The 26-cent saving at the bowser will be wiped out within weeks

Savings from a 26-cent-a-litre cut to fuel excise tax could be wiped out within weeks as the global oil price is expected to continue its climb, increasing motorists’ bills for diesel and petrol into the foreseeable future, regardless of when the Iran war ends.

Petrol is at record highs, reaching an average $2.58 a litre on Tuesday in Sydney and Melbourne while crude oil remains around $US107 a barrel. The Albanese government announced on Monday it would halve the 52 cents per litre tax on fuel for three months, starting April 1.

But AMP chief economist Shane Oliver said it was now likely the price of Brent crude, a global benchmark, would hit US$150 a barrel, even if the war was to end now and regular trading for the Middle East resumed immediately.

“The longer this drags on, the more oil prices globally will start to reflect the full impact of the supply hit, which means you could end up towards $US150 a barrel,” Oliver said.

The price hike would be driven by the cost of repairing damaged infrastructure and the weeks it would take to bring production back to capacity.

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Oliver said that if the oil price hit $US150 a barrel in coming weeks, unleaded petrol would sell for around $2.80 in Australia. However, he said prices could rise even higher if the conflict drags on.

A rule of thumb for fuel prices is that for every $10 increase in the price of oil, petrol prices rise 10 cents at the bowser.

https://www.smh.com.au/politics/federal/the-26-cent-saving-at-the-bowser-will-be...