Australia’s Prime Minister Anthony Albanese said the government would halve the tax on fuel and diesel and remove the heavy road user charge for three months to help households cope with the surge in costs driven by the conflict in West Asia.
Halving the tax would reduce the cost of fuel by 26.3 Australian cents per litre, according to Albanese.
The total cost to the government would be approximately A$2.55 billion (US$ 1.75 billion), Treasurer Jim Chalmers said at a joint press conference with the prime minister and Energy Minister Chris Bowen.
Four Levels Of Action
The government also confirmed that it adopted a national fuel security plan with all state governments agreeing to work together to deliver fuel to regional areas where it is needed the most.
Albanese announced there were four levels of action, and Australia is currently at level two, which is to keep the country moving. The highest level would be to ensure critical services were maintained.
Around 20% of the world’s oil was transported through the Strait of Hormuz before the U.S.-Israeli war with Iran blocked supplies. The price of Brent crude has surged 59% in March, the steepest monthly gain in history, and was at $115.66 per barrel when the market opened on Monday.
The measures are the latest in a series of fuel security measures adopted by Canberra since the war began on February 28. It had previously announced the release of petrol and diesel from domestic reserves and the temporary relaxation of fuel quality standards.
Still Below Recommendations
The average retail price of a litre of diesel rose to more than A$3 in Australia last week and petrol to A$2.50, according to a March 29 report from the Australian Petroleum Institute.
“While Australia’s fuel supply outlook remains secure in the near term, we need to be very clear as well with Australians that the longer this war goes on, the worse the impacts will be,” Albanese said.
Australia has its highest fuel stocks in 15 years; however, they are still far below the International Energy Agency’s recommendation of 90 days.
The latest government numbers as of last week said Australia had enough for 30 days of diesel, 30 days of jet fuel, and 39 days of petrol.
Underwriting Spot Cargoes
It has also adopted the Export Finance and Insurance Corporation Amendment, which will allow the government to underwrite the purchase of spot cargoes of fuel at prices that rise via the credit agency Export Finance Australia.
Bowen said that spot cargoes were available but expensive, and smaller industry players were not able to take the risk.
“These new fuel security powers will put Australia in a strong position, securing fuel supply where it may be cost-prohibitive for private suppliers to source on commercial terms, without government support,” Bowen said in a statement.
(With inputs from Reuters)
