Australian Motorists Warned to Buckle Up for Higher Fuel Prices

Australians are being warned sky-high fuel prices are here to stay as conflict in the Middle East reaches dangerous levels of escalation.

With the U.S.-led war on Iran showing no sign of ending and oil tankers being sunk in the Strait of Hormuz by both sides, global oil prices have surged above US$100 ($139) a barrel.

This has led to Australian bowser prices jumping to $2.11 for regular unleaded on average, from $1.55 in July.

Diesel prices have increased almost 50 percent since June.

The runaway cost is sparking inflation fears and raising concerns the Reserve Bank of Australia will lift the cash rate when its monetary policy board meets again at the end of September.

High fuel prices are the “new norm,” according to NRMA spokesman Peter Khoury.

“It really depends exclusively, almost, on what’s going to happen in the Middle East,” he told AAP.

“We’ve seen dangerous levels of escalation in the last few days, so you’ve got the situation where they’re blowing up each other’s oil tankers in the ocean, so that doesn’t help.”

Energy Minister Chris Bowen said on Sept. 12 there was no doubt the situation in the Middle East was declining.

“The … ongoing war is doing nothing to improve the fuel supply around the world and is pushing up prices,” he told reporters.

“We’re seeing that in markets, even overnight, and that will inevitably also flow through to Australia.”

However the government’s approach to the situation would remain “cool and calm” and firmly fixed on guaranteeing fuel security, Bowen said.

In response to soaring prices at the outbreak of hostilities, the government temporarily halved fuel excise in April, slashing 26 cents off per litre.

A scaled-back extension of the discount, at 16 cents per litre for petrol and diesel, lasted until Aug. 2.

Khoury said the government keeping its options open remained the best approach to the unfolding crisis.

“Even though the average price for unleaded nationally is $2.11, in April it was $2.60, and that was at that point when the government cut the excise,” he said.

“We’re nowhere near where we were when we hit those record high levels.

“It is obviously expensive, more expensive than we want it to be, but it’s nowhere near those levels.”

Khoury urged motorists to check fuel prices in real-time and shop around for savings when filling up.

About one fifth of the world’s oil transits through the Strait of Hormuz, with fighting between the two countries centring on control for the key shipping route.

Bowen says Australia has 41 days worth of petrol in reserve, 32 days worth of diesel and 30 days worth of jet fuel.

Some 41 ships are on the water, with 3.3 billion litres of fuel scheduled for delivery over the next four weeks.

By Tess Ikonomou in Canberra