The new Labor government faces an immediate test on its election promise to tackle cost-of-living pressures as a rebounding global oil price threatens to swallow the petrol price relief from the fuel-excise cut and consumers brace for a looming spike in electricity bills.
As Russia’s invasion of Ukraine deepens a global energy crunch and intensifies demand for fossil fuels, the flow-on effects are being felt in Australia amid increasing costs to fuel the nation’s coal and gas-fired power stations and higher petrol prices for motorists filling up at the bowser.
Prime Minister Anthony Albanese and Labor energy spokesman Chris Bowen have promised to reform electricity policy to lower power prices.Credit:Alex Ellinghausen.
The benchmark Brent oil price has soared back up to US$117 a barrel over the past week. The last time it was this high was in late March when average petrol prices at Australian bowsers rose beyond $2.20 per litre.
The 44-¢-a-litre fuel excise tax was halved by the former Coalition in the March 29 budget, causing the petrol price to drop to $1.60 in April. However, it has since risen back above $2.20 amid escalating Western sanctions on Russian oil to starve Moscow of the revenue it needs to fund the war in Ukraine.
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Treasurer Jim Chalmers has said Labor may not extend the fuel excise cut beyond its initial six-month period, which is due to finish on September 28.
However, Labor has committed to deliver a federal budget in October, which presents a neat opportunity for the government to implement the tax cut if it decides to extend it. The cut to the tax cost the federal budget about $3 billion.
On electricity prices, Labor has cited modelling by analysts Reputex that showed its plan would replace more expensive coal with cheaper renewables to cut power bills by $275 as soon as 2025.
On Thursday the Australian Energy Regulator confirmed that the default market offer, which is a price cap on what retailers can charge households and businesses, would go up 14 per cent, or $227, in NSW; 11 per cent, or $165, in Queensland; and by 5 per cent, or $61, in Victoria.