The fuel price cut will be extended by one month beyond the June 30 deadline, but the July cut will be worth only half of what it has been since April.
On Sunday, Albanon’s government will announce a 16¢-a-litre cut in fuel duty from July 1, which will provide a similar reduction in petrol and diesel prices.
The 32¢-a-litre tax cut began in April in response to record oil prices in March due to Iran’s closure of the Strait of Hormuz on February 28, which choked nearly 15 percent of the world’s oil supply.
The road user’s heavy vehicle charge, worth 32¢ per litre, was abolished for three months. In July, it will also be reduced by 16¢.
The phasing out of fuel tax rebates is designed to prevent further panic buying, as motorists stock up on cheap fuel in the final weeks before the price cuts expire.
Record demand for gasoline and diesel in the weeks after the war in the Middle East began led to widespread panic buying, and up to 600 service stations ran out of at least one type of fuel. Australia didn’t run out of oil, but the supply chain buckled under pressure.
“By reducing the fuel tax cut, this will also help to control demand at service stations until the end of the month,” the federal government said in a statement.
Fuel prices are well below their March highs, when the price of undiluted petrol rose $2.50 a liter in Sydney and Melbourne and $3 for diesel.
The average price of unleaded petrol in Sydney and Melbourne, including the 32¢-a-litre rebate, is about $1.60 a litre. That’s the same as a week before the Iran war started.
Diesel is selling for $2 a litre, slightly above the pre-war price of $1.80.
Premier Anthony Albanese said the 16-gallon cut would reduce the cost of a 65-gallon tank of fuel by about $11.
“Today’s decision recognizes that despite the welcome recent drop in gasoline prices, we know people are still under pressure,” Albanese said.
Forecasters expect oil prices to continue to fall, amid renewed confidence in the market after the United States and Iran signed a ceasefire agreement on Wednesday.
The international benchmark, Brent crude, sits at $US78 per barrel. This is about 7 percent higher than pre-war oil prices but well below the highs of the previous weeks and months.
New major vehicle tax and fuel tax cuts in July are expected to cost the budget $400 million in foregone revenue. The three-month cut of 32¢ is estimated to cost $2.5 billion.
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Mike Foley is the climate and energy columnist for The Age and The Sydney Morning Herald.Connect through email address.
