Fuel relief to end amid price spike fears

·2-min read

The federal government will end petrol excise relief but insists motorists won't be hit too hard at the bowser.

Treasurer Jim Chalmers has confirmed the September 28 deadline on the temporary fuel excise cut of 22 cents per litre, citing the need for "responsible budget management" amid other increasing pressures.

The Australian Competition and Consumer Commission would have a role in ensuring prices didn't rocket once the cut ends, he said, noting plenty of fuel had been purchased by distributors at a lower price and that should be passed on to drivers.

"We're under no illusions this will be difficult for people - it's a difficult decision for us to take as well," Dr Chalmers told reporters on Tuesday.

"But we put a premium on responsible budget management; we do have to make room for these pressures ... ending that fuel excise relief next Wednesday night is part of the story."

He pointed to lower fuel prices in previous months as encouragement consumers wouldn't cop too much of a hit.

"We need to remember fuel prices in most parts of the country at the moment are now around 50 cents a litre below the peak recorded in July and that's obviously a welcome development," Dr Chalmers said.

"Most people understand the budget can't afford to keep the excise cut going forever and people are preparing for the fact we'll return to its normal setting."

He said the government had worked closely with service stations and suppliers to understand there was 700 million litres of lower-excise fuel in the system, adding that the consumer watchdog expected prices would not soar when the tax was reintroduced.

"This is 700 million reasons why the price shouldn't shoot up ... on the night that the excise relief ends," Dr Chalmers said.

"The ACCC and the government expect the price of petrol shouldn't shoot up at the bowser on Wednesday night by the full (amount) if the normal market pressures are in operation."

Shadow treasurer Angus Taylor said he certainly didn't want to see fuel prices "jacked up" but urged the government to show a comprehensive plan to address the many cost of living pressures in the lead-up to Christmas.

NRMA spokesperson Peter Khoury said oil companies were on notice and had to do the right thing by not immediately increasing prices.

"The ACCC have said they'll be watching and the NRMA will be as well ... servos have got existing stock and we expect it to be sold at that price," he told AAP.

"Only after they've sold existing stock and they're buying at increased prices can that be passed on to the consumers, and that obviously can't happen overnight.

"It's more than just being understanding - we expect them to do the right thing."