Diesel is now sitting near $2.50 a litre in most Australian capital cities, and that single number is doing more work in the inflation figures than most business owners realise. On 2 September the average retail diesel price across the five largest cities was $2.49 a litre, with Melbourne and Brisbane at $2.52, Hobart at $2.54 and Canberra at $2.61, according to the federal government's fuel statistics dashboard. Petrol averaged $2.05. Diesel is 73 cents a litre higher than it was before the Middle East conflict began in late February.

Andrew unpacked this with James in the podcast episode Petrol, Property and Rates: Australia's September Squeeze, recorded on 2 September. The short version: the pump price isn't a standalone problem. It's a cost input that flows into freight, food, construction and services, and it lands right in front of the Reserve Bank's next decision on 29 September.

The excise relief is gone, and that part isn't coming back

A lot of drivers noticed a step up in August and blamed the oil price. Some of it was tax. The temporary fuel excise relief ended on 3 August 2026, and the ATO confirms rates went back up to reflect both the end of the relief and the August CPI indexation.

The numbers are worth knowing precisely, because they're fixed and you can plan around them. Excise on petrol and diesel was cut to 20.6 cents a litre from 1 April to 30 June, sat at 36.6 cents from 1 July to 2 August, and has been 53.7 cents a litre since 3 August, per the ATO's excise duty rate tables. That's a 17.1 cent per litre increase in the tax component, plus GST on top, from one day to the next.

Here's the thing about that: it's the most predictable part of your fuel bill. Crude is volatile and nobody can forecast it. Excise is a published rate with a published indexation cycle. If you're running vehicles, plant or equipment, you can price that in with certainty, and a surprising number of businesses still don't.

Two refineries and a very long supply chain

Australia's exposure to overseas shocks isn't bad luck. It's structural. Geoscience Australia's energy commodity resources report shows Australia imported about 95% of its oil requirements in 2024, with imported refined products making up 79% of total refined product consumption and only two domestic refineries left operating. Domestic refining covers roughly 20% of national supply, with the rest arriving by ship.

That means when something goes wrong between the Gulf and Singapore, it shows up here within weeks. And plenty has gone wrong. Brent crude settled at $101.21 a barrel on 9 September after attacks on shipping near the Strait of Hormuz, its highest close since May, Reuters reported, and it has kept climbing since. Meanwhile the much-publicised US deal over Venezuelan oil reserves won't change what arrives at an Australian terminal any time soon. New barrels need drilling, refining capacity and years of capital. Headlines move sentiment fast; physical supply moves slowly.

My honest read is that fuel security is now a business planning issue rather than a policy debate to watch from the sidelines. We are not going to rebuild a refining industry inside one interest rate cycle, so the sensible assumption is that Australian diesel stays volatile and structurally higher than it was in 2024.

Diesel is an input cost, not just a fuel bill

Petrol is a household expense. Diesel is an economy-wide input. It moves almost every pallet of food, every load of building material and every piece of earthmoving equipment in the country. When diesel jumps 73 cents a litre, transport operators either absorb it, apply a fuel levy, or renegotiate rates. Most do the second and third.

Freight is where it bites hardest, because it's a cost that sits inside the price of nearly everything else. A B-double running Sydney to Brisbane and back burns hundreds of litres a trip. Multiply 73 cents a litre across a national fleet and you get fuel levies on freight invoices, higher landed costs for wholesalers, and eventually shelf prices. Cold chain makes it worse, since refrigerated transport burns diesel to keep the load cold as well as to move it.

You can see the flow-through starting in the official data. In the 12 months to July 2026 the CPI rose 3.5%, down from 3.8% in June, but automotive fuel alone rose 7.5% in the month of July, and transport costs lifted from 0.1% to 1.6% annually, according to the ABS. Food and non-alcoholic beverages were up 3.2% and meals out and takeaway up 4.5%. Trimmed mean inflation, the measure the RBA watches most closely, sat at 3.6% and didn't budge.

And that July figure only captured the partial unwinding of excise relief. The full restoration on 3 August lands in the August and September data.

Why 29 September matters more than usual

The cash rate has been at 4.35% since August, when the Monetary Policy Board voted unanimously to hold. Read that statement closely and the fuel link is explicit: the Board noted the disruption to global oil supply was adding directly to inflation, and that there were indications higher fuel prices were being passed through into the prices of other goods and services. That's the sentence that matters for anyone with debt.

The Board next meets on 28 and 29 September, with the decision at 2.30pm on the 29th, per the RBA's published schedule. The major banks don't agree on the outcome. NAB expects a 25 basis point increase in September, while ANZ, CommBank and Westpac all have the next hike pencilled in for November, which would take the cash rate to 4.60% either way, Canstar's rate forecast tracker reports.

