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$2 a litre petrol could be back: ‘Anything is possible’

Cars driving past petrol station with sign saying fuel is over $2 a litre.
It's impossible to predict what will happen to oil prices under current volatile conditions. (Source: Getty)

Fuel prices have been creeping higher again, sparking concern about a return to prices over $2 a litre.

Petrol prices have risen by 40 per cent in the past year, according to recent data from the Australian Automobile Association, putting significant pressure on households reliant on private vehicles to get around.

Weekly petrol costs rose an average of $26.49, to $93.87, over the past 12 months in capital cities, with Hobart the most expensive at $100.18.


People living in the regions were hurting the most, with fuel prices rising, on average, to $96.65, from $27.89, per week.

NRMA spokesperson Peter Khory told ABC Radio a return to record-high prices seen in March was not particularly likely.

However, he couldn’t see any signs that prices would drop either.

Record-high fuel prices in March were followed by a price drop as the 22-cents-a-litre fuel-excise cut came into force and oil prices fell.

Given the volatility in the market this year, Khoury said it was “impossible to predict” if prices would soar above $2 a litre again.

“Anything is possible,” he said.

“However, the factors that we're looking at today suggest that you won't see those sorts of radical increases. But, unfortunately, we're not seeing signs that precede significant downward pressure either.”

He said the fate of petrol prices hinged on competing situations in Russia and China pulling fuel prices in two different directions.

Lockdowns in China are forcing prices downwards, but tightening sanctions on Russian oil are having the inverse effect.

“Whichever one of those two prevails is likely to have the more meaningful impact on what we end up paying for the next six months,” Khoury said.

What happens when the fuel excise is reintroduced?

Motorists have enjoyed some relief at the fuel pump since late March, when Treasurer Josh Frydenberg temporarily halved the fuel-excise tax.

On Sunday, both Prime Minister Scott Morrison and Labor leader Anthony Albanese committed to returning the fuel excise to its original levels come September, as per the original plan.

Khoury said fuel prices would go back up by 22 cents a litre, provided service stations actually passed on the cut in the first place.

“That was inevitable, it was always going to happen,” he said.

Khoury said reintroducing the fuel excise was considered necessary to raise revenue that could be put towards transport infrastructure, with flooding earlier in the year causing significant damage to the road network in parts of the country.

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