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Background to Rising Petrol Prices

Middle Eastern conflict and disruption to crude oil supply

The biggest factor behind the surge in petrol prices is disruption to crude oil supply caused by the conflict in the Middle East. This conflict has severely hampered local energy production and maritime transport, and international crude oil prices rose by 66% while liquefied natural gas (LNG) prices surged by 44%. The closure of the Strait of Hormuz, in particular, has had a major impact, leading to a situation in which global LNG supply has fallen by approximately 20%. Although some crude oil has been redirected to alternative routes, even after accounting for that, global crude oil supply is down by about 10% (ref:1).

Because crude oil is a commodity traded around the world, if major maritime shipping routes are cut off, there will be quantities that cannot reach consuming countries no matter how much producer countries make. Since a large share of crude oil and refined fuels depends on imports, disruptions to such supply chains directly translate into domestic petrol prices.

Spike in international refined fuel prices

In addition to the rise in crude oil prices, international trade prices for refined fuels have also surged significantly. Since the end of February, when the conflict began, domestic wholesale petrol prices have risen by about 19%, and wholesale diesel prices have risen by about 48% (ref:1).

Movements in international benchmark prices are first reflected in domestic wholesale prices, and then flow through to retail prices. For this reason, if international prices rise, the impact on prices at domestic petrol stations is unavoidable. In particular, diesel has a high degree of dependence in industrial areas such as logistics and agriculture, and it should not be overlooked that its increase has been about 2.5 times that of petrol (ref:1).

Weaker Australian dollar and the spillover to domestic prices

The surge in petrol prices is also tied to movements in the exchange rate. The Australian dollar’s exchange rate against the US dollar fell to a quarterly average of 62.7 US cents, recording its lowest level in more than 20 years since 59.3 US cents in the March 2003 quarter (ref:2).

Because fuel is imported in US dollars, the weaker the Australian dollar becomes, the more Australian dollars are needed to buy the same amount of fuel. In other words, the simultaneous double pressure of higher international crude oil prices and a weaker Australian dollar made the surge in petrol prices even more severe.

Current State of Petrol Prices

Trends in retail prices in major cities

Retail prices have clearly fallen from their peak in late March. As at 6 May, the average retail petrol price in the five major cities of Sydney, Melbourne, Brisbane, Adelaide and Perth had fallen by 76.1 cents per litre compared with 31 March. This decline far exceeds the 32-cent excise (fuel tax) cut implemented by the government (ref:3).

Meanwhile, as at late April, the national average retail petrol price was 192.3 cents, and the wholesale price was 183.4 cents (ref:4). Retail petrol prices have recovered to only about 2% above pre-conflict levels, but diesel remains at a level 51% higher than before the conflict (ref:1). Because there is a large difference in the pace of recovery between petrol and diesel, the impact on household budgets differs depending on the fuel type of the vehicle you drive.

Price trends in regional areas and supply concerns

Gasoline prices are also trending down in regional areas. Over the five weeks from 31 March, around 98% of the monitored regional fuel outlets recorded a fall of more than 30 cents in average retail petrol prices (ref:3).

However, there is still a price gap between metropolitan and regional areas. The disparity is also stark between cities, with the weekly survey showing Darwin recorded the highest average retail prices for both petrol and diesel among the eight capital cities, while Canberra was at the lowest level. Some cities have also seen sharp short-term spikes, such as Perth, where average retail petrol prices rose by as much as 59.5 cents per litre between 20 February and 11 March (ref:5). Regional areas also have freight cost mark-ups, so price falls tend to lag behind metropolitan areas.

Fuel excise tax cuts and government measures

Overview of the excise halving measure

The Government has announced a temporary halving of fuel excise (fuel tax) in response to surging petrol prices. Announced on 30 March 2026, this measure reduces the fuel excise on petrol and diesel by 50% for three months, from 1 April to 30 June. In addition, on 2 April, an extra measure was announced by agreement with the state and territory governments to forgo part of the GST (Goods and Services Tax) revenue on fuel, which is equivalent to an additional reduction of 5.7 cents per litre. Combined, these measures amount to a total reduction of 32 cents per litre (ref:3).