There's a genuine tension in the Board's position. Oil-driven inflation is a supply shock, and central banks normally look through those because raising rates doesn't produce more diesel. But the RBA's August statement flags the risk that matters: pass-through into other prices, and short-term inflation expectations that have eased but are still higher than earlier in the year. Once fuel costs get embedded in wages and contracts, they stop being temporary.

Note the direction of the disagreement. It's about timing of the next rise, not whether cuts are close. That's a very different environment from the one most borrowers spent 2025 planning for, and it's happening while housing values fall, which tells you how much the cost side is driving the story.

What a business owner or investor can actually do this month

None of this is advice about your situation, but there are practical moves worth checking before the end of September.

  • Claim fuel tax credits properly. From 3 August 2026 the rate is 21.3 cents a litre for liquid fuels used in heavy vehicles on public roads, and 53.7 cents a litre for all other business uses including auxiliary equipment, with the road user charge set at 32.4 cents a litre, per the ATO's fuel tax credit rates. If your bookkeeping still uses the reduced 2026 rates, you're understating a real refund.
  • Split off-road and on-road usage. The gap between 53.7 and 21.3 cents a litre is large enough that vague apportionment costs money. Telematics data or a simple usage log usually pays for itself in one quarter.
  • Re-run your quarterly cashflow with diesel at current prices, not last year's. If you budgeted diesel at $1.80 and you're paying $2.50, a fleet burning 3,000 litres a month is $2,100 a month worse off before anything else changes.
  • Check whether your contracts allow a fuel or freight adjustment. Many older supply agreements don't, and that's a margin problem you can only fix at renewal.
  • Stress test debt at 4.60% and higher, not at 4.35%. If a 25 basis point move in either September or November breaks your servicing position, that's worth knowing now rather than in December.
  • Don't apologise for holding cash. With inflation at 3.5% and term deposits pricing off a 4.35% cash rate, cash isn't the dead weight it was three years ago. For a business facing rising input costs and a possible rate rise, liquidity has real option value.

The steady move is to treat higher fuel as a base case rather than a spike you can wait out. Reprice, reforecast, claim what you're entitled to, and keep a buffer. Then watch the 29th.

Frequently asked questions

What is the fuel excise rate in Australia right now?

From 3 August 2026 the excise on petrol and diesel is 53.7 cents per litre. It was temporarily reduced to 20.6 cents from 1 April to 30 June 2026, then 36.6 cents from 1 July to 2 August 2026. The current rate reflects both the end of the temporary relief and the August CPI indexation, according to the ATO's excise duty rate tables.

When did the temporary fuel excise relief end?

The temporary fuel excise relief ended on 3 August 2026. The ATO confirms rates increased from that date to reflect the end of the relief plus the August 2026 CPI adjustment. The tax component of petrol and diesel rose by 17.1 cents per litre, with GST applying on top of that.

How much is diesel in Australia in September 2026?

On 2 September 2026 the average retail diesel price across the five largest capital cities was $2.49 a litre, with Melbourne and Brisbane at $2.52, Hobart $2.54 and Canberra $2.61. Petrol averaged $2.05. That puts diesel about 73 cents a litre above pre-conflict levels of 20 February 2026.

When is the next RBA interest rate decision?

The Monetary Policy Board meets on 28 and 29 September 2026, with the decision announced at 2.30pm on 29 September. The cash rate target has been 4.35% since August 2026, when the Board voted unanimously to hold it, noting that global oil supply disruption was adding directly to inflation.

Will the RBA raise rates in September 2026?

The major banks are split. NAB forecasts a 25 basis point increase in September, while ANZ, CommBank and Westpac expect the next rise in November. Both paths point to a 4.60% cash rate. The disagreement is about timing rather than direction, and no bank currently expects a cut before 2027.

Why are Australian fuel prices so exposed to overseas events?

Australia imported about 95% of its oil requirements in 2024 and has only two operating refineries left, which supply roughly 20% of national fuel. Imported refined products made up 79% of consumption. That means Gulf and Asian supply disruptions, and shipping risk around the Strait of Hormuz, reach Australian pumps within weeks.

What is the fuel tax credit rate for diesel from 3 August 2026?

It is 21.3 cents per litre for liquid fuels used in heavy vehicles travelling on public roads, and 53.7 cents per litre for all other business uses, including powering the auxiliary equipment of a heavy vehicle. The road user charge is 32.4 cents per litre for liquid fuels and 43.2 cents per kilogram for gaseous fuel.

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