Millions of Australian motorists will continue to receive fuel cost relief for another month after the federal government confirmed that its fuel excise discount will not end completely on June 30 as originally planned. Instead, the current 32 cents-per-litre discount will be reduced to 16 cents per litre from July 1, giving drivers temporary relief before the measure is expected to expire altogether on August 2, 2026.
The announcement comes as fuel affordability remains a major concern for households and businesses. While petrol prices have eased from previous highs, many Australians continue to face pressure from rising living costs, transport expenses and economic uncertainty.
Fuel prices set to increase despite continued relief
Under the revised arrangement, motorists will still benefit from a reduced fuel tax during July, but they will pay more than they do today. Prime Minister Anthony Albanese said the temporary extension provides a gradual return to normal fuel excise settings rather than an immediate jump in prices.
According to government estimates, the 16-cent-per-litre discount could save motorists about $11 when filling a 65-litre fuel tank compared with paying the full excise rate, which is typically around 53 cents per litre.
Data from the Australian Institute of Petroleum showed the national average unleaded petrol price was approximately $1.66 per litre during the week ending June 21. Based on that figure, prices could rise to around $1.82 per litre from July 1 and potentially reach $1.98 per litre once the fuel excise discount ends completely.
The impact varies depending on vehicle size and fuel consumption. A Kia Picanto driver could spend around $5.60 more for a full tank during July, while a Toyota RAV4 Hybrid owner may pay approximately $8.80 extra. For larger vehicles, the increase becomes more noticeable. Toyota Kluger owners could face nearly $22 in additional fuel costs per tank once the discount is fully removed, while Nissan Patrol drivers may pay close to $45 more per fill-up.
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Global oil uncertainty remains a key factor
The fuel tax debate comes at a time when global energy markets are facing renewed uncertainty. Concerns over tensions in the Middle East, including disruptions around the Strait of Hormuz, have renewed discussions about fuel security and oil supply risks.
Some analysts have even compared current conditions with the oil shocks of the 1970s, which reshaped energy policy around the world. Although Australia is not experiencing fuel shortages or long queues at service stations, global oil markets continue to influence local pump prices.
For transport operators, the government has also extended a 16-cent reduction to the Heavy Vehicle Road User Charge, helping reduce costs for freight and logistics businesses that move goods across the country.
Fuel affordability remains a significant cost-of-living issue, particularly for Australians who rely on private vehicles for daily commuting. Alongside federal fuel tax relief, some households may also benefit from programs such as the WA $100 Fuel Support Payment, which provides targeted assistance to eligible residents facing rising transport and energy expenses.
Motorists can review the government’s full announcement on the official Prime Minister of Australia website.
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