Reason Aussies should fill up now and avoid more pain at the pump

Aussie motorists are just a day away from a major increase in the price of fuel and are being encouraged to fill up now.

Australians hoping for a last minute backflip on the fuel excise have been left disappointed, after the Treasurer held firm on Wednesday.

At midnight Thursday, the tax cut which slashed petrol prices by 22 cents a litre will expire.

Jim Chalmers said the government understood higher prices would begin to affect people’s hip pocket, but reiterated the budget couldn’t take the $3bn hit.

Fuel prices will rise towards Christmas. Photo: NCA NewsWire / Flavio Brancaleone

“We don’t think it’s responsible to put another $6 billion a year on the national credit card to provide this relief in an ongoing way. We think there are other better ways to provide that cost of living relief,” he said.

“We don’t pretend that this won’t make things more difficult for a lot of Australian motorists. Our responsibility to the Australian people is to manage the budget responsibly.”

He stressed prices should not immediately increase and the Australian Competition and Consumer Commission would be closely monitoring the situation.

“There are hundreds of millions of litres of petrol in tanks underground, paid for under the existing excise regime,” he said.

The price of fuel will eventually rise by 25c per litre as the full excise is restored. Picture: NCA NewsWire / John Gass

“So there should not be an automatic 23 cents a litre increase overnight depending on how much fuel service stations have under the ground in these tanks bought at the cheaper price.

But NRMA spokesman Peter Khoury noted motorists were already paying more at the pump.

“To put it into context, oil prices have dropped $60 a barrel since June. The wholesale price in Australia has dropped 52 cents. It‘s done nothing but go down,” Mr Khoury said.

NRMA spokesman Peter Khoury says the current fuel price hike is unexplainable. Picture: NCA NewsWire/Bianca De Marchi

“There is absolutely no reason why these capital cities are in the 180s and 190s,” he said.

Australasian Convenience and Petroleum Marketers Association (ACAPMA) CEO Mark McKenzie said prices should not rise for at least five days.

“What we'll see is that service stations that are replacing their fuel on a daily basis will get the increase in costs flow straight through,“ Mr McKenzie said.

“But we do have a lot of service stations that get deliveries on a once-weekly or twice-weekly basis, so therefore what they'll probably do is hold out as long as they can to remain competitive.”

This week’s average price has come down to around 178c per litre, a significant drop from the 212c peak in July.