Fuel crisis Australia: Building and plumbing costs surge, Middle East war forces suppliers to hikes prices

Everyday Australians could soon see the pain from the global fuel crisis spill over into construction and trades, with soaring material costs expected to be passed directly onto homeowners.

An internal email from major supplier Iplex, obtained by The Nightly, sent to Reece Plumbing customers, reveals steep price hikes across critical construction materials — including a 27 per cent increase in PVC products, 36 per cent for polyethylene (PE), and 31 per cent for polypropylene (PP) — set to take effect from April 17.

The email also warned regional customers could face up to a 10 per cent increase in freight charges, citing “significant cost escalation” across global petrochemical supply chains.

These materials are widely used in plumbing, drainage, and infrastructure, and because they are made from petroleum, their costs rise directly when fuel prices increase.

Prime Minister Anthony Albanese has appointed a national fuel co-ordinator amid escalating concerns about shortages of petrol, diesel, and jet fuel in the wake of the US-Israel-Iran war, however, the crisis appears set to imminently impact more that just fuel for transport.

Simon Croft, chief executive of industry and policy at the Housing Industry Association, said the HIA has been inundated with calls from concerned builders.

“Over the past three days, our member builders have been receiving a range of advice from various suppliers across things like concrete, steel reinforcement, PVC and other plastic plumbing pipes about impending price increases,” Mr Croft told The Nightly.

“There are real concerns around what that might mean for construction costs and for contracts they’ve already entered into.”

He explained that the price increases have two main drivers.

“One is due to the fuel price increases that we’re all seeing at the bowser, with additional levies on delivery and supply costs,” he said.

“The second is for products particularly impacted by the supply chain — often imported items caught up in the current conflict.”

Builders under fixed-price contracts face particular challenges.

“For some projects, it’s complicated for builders and trades to pass these costs on,” Mr Croft said.

“Some states have measures that allow for cost escalation clauses for unforeseen circumstances like conflicts or extreme weather, but for many builders, a lot of these cost increases may have to be absorbed, which are outside their control.”

In practice, states such as NSW, Queensland, South Australia, Tasmania, the Northern Territory, and the ACT allow such clauses in certain contracts, while Victoria and Western Australia place tighter restrictions.

He said the surge is affecting the entire construction sector.

“We’ve seen increases in concrete, plumbing pipes, and other critical materials,” Mr Croft said.

“PVC pipes in particular have had a very big spike, which is a real concern. With increased fuel costs, it’s likely other areas, including labour costs, will also be affected.”

The HIA is actively in discussions with Federal and State governments about potential solutions to ease the pressure.

“The uncertainty is playing heavily on the minds of builders, trade contractors, and no doubt homeowners,” Mr Croft said. “It compounds recent interest rate rises, and we’re talking with governments about ways to minimise costs through regulation, red tape reduction, and stability in upcoming Federal and State budgets.”

He urged builders, contractors, and suppliers to communicate openly about pricing and factor the current pressures into future projects.

“There’s still a lot of uncertainty,” Mr Croft said. “We’re encouraging the industry to be proactive in factoring these costs into future quotations.”A NSW plumbing business owner also spoke to The Nightly anonymously and said they are worried the surging prices would “affect us heaps”.

“I think it will slow up the building industry heaps and we will pass all the prices on so everyday battlers will be getting hammered.”

The Nightly has reached out to Iplex and Reece Plumbing for comment.

Why fuel is driving the surge

The price spike is being driven in part by the escalating global fuel crisis, triggered by conflict in the Middle East disrupting oil supply routes.

Iran controls the Strait of Hormuz — a critical chokepoint for around a fifth of the world’s oil supply — meaning any disruption or threat in the region can quickly drive up global fuel prices.

Materials like PVC and PE are petroleum-based — meaning they are directly derived from oil and gas. When fuel prices rise or supply chains are disrupted, the cost of producing these plastics climbs sharply.

Flow-on effects for homeowners

For Australians, the impact is likely to show up in higher building quotes, renovation costs and potentially slower construction timelines.

Plumbing materials are a fundamental part of every build — from pipes in the walls to sewerage systems underground — meaning even modest increases can quickly add thousands to the cost of a new home.

Builders already grappling with labour shortages and high interest rates now face another layer of pressure.

Prime Minister calls for calm

It comes as Anthony Albanese has urged Australians not to stockpile fuel, as he appoints a national fuel coordinator amid escalating concerns about shortages of petrol, diesel, and jet fuel.

The Prime Minister revealed the new fuel tsar after holding the National Cabinet in Tasmania on Thursday with State and Territory leaders.

Anthea Harris, former head of both the Australian Energy Regulator and the Energy Security Board, as well as a former deputy secretary for Victoria’s energy group, will take up the role.

The COVID-era type role will monitor, co-ordinate, and intervene in distribution of fuel in Australia.

Mr Albanese said she had an unmatched level of industry expertise and insisted the taskforce was a “sensible measure”.