Australian drivers paid an average of 170.1 cents a litre for unleaded in the first week of July, up 12.2 cents in a week, and the price is set to rise again on 1 August. Most of that increase is not the global oil price. It is the return of fuel tax the government had temporarily cut.
The government halved its excise relief on 1 July, taking back about 16 cents a litre of the discount it had run since April. The rest ends on 1 August, when the excise returns to 52.6 cents a litre on petrol and diesel. The Australian Competition and Consumer Commission said on 10 July it would watch retailers to confirm the change shows up accurately at the pump and is not used as cover for wider margin increases.
The oil price is pushing the same way, though it eased on Tuesday. Brent crude traded near US$88 a barrel, down from above US$90 over the weekend, after US strikes on Iranian coastal targets and Iran's disruption of tanker traffic through the Strait of Hormuz drove prices up. West Texas Intermediate sat near US$82, slipping as mediators pressed both sides toward talks in a conflict that flared again in the middle of the month.
On the market, the S&P/ASX 200 opened about 0.4 per cent lower on Tuesday, a fourth straight losing session, after closing at 8,791.3 on Monday. The oil move had split Monday's trade. Woodside rose 2.9 per cent and Santos 1.7 per cent, while BHP fell 2.9 per cent, Rio Tinto 2.5 per cent, and gold miners dropped as the metal pulled back.
The Reserve Bank meets next on 11 August, a fortnight after the excise reverts. It has held the cash rate at 4.35 per cent, and financial markets price the chance of a rise at that meeting at under 10 per cent, even as some bank economists still expect at least one more increase before the end of the year. Petrol feeds straight into the consumer price index, so a sustained lift at the bowser makes the inflation number the bank is watching harder to bring down.
Wall Street gave a soft lead overnight, the S&P 500 down 0.19 per cent and the Dow off 0.59 per cent, with investors waiting on a run of large US technology earnings. For Australian drivers the arithmetic is simpler than the market's. A crude price set by a war on the other side of the world, and a fuel tax set in Canberra, are both heading up into August.