Contents of the fuel security package

The government is strengthening its stance on monitoring the fairness of retail prices, in parallel with excise tax cuts. The ACCC has asked fuel retailers to explain why there are large variations in pricing. This is because cases have been identified in which retail prices were raised first, even though cheaper fuel purchased before the dispute was being sold (ref:5).

Enforcement is also being strengthened. The government has announced plans to raise the maximum penalty for breaches under the Consumer Law and the Competition and Consumer Act from $50 million to $100 million (ref:5). Such a monitoring framework plays an important role in determining whether tax cuts are being properly passed on to consumers.

How to buy a car without losing out in a price surge

Choosing a car with fuel efficiency as the top priority

When petrol prices are soaring, fuel efficiency becomes the most important criterion when choosing a car. There are estimates that the increase in fuel costs amounts to less than 1% of total household income, but it has also been pointed out that some households are bearing a burden greater than that (ref:1).

For people with long commuting distances or those living in regional areas, differences in fuel efficiency have a major effect on annual costs. Even if upfront spending is slightly higher at the time of purchase, choosing a car with lower fuel consumption per 100 km makes it easier to keep down the total cost over a period of several years. When comparing models, check not only the fuel economy figures published by the manufacturer, but also figures under conditions close to real-world driving.

Sales Trends for EVs and Hybrid Vehicles

In response to soaring petrol prices, the shift to electric vehicles is steadily progressing. In December 2025, the share of electric vehicles in new car sales (the combined total of battery electric vehicles, BEVs, and plug-in hybrid vehicles, PHEVs) reached 16.7%, recording the highest monthly share in Australian history. Of the 16,303 electric vehicles sold, about 64% were BEVs and about 36% were PHEVs (ref:6).

In 2025 as a whole, electric vehicle sales were also up 38% from the previous year, and PHEV sales in particular surged to 53,484 units, more than double the previous year’s figure (ref:6). The longer petrol prices remain high, the stronger this trend is expected to become, so from a resale value perspective as well, electric vehicles and hybrid vehicles are worth considering.

Criteria for comparing running costs

When deciding whether to buy a car, it is essential to compare not only the upfront cost but also the total running costs. Spending at petrol stations has surged in nominal terms since the start of the conflict. However, there are still no clear signs that this has caused other consumer spending to fall (ref:1).

This suggests that many household budgets are at the stage of absorbing the increase in fuel costs within overall living expenses, rather than offsetting it by drawing down savings or cutting other spending. However, if the price spike continues for a long time, the situation may change, so it is useful to make a list and compare fuel costs calculated from annual mileage and fuel efficiency, insurance premiums, registration fees, maintenance costs, and so on, and estimate the total cost over a span of around five years.

How to sell your car without losing out in a price surge

Timing for Selling a Car with Poor Fuel Economy at a High Price

In a situation where petrol prices continue to rise, it is generally thought that demand for large cars and sports cars with poor fuel economy is likely to fall, but depending on the timing of sale, it can sometimes be advantageous. While diesel retail prices remain at 51% above pre-conflict levels, petrol retail prices have returned to just 2% above pre-conflict levels (ref:1).

In other words, for petrol cars, now that retail prices have dropped significantly from their peak, buyers’ psychological resistance may ease. Conversely, diesel cars still carry a heavy fuel-cost burden, so if you are considering selling, it is wise to make an early decision. Because prices may rise again after the end of June, the deadline for the excise tax cut, listing the vehicle during the tax-cut period will make it easier to find a buyer.

