Anthony Albanese faces pressure from Labor backbenchers to extend fuel tax relief as prices soar

Prime Minister Anthony Albanese is facing pressure from his own Labor backbenchers to extend fuel tax relief that expires in less than a fortnight with petrol and diesel prices rising again as tensions flare in the Middle East.

The 16-cent-a-litre cut to excise and the GST expires on August 2, having been extended this month at a halved rate of relief that’s already contributed to higher fuel prices.

The Brent price of crude oil has now surged to $US91 a barrel ($130), the highest price since June 11, in the days before the US and Iran signed a memorandum of understanding that has since collapsed, leading to ships being stranded again in the Strait of Hormuz.

Average Australian capital city unleaded prices soared by 18 cents to $1.70 a litre in the first fortnight of July after the fuel relief was tapered, but in parts of Sydney and Perth, motorists are now paying $1.75 a litre for basic E10 petrol.

Higher octane 98 premium unleaded is selling for $2.25 a litre again in parts of Melbourne.

Equivalent diesel prices rose by 19 cents to $1.93 a litre in the two weeks to July 15, Australian Competition and Consumer Commission data showed, but in parts of Sydney, premium diesel is now selling for $2.27 a litre.

Labor backbencher Rob Mitchell, who represents the regional electorate of McEwen north of Melbourne, said many of his constituents wanted the relief to continue as US President Donald Trump ramped up his war with Iran.

“No one’s ever going to argue for higher fuel prices,” he told The Nightly.

“But the reality is who knows what’s going to happen with Iran? It’s on again, off again.

“If you’re spending more money on fuel, that’s going to impact your budget both household, business and government.”

The fuel tax relief expires before Parliament resumes on August 6, but Mr Mitchell is expecting some robust debate in the Labor caucus when MPs and senators return to Canberra.

“What happens in caucus stays in caucus,” he said.

Westpac economist Ryan Wells said petrol and diesel prices at the bowser were likely to soar again, contributing to a higher headline inflation number, unless the Federal Government extended its fuel excise relief beyond August 2.

“The tensions in the Middle East are re-escalating again so it doesn’t preclude the Government from deciding that they might need to offer more support if needed,” he said.

“Mechanically speaking, if there were no changes to the policy as is, then it was going to roll off, we would see another leg up in retail fuel prices come August just as the full tax package unwinds.”

Former Labor strategist Bruce Hawker said the Federal Government would probably want to time more fuel relief closer to the next election due in 2028 if the Middle East conflict dragged on.

“The cost of doing this through temporary cuts to the fuel excise is very high,” he told The Nightly.

“They need to balance these considerations while planning for the next election, which is still two years away.

“While the Government will want to help households as soon as reasonably possible, politically the most important thing is to ensure that cost of living pressures are starting to come down in the months leading up to the election.”

Iranian attacks on US bases in Kuwait, Jordan, Bahrain and Qatar have also pushed up the price of liquefied natural gas.