Fuel tax relief extended, but motorists are still about to pay more at the bowser

Motorists will continue receiving fuel tax relief through July, but there is a catch with the discount to be slashed.

Australian drivers will receive another month of relief after the federal government confirmed the fuel excise cut will be extended beyond its original June 30 deadline.

WATCH THE VIDEO ABOVE: Fuel tax discount extended at reduced rate

However, while the extension will provide some ongoing cost-of-living relief, motorists are still set to pay more from next month as the discount is reduced.

Prime Minister Anthony Albanese has announced the fuel excise cut would continue from July 1 to August 2, but at half its current rate.

Since April, Australians have benefitted from a 32-cent-per-litre reduction in fuel excise after fuel prices surged during the conflict in the Middle East and distruption to global oil supplies followed the closing of the Strait of Hormuz.

Under the new arrangement, the discount will fall to 16 cents per litre for both petrol and diesel.

“Today’s decision recognises that despite the welcome and substantial drop in the price of petrol recently, we know people are still under pressure,” Albanese said.

“The 16 cents a litre extension to the fuel tax cut that we’ve announced today will reduce the cost of a 65L tank of fuel by around $11.”

The Heavy Vehicle Road User Charge will also be reduced by 16 cents per litre during July, with the combined measures expected to cost the federal budget about $400 million.

The government said the staged reduction was designed to avoid a rush of motorists filling up before the discount expires complete.

“By tapering off the fuel tax cut, this will also help to manage demand at service stations towards the end of the month,” the government said.

Treasurer Jim Chalmers said the extension would provide additional support as fuel assistance is gradually wound back.

“This extra month of fuel discount will help Australian motorists and businesses with the cost of living as this support tapers off,” he said.

“On top of our other cost-of-living help, including more tax cuts for every taxpayer, this will make a meaningful difference when it comes to helping Australians make ends meet.”

While the extension will soften the blow, drivers are still likely to notice higher prices from July as the current 32-cent discount is effectively halved.

The announcement comes as fuel markets begin to stabilise following a ceasefire agreement between the United States and Iran, with global oil prices falling well below the peaks seen earlier this year.

Average unleaded petrol prices in Sydney and Melbourne are currently sitting around $1.60 per litre, while diesel remains higher at about $2 per litre.

The government has also sought to reassure Australians about fuel supplies, urging motorists not to panic buy.

Earlier this week, Albanese said Australians should continue going about their normal business, while Energy Minister Chris Bowen revealed billions of litres of fuel are currently on their way to Australia.

Bowen said the country has its second-highest fuel stockpile since 2023, with 51 ships heading towards Australian ports carrying petrol, diesel, jet fuel and crude oil.

“There continues to be uncertainty internationally, but that will continue to be the approach of the Albanese government, a calm approach,” he said.

“Working carefully with our trading partners, with the private sector, with all Australians to ensure the supply of fuel to Australia is as good as it possibly can be in these challenging international circumstances.”