Households have been warned that their weekly grocery bill could soon soar if the federal government fails to slice trucking industry taxes, as Anthony Albanese and state premiers prepare to map out ways to stop runaway demand for petrol and diesel.
Ahead of a national cabinet meeting on Monday morning that will be dominated by debate over how to conserve the nation’s liquid fuel supplies without replicating mistakes made during the COVID-19 pandemic, business leaders urged the government to target the transport system to ensure price pressures did not spread into supermarket aisles.
The federal government made the first of what is expected to be a series of announcements at the weekend aimed at shoring up fuel supply and reassuring Australians there is no need to panic.
Federal Environment Minister Murray Watt said on Sunday fuel rationing was “not on our agenda at this point in time” and urged Australians to “think about your neighbour” instead of hoarding fuel.
“What we’re asking people to do is to use some common sense, take the fuel that you need but not more than you need and think about your neighbour who needs fuel as well,” he told Sky News Australia.
With diesel prices surging past $3 a litre in major cities, transport operators are struggling to absorb rising costs, and industry groups say targeted government measures are needed to prevent the increase being passed on to consumers.
The nation’s peak chambers of commerce have called for national cabinet to green-light urgent action to stabilise supply chains and protect businesses at the front line of the fuel crisis when it meets on Monday, arguing that without intervention, everyday food and grocery prices are set to rise in the weeks ahead.
They have proposed a four-point plan aimed at securing fuel supply, ensuring distribution, managing demand and maintaining business continuity. Central to the plan is a temporary reduction in the heavy vehicle road user charge – currently 32.4¢ per litre – which would give immediate relief to freight operators and help blunt the impact on grocery prices.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the measure would directly target the part of the supply chain where price pressures are most acute.
“We believe that by reducing that it will help control the cost in the supply chain,” McKellar said. “It will also ensure that some of those additional costs don’t have to be fed into the supply chain, so for things like food and grocery prices, it will help insulate the impact and moderate the inflationary effect.”
The road user charge, which applies to every litre of fuel used by heavy vehicles, raises about $2.5 billion annually for the federal budget. Ministers had already agreed to annual increases of 6 per cent through to 2025-26, but business groups say the current settings are unsustainable given the speed of the price surge.
Industry analysts say transport operators – especially small operators and owner-drivers – are being hit first, with limited ability to pass costs on immediately. Those higher costs are now beginning to work their way through to supermarkets.
Coles and Woolworths have both adjusted how they manage fuel levies for independent truck drivers.
Woolworths has increased some levies by as much as 70 per cent, while Coles has moved to fortnightly reviews of its fuel levy and is offering faster payment terms to ease contractors’ cash flow. While neither retailer has flagged immediate price rises for customers, analysts say these additional costs are unlikely to remain contained indefinitely. There has been no reports yet of mass panic buying.
Oil prices rose sharply at the weekend on fears the war against Iran will expand to include the Strait of Bab el-Mandeb in the Red Sea through which tankers access the Suez Canal. Brent crude futures reached $US111 ($161) a barrel on Saturday, the highest level since mid-2022 following Russia’s invasion of Ukraine.
The federal government said fuel continued to arrive in Australia in the quantities and frequency needed and expected, with ship tracking showing sufficient fuel on its way to arrive within the next week. While aggregate national fuel supplies remain at normal levels– 39 days of petrol, 30 days of jet fuel and 30 days of diesel – it said localised shortages have emerged as a result of increased purchasing, particularly for diesel.
Gas giant Santos announced on Sunday it had brought forward part of a 575,000-barrel Cooper Basin crude parcel by about a month for delivery to Viva Energy, which owns and operates the Geelong refinery in Victoria.
It means the Geelong refinery can now produce the maximum possible amount of petrol and diesel after deferring planned maintenance.
Opposition industry spokesman Andrew Hastie said Albanese needed to reassure people “every single day.
“I think all Australian need a message from the prime minister to just keep calm [and] carry on,” told ABC’s Insiders program.
Business NSW chief executive Daniel Hunter said some service stations in Sydney and regional areas had begun running dry, prompting a need for emergency measures.
“Bulk supply for critical businesses in construction, mining and agriculture must be a national priority,” Hunter said.
“This is a fuel supply crisis and a huge problem for diesel distribution. National co-ordination will help ease this pressure.”
Victorian Chamber of Commerce and Industry chief executive Sally Curtain said the disruption was spreading across multiple sectors, warning that businesses could not absorb the costs alone.
“Fuel and supply chain disruptions are having significant impacts across key industries,” Curtain said.
“Businesses are adapting quickly, but governments must act now to secure supply, keep goods moving and protect jobs.”
Australian Industry Group chief executive Innes Willox said national cabinet must now consider a full range of measures to manage the crisis, from moderating demand to preparing for more severe interventions if required.
“Global supply chains for many products – fuels, fertilisers, plastics, industrial commodities and more – will be affected in the weeks ahead. All options should remain on the table,” he said.
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Rob Harris is the national correspondent for The Sydney Morning Herald and The Age based in Canberra. He is a former Europe correspondent.Connect via email.
Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.