Australian motorists are feeling the pinch at the pump as fuel prices accelerate sharply. New data from the competition regulator shows the five-city average diesel price reached 286.8 Australian cents per litre on September 23, adding A$9.45 to the cost of a standard 50-litre fill compared to just a week earlier. Petrol prices also climbed, rising 6% to 237.1 cents per litre, which translates to an extra A$6.45 for the same volume.
The increases are not uniform across the country. Regional averages remain higher, with diesel at 288.9 cents per litre and petrol at 242.7 cents per litre, according to the Australian Competition and Consumer Commission (ACCC). These regional figures highlight the broader impact of rising global refined-fuel costs, which have been driven by supply constraints and geopolitical tensions.
Wholesale pressures and tax dynamics
The immediate driver of the retail surge is the wholesale market. Five-city terminal-gate prices for petrol and diesel rose by 11.7 cents and 15.4 cents per litre, respectively, in the latest reporting period. The ACCC notes that such wholesale moves typically take one to two weeks to fully pass through to retail pumps, suggesting further increases may be on the horizon.
While fuel excise was fully restored to 53.7 cents per litre on August 3, the regulator confirmed that retailers have passed on those tax changes appropriately. This week's spike is instead attributed to elevated international refined-fuel benchmarks, which have been climbing amid tight global supply and refinery outages.
Qantas faces mounting fuel costs
The ripple effects extend well beyond the forecourt. Qantas Airways Limited (ASX: QAN) is bracing for a significant increase in its fuel bill. The airline expects to spend approximately A$3.6 billion on fuel in the first half of fiscal 2027, assuming jet fuel prices remain near A$200 per barrel. This comes after the company reported fuel expenses of A$5.724 billion for fiscal 2026, up A$721 million year-on-year.
The impact on Qantas's bottom line has been stark. Underlying profit before tax fell 14% to A$2.064 billion, while operating margin contracted by 1.9 percentage points to 9.2%. Unit costs rose 6%, outpacing a 4% increase in unit revenue, squeezing profitability. In response, CEO Vanessa Hudson said the airline has "quickly adjusted fares and capacity" to mitigate the surge in fuel prices, which has limited the net earnings impact to A$420 million but transfers part of the burden to travellers.
Market reaction and analyst outlook
Qantas shares closed at A$8.94 on Friday, down 0.89%, and remain 21% below their 52-week high. Despite the recent fuel price spike, the analyst consensus remains bullish. Seventeen tracked analysts carry a Buy rating with an average target price of A$11.53, implying roughly 29% upside. However, most of these targets were set before this week's retail fuel increase, and the airline's hedging strategy only partially shields it from rising jet-refining margins.
Investors will be watching the next ACCC report, due before the weekly monitoring program concludes on September 30, to see whether the wholesale price hikes translate into sustained pump price increases. For now, the outlook for both consumers and airlines remains clouded by volatile energy markets.
