Sylvie Willis
Australia is a hydrocarbon-rich nation, and oil and gas play a key role in satisfying the country's energy needs. In 2022, approximately 769.5 megaliters of fuel oil were sold in Australia. In 2023, there was 9% less petrol sold in the country compared to pre-COVID levels. This could be due to the rise in fuel-efficient, electric, and hybrid vehicles, as well as more people working from home. In 2023, the average cost of petrol in Australia's five largest cities was 195.6 cents per litre, up 12.7 cents from the previous quarter. Australia relies on imports for about 90% of its petrol supply, with most of it coming from Asia, especially Singapore. The country produces some crude oil domestically, but most of it is exported.
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What You'll Learn
Fuel efficiency and green vehicles
Fuel efficiency is on the rise in Australia, with a growing number of people choosing to lower their carbon emissions by investing in the green vehicle market. In 2023, 16.2% of all new vehicles purchased in Australia were either battery-electric, plug-in hybrid, or hybrid. This marks a significant shift towards more environmentally friendly transportation options.
The Australian government's New Vehicle Efficiency Standard (NVES) is a crucial initiative contributing to this trend. The NVES, which applies to new cars sold in the Australian market, offers consumers more choices of new, efficient vehicles while also reducing emissions. With the introduction of the NVES, Australia is on track to achieve its goal of net-zero emissions by 2050.
The benefits of fuel-efficient vehicles are not just environmental but also economic. As fuel prices continue to rise, more Australians are considering switching to fuel-efficient or electric vehicles. In 2023, it cost Australians an average of $73.10 to refuel a car, an increase of almost $5 from the previous year. Diesel vehicles are particularly costly, refueling over $100 per refill.
Fuel efficiency can be improved not just by choosing more efficient vehicles but also by adopting specific driving habits and proper vehicle maintenance. Driving steadily, avoiding aggressive acceleration and braking, keeping tyres properly inflated, and using the recommended grade of motor oil can all contribute to better fuel efficiency. Additionally, minor changes in driving habits, such as reducing weight, adjusting tyre pressures, and driving with windows up can further enhance fuel efficiency.
The shift towards green vehicles in Australia is evident, with a notable increase in the sales of battery-electric and hybrid vehicles. This trend, combined with more people working from home, has resulted in a 9% decrease in petrol sales in Australia compared to pre-COVID levels. As more people prioritize fuel efficiency and lower carbon emissions, we can expect to see further growth in the green vehicle market and a continued decline in fuel consumption.
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Petrol prices and taxes
Petrol prices in Australia are made up of the international cost of refined petrol, taxes, and other costs and margins. The price is measured in cents per litre (cpl) and is subject to change depending on several factors. In the September quarter of 2023, the average cost of petrol in Australia's five largest cities (Brisbane, Perth, Sydney, Melbourne, and Adelaide) was 195.6 cpl, up from 182.9 cpl in the previous quarter.
The main fuel tax in Australia is an excise tax, on top of which a 10% goods and services tax (GST) is added. Both taxes are levied by the federal government. The excise duty rates for fuel and petroleum products (except aviation fuels) are indexed twice a year, on the 1st of February and the 1st of August, based on the consumer price index (CPI). The Australian Bureau of Statistics (ABS) is responsible for determining and publishing the CPI. The excise duty rates may also change due to other law changes.
In some cases, businesses may be entitled to exemptions or rebates for fuel excise tax, including tax credits and certain excise-free fuel sources. From April 1 to October 1, 2022, the fuel excise was lowered or cut by 50% by the federal budget to 22.1 cents per litre for all fuels. The excise tax on commonly used fuels in Australia as of the 1st of February 2022 was $0.442 per litre on unleaded petrol fuel (including standard, blended (E10), and premium grades), $0.442 per litre on diesel fuel (ultra-low sulphur/conventional), and $0.144 per litre on liquefied petroleum gas used as fuel (autogas or LPG). Petrol for use as fuel in aircraft is taxed at $0.03556 per litre.
Changes in international benchmark prices and the value of the Australian dollar influence fuel prices in Australia. Other factors include pricing decisions by wholesalers and retailers and levels of competition in different locations. Fuel prices in Australia's largest capital cities follow a price cycle, with prices steadily decreasing for a period followed by a sharp increase. This pattern is a result of pricing policies rather than changes in the wholesale cost of fuel.
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Diesel car costs
The current price of diesel fuel in Australia is AUD 1.68 per litre, which is lower than the world average of USD 1.18 per litre. However, the price of diesel in Australia has fluctuated over the years, with a minimum of AUD 1.11 in March 2016 and a maximum of AUD 2.36 in July 2022.
