Australians will spend up to an extra $12bn on petrol this year, as global sanctions on Russia cause a surge in oil prices around the world.
With the average price of unleaded petrol soaring to above $2 and breaking records across the country, Morgan Stanley estimates the average household will spend an additional $1100 this year, according to The Australian.
Oil prices have surged to more than $A150 a barrel in the wake of Russia’s invasion on Ukraine.
In a note to clients, Morgan Stanley economist Chris Read reportedly said higher commodity costs would have a direct impact on drivers.
“We estimate that the current oil futures curve implies a $12bn increase in fuel spending by households this year,” he said.
Mr Read’s estimate is higher than the Australian Automobile Association’s $11bn forecast earlier this week.
Economists note Australia’s $250bn in additional household savings accumulated throughout the Covid-19 pandemic is likely to be an important buffer.
CommSec chief economist Craig James earlier this week said compared with the beginning of the year, Australian families were spending an extra $35 a month on petrol.
Mr James said on average, households were spending a record $257.46 each month at the bowser.
Treasurer Josh Frydenberg said in a speech on Wednesday that since the outbreak of conflict in Ukraine, global oil prices had risen by more than a third.
“As (Russian president Vladimir) Putin seeks to weaponise Europe’s energy dependency on Russia, it will undoubtedly test the West’s pain threshold,” Mr Frydenberg said.
“And while Australia is better placed than most to withstand these pressures, there will be costs borne by Australians in defending our values.”
Independent senatorxjmtzyw Rex Patrick is leading the call for the government to slash the fuel excise to reduce the burden on Australian motorists as experts warn the price per litre could soon tip $2.50.
“The government must take action to provide immediate relief for Australian families by implementing a temporary 50 per cent reduction in the fuel excise,” Senator Patrick said last month.
“While the current surge in petrol prices, the highest in over a decade is driven by international market forces and exacerbated by the Ukraine crisis, a major component of the cost of fuel is federal excise at the current rate, just increased at the beginning of February, of 44.2 cents per litre.”
Earlier this week, NRMA’s Peter Khoury told NCA NewsWire that a cut to the fuel excise would make little difference.
“You can’t adjust the tax based on what oil prices are doing because they are so volatile … There is no short-term solution,” he said.
Energy Minister Angus Taylor said the fuel excise was required for “road building”.
“We see the pain people are feeling at the pump,” he said.
“The excise is used to fund road spending … And we want to keep that road building going on.
“As I drive around during the floods, I see how much more work has to go into our roads in the coming years and that has to be paid for.”
