut has provided some relief for about three months so far and is due to return to the full levy of 44.2 cents per litre on September 28. 

That's when Mr Frydenberg expected the price for a barrel of oil would come back to around $US100 ($147), down from around $US115 to $US120 when the cut was introduced. 

When will the full excise return? 

Sadly, drivers can expect to see a jump in petrol prices from September 29.

Labor did back the Morrison government's halving of the fuel excise.

But in the lead-up to the election, both sides insisted it was only a six-month measure and the full tax would be reapplied to the prices in September.

Prime Minister Anthony Albanese reiterated that message to reporters this week, saying both sides had no plans to extend the cut further into the future.

"And that's the circumstances we have to deal with. We can't do everything we would like to do," Mr Albanese said.

"Because in the long run, if we don't do something about improving the fiscal position of the budget, then the impact on households will just flow on down the track.

"So we do have difficult decisions to make."

Albanese in light blue tie with grey suit jcket and black rimmed glasses
Prime Minister Anthony Albanese says there are no plans to extend the excise cut into the future.(AP: Mark Baker)

What have the petrol prices been doing since the excise was cut?

It's likely you're still feeling the sting at the bowser with petrol prices remaining high. 

The latest data from the Australian Institute of Petroleum shows Australian drivers last week paid an average of $2.11 per litre. 

If prices remain that way, we could be paying more than $2.30 per litre to fill up when we're slugged with the full excise in September. 

Oil prices have, however, plunged this week, to about $US100 per barrel. 

They are a significant factor in the international benchmark prices for refined petrol and diesel, so if retailers begin to reflect the reduction in cost at the pump, drivers could see some relief before the full excise is reinstated.

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