When considering the costs of driving a diesel car in Australia, it is important to note that diesel vehicles are generally more expensive to refuel than their petrol counterparts. In 2023, it costs Australians an average of $73.10 to refuel a car, but diesel cars, utes, and 4x4s often cost over $100 per refill. This higher cost is consistent across the country, although fuel tends to be cheaper in cities and urban areas than in rural or outback regions.
The decision to choose a diesel vehicle in Australia may be influenced by factors beyond the fuel costs. Diesel engines are known for their durability and torque, making them a popular choice for towing or carrying heavy loads. Additionally, diesel fuel has a higher energy density than petrol, resulting in better fuel efficiency for vehicles with larger engines or those used for long-distance travel.
However, the availability of diesel fuel in Australia may vary depending on the region. While major cities and urban centres will have multiple refuelling options, rural or remote areas may have fewer service stations, potentially impacting the accessibility of diesel fuel.
With the recent focus on environmental sustainability, it is worth noting that diesel vehicles may face stricter emissions regulations or incentives to transition to alternative fuel types. The Australian market has seen an increase in the adoption of green vehicles, with battery-electric, plug-in hybrid, and hybrid vehicles making up 16.2% of new vehicle purchases in 2023. This trend could influence the availability and pricing of diesel fuel in the future.
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Fossil fuel imports
Australia is one of the world's largest exporters of fossil fuels, ranking third behind Russia and Saudi Arabia. The country's fossil fuel exports are higher than those of Indonesia, Canada, Iraq, the United Arab Emirates, and Qatar, and nearly four times larger than Venezuela or Colombia. In absolute terms, Australia is the fifth-biggest miner of fossil fuel carbon, producing 1.5 times more than all EU countries combined.
Australia's domestic greenhouse gas emissions per capita are among the highest in the world, and its fossil fuel exports significantly contribute to global warming and climate change. The country's exports are responsible for around 4.5% of global fossil carbon dioxide emissions, with 80% of those emissions coming from fossil fuel exports. Under current government policies, this is projected to increase by 50% over the next decade, threatening the 1.5˚C warming limit.
Despite Australia's diverse economy and minimal dependence on fossil fuel production, the country has no policy to restrict or limit its fossil fuel exports. The emissions from these exports are "doubling back" on Australia, increasing the risks of extreme weather events and devastating natural disasters.
While Australia has taken steps towards reducing fuel consumption, such as an increase in the adoption of electric and hybrid vehicles, the country's fossil fuel exports and their impact on the global climate cannot be understated.
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Fuel excise tax
In Australia, the main fuel tax is an excise tax, on top of which a 10% goods and services tax (GST) is added. Both taxes are levied by the federal government. The fuel excise tax was introduced in 1997 after the High Court of Australia ruled that a licence fee based on the value of tobacco was unconstitutional, as it was an excise tax that only the Commonwealth can levy.
The excise duty rates for fuel and petroleum products (excluding aviation fuels and certain petroleum-based products) are indexed twice a year, based on the consumer price index (CPI). The Australian Bureau of Statistics (ABS) is responsible for determining and publishing the CPI. Usually, indexation occurs on 1 February and 1 August. However, indexation day can be deferred to five days after the CPI figure is published if it is not released at least five days before the indexation day.
The excise tax rates may also change due to other law changes. The excise tax on commonly used fuels in Australia as of 1 February 2022 was $0.442 per litre on unleaded petrol fuel (including standard, blended (E10), and premium grades) and $0.442 per litre on diesel fuel. From April 1 to October 1, the fuel excise was lowered or cut by 50% by the federal budget 2022 to 22.1c per litre for all fuels.
In 2023, there was 9% less petrol sold in Australia compared to pre-COVID levels. This could be due to the rise in fuel-efficient, electric, and hybrid vehicles, as well as more people working from home.
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Frequently asked questions
Australia relies on imports for about 90% of its fuel supply. In the financial year 2022, approximately 769.5 megaliters of fuel oil were sold in the country.
Australia imports refined petroleum from Singapore, South Korea, India, Malaysia, and China. In 2020 and 2021, Singapore, South Korea, and India were the fastest-growing import markets, with Singapore alone accounting for 25% of imports.
Unleaded fuel is the standard petrol used in most cars and light-duty vehicles in Australia.
The average fuel consumption of new light-duty vehicles in 2019 was 8.3 litres of gasoline equivalent per 100 km. In 2023, it cost Australians an average of $73.10 to refuel a car.
In 2019, diesel accounted for 32% of LDV sales in Australia, which was far higher than the global average. In 2020, 49.1% of the total fuel consumed was diesel.