Sales strategy that takes advantage of the shift in demand

In the market, the switch from conventional petrol and diesel vehicles to electric vehicles is progressing. In the September 2024 period, BEVs accounted for 6.6% of new-car sales, PHEVs about 2.5%, and conventional hybrids 16.7%, while conventional vehicles that run only on engines still accounted for 74.2%, more than half of the market (ref:7). However, the shift to electric vehicles has continued to accelerate, and in December 2025 electric vehicles (the combined total of BEVs and PHEVs) reached 16.7% of new-car sales, setting a new monthly record, and for the full year 2025 the number of electric vehicles sold increased by 38% from the previous year (ref:6).

An increase in demand for switching to electric vehicles also means an increase in the supply of conventional engine vehicles in the second-hand market. If supply increases, downward pressure is put on used-car prices, so if you are letting go of a fuel-inefficient car, it is rational to move to sell before inventory piles up in the market. When listing the car for sale, it becomes easier to advance price negotiations if you present the buyer with a rough idea of the running costs, including annual fuel expenses.

Practical techniques to keep fuel costs down

Price cycles and the cheapest timing

In the five major cities, petrol prices are known to move up and down in a regular cycle. After a sharp rise over a short period, they gradually fall over a longer period. In 2024, the average cycle length was about 5.5 weeks in Sydney, 6.5 weeks in Melbourne, 6 weeks in Brisbane, 2.5 weeks in Adelaide, and 1 week in Perth (ref:8).

According to ACCC estimates, if you filled up with 50 litres of regular petrol each week at the cheapest timing in 2023, the annual savings would have been about $242 in Brisbane and as much as $740 in Perth. In Sydney, savings of about $407 were possible, $333 in Melbourne, and $486 in Adelaide (ref:9). Simply refuelling at the bottom of the cycle can make a difference of hundreds of dollars a year.

How to use fuel price apps

When trying to identify the bottom of the price cycle, apps and websites that let you compare fuel prices are useful tools. In Victoria, you can use “Servo Saver” in the Service Victoria app to compare fuel prices at petrol stations across the state. It lets you check prices around your current location and find the cheapest place to fill up for each fuel type, making it a practical option for drivers who want to keep their day-to-day refuelling costs down (ref:10).

In New South Wales, you can use “FuelCheck”, provided by the government, to check fuel prices at petrol stations across the state. FuelCheck lets you find the cheapest nearby station, compare prices by fuel type, and report to NSW Fair Trading if the displayed price differs from the price at the pump. By regularly checking these services and making a habit of choosing when and where to refuel, you can keep fuel costs lower even during periods of price spikes (ref:11).

Points to note and pitfalls that are easy to get wrong

When petrol prices surge, it is necessary to be careful of opaque movements in retailers’ pricing. The ACCC has identified cases where retailers raised retail prices first, even though they were selling fuel purchased at lower prices before the dispute, and asked operators for an explanation (ref:5). NSW Fair Trading has also been carrying out spot checks across the state, and has already inspected more than 190 service stations and issued 13 penalty notices (ref:12).

In addition, from March to April, the normal petrol price cycle almost disappeared in Sydney, Melbourne, Brisbane and Adelaide. However, recently, cyclical price increases have once again been observed at some outlets in Sydney, Melbourne and Adelaide (ref:3). During periods when price cycles are irregular, the key to avoiding mistakes is not to rely only on past patterns, but to check live prices each time using apps and similar tools.

Conclusion

The surge in petrol prices has occurred as a result of reduced crude oil supply due to the Middle East conflict, a sharp rise in international refined fuel prices, and a weaker Australian dollar all coming together. Although retail prices have temporarily fallen due to the Government’s excise tax cut, there remains a possibility that they will rise again depending on the expiry of the measure and changes in the international situation.

When buying or selling a car, making decisions based on fuel efficiency, and when refuelling, using price cycles and apps to keep costs down, are practical measures during a period of surging prices.

A Guide to Buying and Selling Cars Without Losing Out Amid Soaring Petrol Prices