Fuel prices set to skyrocket as government excise cut ends

Motorists are being warned to brace for a price jump at the petrol pump next month adding more pain to the cost of living crisis.

Drivers are being warned to prepare for rising petrol prices as the federal government stands firm to end the fuel excise discount.

In March the fuel excise was halved for six months by the previous Coalition government.

It was in response to soaring fuel prices, with the cut stripping 22 cents off a litre of petrol.

Despite pressure to extend the temporary measure beyond its six month deadline, the new Labor government has been adamant the full tax will be restored, meaning it will run out in late September.

The federal government is sticking to plans to end the fuel excise cuts in September. Picture: NCA NewsWire/Tertius Pickard

Authorities are urging motorists not to panic buy in the coming weeks before the excise ends.

Petrol station owners have ordered more stock to cope with the increase, and are reminding the public not to overstock on petrol while the price is lower.

The cut to the fuel excise saw the usual fuel excise drop from 44.2c/L to 22.1c/L.

But the Albanese government will not budge on ending the excise cuts on September 28, saying the scheme has cost more than $3 billion so far.

It is a financial burden the Labor government can no longer sustain, which means as of midnight, September 29, the tax on fuel will increase by more than 20c.

Although it doesn’t sound much, an increase in the fuel excise will see motorists spending around $11 more every time they fill up a standard 50L tank.

In July, Prime Minister Anthony Albanese said that although he would like to extend it, neither Labor or Liberal could promise an excise cut extension going into the election.

The Labor government will end the fuel excise cut on September 28. Picture: NCA NewsWire / Gary Ramage

"And that's the circumstances we have to deal with. We can't do everything we would like to do," he said.

"So we do have difficult decisions to make."

Mark Mckenzie, CEO of the Australasian Convenience and Petroleum Marketers Association said motorists can expect to see an initial cost rise in the coming few days as fuel suppliers replace their stock with the higher excise fuel.

At its highest, Australians paid between $2-3 per litre for petrol, peaking around the start of Russia’s invasion of Ukraine.