Fuel prices to rise when excise cut ends within days

Australian motorists will pay more for fuel following confirmation by treasurer Jim Chalmers that the federal government's current fuel excise discount will end at midnight this Sunday (August 2, 2026).

In response to record petrol and diesel prices following the outbreak of conflict in the Middle East in late February, the Australian Government halved the 52.6 cents-per-litre fuel excise in April, to ease cost-of-living pressures for three months until June 30.

The total saving reached 32 cents per litre after the states and territories agreed to contribute an additional 5.7cpl, funded by extra Goods and Services Tax (GST) revenue generated by higher fuel prices.

The package also included the suspension of the 32.4cpl road-user charge for heavy vehicles during the same period. Federal budget papers estimated the combined measures would cost the government $3.3 billion.

While the May 12 federal budget did not include an extension of the discount, the government announced in June that the fuel excise cut would continue until August 2, with the Commonwealth's contribution reduced from 26.3 to 16cpl from July 1.

Speaking to reporters today, Mr Chalmers confirmed the temporary relief would not be extended.

"That fuel excise relief will end midnight on Sunday and that's because it has played a really important role helping to take some of the sting out of these cost-of-living pressures," Mr Chalmers said.

"It was never the government's intention for that to be permanent. We began to taper that off at the start of the month, deliberately, so that we could provide a bit more cost-of-living help."

According to the Australian Institute of Petroleum (AIP), the national average retail price of unleaded petrol for the week ending July 26, 2026, was 182.0cpl, above the four-week average of 171.8cpl.

That compares with 181.0cpl in the week ending March 1, 2026, before the federal government announced its fuel excise relief package, when the four-week average was 171.2cpl.

Average national retail diesel prices were 180.9cpl in the week ending March 1. By the week ending July 26, the AIP reported the national average had climbed to 227.2cpl.

Electric vehicle (EV) sales have surged since the fuel excise reduction was introduced in April, accounting for a record 23.3 per cent of new passenger vehicle sales in June. The Tesla Model Y also became the first EV to top Australia's monthly new-vehicle sales charts across all powertrains in May 2026.

The announcement comes after the federal government unveiled several initiatives aimed at strengthening Australia's fuel security, including the Australia Fuel Security Reserve, which is intended to store around one billion litres of fuel.

Yesterday, prime minister Anthony Albanese also announced the federal government would commit $4 million towards a pre-feasibility study into what could become Australia's first new oil refinery in more than 60 years.

MORE: Australia planning its first new oil refinery in over 60 years