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Energy analysts raise concerns on fuel excise cut, divided on whether it will 'temper' inflation (ABC News Radio - National)

Press/Media: Expert Comment

Description

Nature of contribution: Expert source, quoted directly with accompanying photograph supplied by Macquarie University. One of five analysts consulted.

Quoted on the design of the federal government's temporary fuel excise reduction, advising that the cut should have been weighted more heavily toward diesel than petrol on the grounds that diesel, not petrol, is where the economic pain concentrates. The comment anchors the article's central policy critique and is supported by subsequent contributors on the inelasticity of diesel demand across freight, agriculture and mining, and the consequent flow-through to food production costs.

Subject

Australian fuel excise reduction, diesel demand inelasticity and the trade-off between cost-of-living relief and fuel conservation.

Period14 Apr 2026

Media contributions

1

Media contributions

  • TitleEnergy analysts raise concerns on fuel excise cut, divided on whether it will 'temper' inflation
    Degree of recognitionNational
    Media name/outletABC News
    Media typeWeb
    Country/TerritoryAustralia
    Date14/04/26
    DescriptionThis article canvasses expert disagreement over the federal government's decision to halve the fuel excise for three months, a cut of 26.3 cents per litre supplemented by 5.7 cents in state relief. It documents the divergent outcomes across fuels — unleaded petrol falling to around $2.20 per litre while diesel returned above $3.20, close to pre-cut levels — and Dr Lurion De Mello argues that the relief should have been weighted more heavily toward diesel, since petrol is not the pain point and the moment is concerning both domestically and globally. Supporting analysis develops the mechanism: diesel demand is inelastic across farming, freight and mining, with supply disruption feeding directly into production capacity, operating costs and food prices, while the distribution of any tax cut between consumers and retailers depends on the relative elasticity of supply and demand. Countervailing positions hold that further diesel relief would be difficult to target and might advantage the mining sector, that prolonged excise reduction blunts incentives for vehicle efficiency and electrification, and — most sharply — that the excise should not have been cut at all, on the argument that the binding risk is availability rather than price and that higher prices are the principal mechanism for suppressing discretionary consumption ahead of possible rationing. The piece closes on alternative relief instruments, including targeted rebates and the contested treatment of fuel tax credits.
    Producer/AuthorEmilia Terzon
    URLhttps://www.abc.net.au/news/2026-04-14/fuel-excise-cut-questioned-as-iran-war-continues/106559252
    PersonsLurion De Mello
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