In good news for business and households, the government has extended half the fuel excise cut for a month, which changes the timing of the snapback.
⛽ The pump discount drops to 16c/L for July (down from 32c/L now)
⛽ The heavy vehicle road user charge is set at 16c/L of diesel for July (half the standard rate and up from zero)
⛽ Australian petrol reserves sit at a relatively reasonable 44 days, with diesel at 39 days, and jet fuel at 32 days
This is a halfway measure. Instead of the full discount lapsing on 30 June, around half of it carries into July before the rest reverts on 1 August. This means we have a gradual return to full excise over a couple of months, rather than a hard snapback on 1 July.
While the extension is welcome, everyone likes cheaper fuel, given where petrol and diesel prices currently sit, it seems an unnecessary extravagance. To my mind, it would make more sense to keep their powder dry in case we see oil prices rise again later this year.
While the US and Iran have meandered towards a peace deal, the crisis is not over. The Strait of Hormuz reopened only briefly and Iran has already moved to close it again. Shut in production could take months to restart and shipper confidence has to rebuild before flows normalise. There is also an inflation wrinkle, as staggering the snapback smears the mechanical price increase across two monthly CPI prints rather than one, which stretches out the period the RBA has to look through excise noise to read the underlying trend.
For business owners the practical takeaway barely shifts, the elevated fuel cost assumptions you should already be carrying through Q3 stay exactly where they are, with risks to the upside remaining a concern until a deal between the US and Iran is finalised and Hormuz traffic normalises.