WHY PETROL PRICES ARE CLIMBING AGAIN DESPITE EXCISE CUT

Experts have blamed international factors, including sanctions on Russia, for driving up global oil prices.

A government excise on fuel was cut by 22 cents following the federal budget six weeks ago.

“That happened at the same time that oil prices had fallen considerably as well. So we saw those prices falling on average,” NRMA spokesperson Peter Khoury said.

However, he noted “the biggest factor was always going to be and always will be oil prices”.

The excise is set to return to normal in September.

Motorists are seeing petrol prices rise again since the government halved the fuel excise by 22 cents a litre. Picture: NCA NewsWire / Gaye Gerard

Mr Khoury said in some cities the price cycle was temporarily trending downwards, however overall the trend remained the same as the past 12 months.

“In Sydney, for example, prices are going to fall a bit for the next few days, before they go back up again,” he said.

“But overwhelmingly, as a general rule, oil prices have gone back up again and petrol prices are going to do the same.”

Australia’s international benchmark price for unleaded has increased $12 a barrel in the past week.

Mr Khoury said prices everywhere would likely reach $2 a litre, or close to it.

“A highly volatile global market that has been around now for the last 12 months continues to spiral,” he said.

One counterbalance to the effect of European sanctions on Russia has been the shutdown of parts of China, including Shanghai, due to an outbreak of Covid-19.

Less demand for fuel within China is putting downward pressure on global oil prices, creating “competing factors” and a “highly volatile market”.

Global factors including sanctions on Russia are said to be driving oil and therefore petrol prices higher. Picture: NCA NewsWire / Gaye Gerard

“Long term there is an expectation oil production levels in the US will hit their peak a bit later this year, which hopefully will deliver relief and we still want to see production levels increase from OPEC,” Mr Khoury said.

“But on any given day, depending what happens in Russia and in China, we continue to be exposed to these highly volatile oil prices and it’s why we are seeing prices here in Australia fluctuate so wildly.”

Mr Khoury said the government halving the excise would continue to play a role, as long as it is passed on by service stations.

“There are some service stations who pass on the cuts in full and there are just others that don’t,” he said.

“That continues to play out and it’s something the ACCC needs to monitor while we’re in this process of having the excise cut.”