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Petrol back above $2 a litre: Here’s what will happen next

petrol prices and money
Petrol prices have shot back up, with $2.19 a litre currently the highest priced fuel around. (Source: Getty)

Petrol prices have shot up to almost $2.19 a litre in parts of the country, leaving many people wondering what will happen when the fuel excise is reinstated in September.

The fuel excise was temporarily halved as part of cost-of-living relief measures announced in the 2022 Budget, which shaved 22 cents a litre off fuel prices.

Without the lower fuel excise, people would currently be paying as much as $2.40 a litre.


However, motorists will be relieved to hear fuel prices are tipped to drop by September.

Roberto Aguilera, energy economist at Curtin University, said new production was expected to enter the market within a few months to offset lower Russian supplies.

He said the US and OPEC were expected to keep increasing production, helping to offset the loss of Russian oil as European countries continued to tighten their sanctions on the invading nation.

Demand for oil was also expected to ease, with the consumption of oil and fuel slowing down due to high prices.

COVID lockdowns in China - the second-largest oil consumer in the world - was also dampening demand.

“So that falling demand, combined with rising supply, should help bring crude and fuel prices down later in the year,” Aguilera said.

So why are they back up now?

At $1.80 a litre, the national average wholesale price for fuel is the highest it has been in more than six weeks, which was just before the cut to the fuel excise was announced.

Aguilera said motorists were currently feeling the impact of higher oil prices as well as a weakening Australian dollar.

A weak Australian dollar means importers have to pay more for products that are initially priced in US dollars, like crude-oil-derived products, and that gets passed down to drivers.

Sarah Orr from Compare The Market said each city was in a different stage of their fuel cycle, but in a lot of places, “it is trending up”.

Orr said it was unlikely prices would rise much higher than $2.19 a litre in this fuel cycle, however, not all service stations would have upped their prices just yet.

That creates opportunities for shopping around, with a 52-cent difference between the cheapest and most expensive fuel on the Brisbane market.

This means you could save $26 if filling up a 50-litre tank.

“When the fuel cycle is on the way up, what we see is it starts with a trickle,” Orr explained.

“We'll see a few start pricing at the high point, and then the rest of them will climb up towards that.”

After a period of time, Orr said the better deals would start to disappear.

Highest prices for Unleaded 91 per litre (current May 16):

Melbourne - $2.15

Hobart - $1.99

Canberra - $1.98

Darwin - $1.93

Sydney - $2.19

Brisbane - $2.19

Perth - $1.89

Adelaide - $1.82

Averages Unleaded 91

Melbourne - $2.07

Hobart - $1.96

Canberra - $1.93

Darwin - $1.93

Sydney - $1.91

Brisbane - $1.91

Perth - $1.77

Adelaide - $1.76

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