A major fuel crisis in Australia has sent prices soaring to record highs. As the government has slashed taxes to help, families and companies are still grappling with petrol and diesel prices at their highest in years.
Key Highlights
- National petrol prices reached $2.53 per litre this month.
- Approx 3.4% of service stations nationwide have completely run out of diesel.
- The crisis is driven by the closure of the Strait of Hormuz in the Middle East, blocking 11 million barrels of oil a day.
- The federal government has cut the fuel tax in half for three months, which saves drivers about 32 cents per litre.
- Use of public transport is up by 12% as the cost of filling tanks makes them think twice.
Australia Has Its Worst Fuel Crisis in 50 Years
Australia has entered a fuel crisis far worse than those infamous oil shocks of the 1970s. A war in the Middle East led to the closure of a vital shipping lane, the Strait of Hormuz, preventing oil from reaching much of the world. This has sent oil prices soaring to above $150 a barrel, meaning it’s more expensive for Australian service stations to purchase the fuel they sell.
This crisis impacts everybody from parents trying to access schools, to truck drivers delivering food to stores. But despite the government’s efforts to assist, the limited supply keeps prices high, while some petrol stations are running completely dry.
Diesel Shortage Disrupts Trucking and Food Prices
Although the price of petrol is skyrocketing, the diesel shortage is really a threat to the country. Trucks are powered by diesel, which transports almost everything we purchase. Currently, more than 1 in 30 service stations across Australia have no diesel. It is getting more difficult for farmers and delivery drivers to carry out their work.
The cost of groceries and other necessities is also rising, because it’s more expensive to transport goods. For every few cents the diesel price rises, so too does the cost of goods in our supermarkets, according to experts. This ripple effect is making the cost of living much more difficult for everyone, not just people who own a car.
Government Reduces Taxes to Reduce Prices
The Australian government has officially reduced the fuel tax (excise) for three months. This reduced the cost of fuel by approximately 32 cents per litre. For a typical household with a conventional passenger vehicle, that reduces their fuel costs by about $20 to $30 each time they double the tank.
But even with this tax cut, the prices remain much higher than a year ago. The government is also keeping tabs on fuel companies to ensure they are passing the full savings onto consumers, and not profiting at this challenging time.
How Australians Are Changing Their Usage
The soaring price of fuel is reshaping the way Australians travel. More people are leaving their cars behind at home, taking the bus or train instead. More people than ever have been seeking out electric vehicles online in search of a way to cease paying for petrol altogether.
FAQs
- What’s making fuel so expensive right now?Â
The world cannot get enough oil because the Middle East has gone to war and strangled one of its busiest shipping routes.
- How much is the tax cut?Â
The government has reduced the fuel tax, taking roughly 32 cents off every litre you purchase.
- How long will prices remain elevated?Â
Experts generally believe prices will remain elevated as long as shipping routes through the Middle East remain shut.
Follow Inspirepreneur Magazine for daily global business news.
