How the war in Ukraine is squeezing fuel prices in Australia
Updated: May 6
Did a road trip during the Easter or Anzac holidays leave you feeling robbed at the petrol bowser?
Even though the Federal government cut fuel excise in half from 44. 2 cents to 22.1 cents for six months in the March budget fuel prices are still eye-wateringly high. The confronting scenes we’ve seen on our TV screens and devices have something to do with it. The Russian invasion of the Ukraine is pushing up oil prices and that’s not the only area of spending being affected. Russia is the world’s second largest exporter of crude oil and refined petrol as well as the world’s largest exporter of natural gas. It has a 12 per cent share of the global oil market. Although Australia only imports about 1.2 per cent of its oil from Russia, global energy markets are factoring in disruptions caused by Western countries implementing sanctions on Russia. And according to the Australian Competition and Consumer Commission the main determinant of petrol price changes in Australia is the international price of refined petrol. Filling up the car isn’t the only area we might feel the impact of the conflict in our everyday lives. Global supply chains are all being impacted by the conflict and resultant sanctions. Maybe you’d never claim to be a connoisseur of Russian products such as vodka or caviar, but the conflict is having an impact on food prices as the energy costs of transporting goods ratchet up. The Australian government has now imposed an additional tariff of 35 per cent on all imports from Russia and Belarus from April 25. The new tariff was in addition to the general duty rates that already applied. It also imposed a prohibition on imports of oil and other energy products from Russia on April 25. These new trade sanctions are likely to exacerbate increases in fertiliser costs. Russia is the world’s largest producer of ammonium nitrate, accounting for about a third of global exports and Australia lists fertiliser among its major imports from Russia. It accounts for about 4 per cent of fertiliser imported into Australia. The sanction could place additional strain on farmers and potentially have a knock-on effect on supermarket prices. If the impact of rising fuel costs on your budget already has you cringing, here are seven ways to cut back. It could just be the nudge you need to make a healthier choice for you and the environment.
Tips to make your fuel budget go further
Opt for public transport whenever possible;
Taking a short trip: either walk or cycle;
Avoid idling if your car is stationary for more than a minute;
Drive with fuel efficiency in mind: accelerate and brake steadily; keep your speed in check; use cruise control on highways; switch on the air-con only where necessary; keep windows closed; remove unnecessary weight; pump the tyres; and replace dirty air filters.
Share trips by car-pooling with friends, family, neighbours, and colleagues;
Limit Sunday drives and rethink road trips; and
Take the leap to an electric or hybrid vehicle.
If you have any questions about budgeting or would like to know more about how to achieve your financial goals, please contact Luke Jensen at Propel Financial Advice.