Oil prices in 2026: what it means for Australian households

Australia's refinery problem: almost entirely import dependent

Australia closed its last major domestic oil refineries between 2012 and 2021. ExxonMobil's Altona refinery (Victoria) closed in 2021, followed by BP's Kwinana (WA) and Viva Energy's Geelong operations converting to import terminals. Australia now imports virtually all its refined petroleum products -- primarily from Singapore, South Korea, and the Middle East.

This means Australia has almost no domestic buffer between global crude prices and what Australians pay at the pump. The Singapore Complex Cracking margin (the relevant refining benchmark for Australian imports) has risen sharply since the Hormuz crisis disrupted regional supply chains. Australian fuel import costs have risen approximately 18% since January 2026.

The Australian government's Fuel Security Services Payment (FSSP) provides subsidies to keep the Ampol Lytton and Viva Energy Geelong facilities operational as strategic assets, but at reduced throughput. These are insufficient to meaningfully buffer a sustained supply shock.

Petrol prices by city

Australian petrol prices vary significantly by city, driven by the fuel price cycle (more pronounced in some cities), local competition, and distance from import terminals. As of early March 2026 (ACCC Petrol Price data):

Perth is disproportionately affected because WA imports most fuel by ship from Singapore, with limited pipeline connection to eastern Australian supply. Regional and rural Australia faces significantly higher prices -- remote areas commonly see AUD 2.40-2.70/litre in normal conditions, rising further with any supply tightening.

Electricity and gas bills

Australian electricity prices are among the highest in the developed world despite abundant coal and increasingly solar generation. The National Electricity Market (NEM) price is heavily influenced by gas-fired generation, which sets the marginal price during peak demand periods. When gas prices rise, electricity wholesale prices rise with them.

The AEMO has reported NEM average spot prices up approximately 22% since January 2026, reflecting both the global gas price increase and reduced availability of LNG-backed gas supply. Default Market Offer (DMO) and Victorian Default Offer (VDO) prices are set annually (July 1) and semi-annually -- the next adjustment in July 2026 is expected to reflect current wholesale market conditions.

Typical Australian household electricity costs (AUD 1,800-2,400/year depending on state) are projected to rise by AUD 180-350 by July 2026 based on current wholesale trends. Gas-connected households (approximately 40% of Australian homes, concentrated in Victoria and SA) face additional gas bill increases of AUD 150-280/year.

The AUD/USD exchange rate amplifier

Oil is priced in USD globally. Australia imports fuel priced in USD. When the Australian dollar weakens against the USD, Australian import costs rise even if the oil price in USD is flat. The AUD has depreciated approximately 4% against the USD since the Hormuz crisis began (from AUD/USD 0.635 to 0.610), adding roughly AUD 0.06-0.08/litre to petrol costs on top of the oil price increase itself.

This currency amplification is a persistent feature of Australian fuel costs. In 2022, the AUD weakened sharply alongside the oil price spike, compounding the impact for Australian households. In 2026, the pattern is repeating -- global risk-off sentiment and USD strength hit the AUD at precisely the moment when USD-priced oil is most expensive.

What Australian households can do

Petrol: Use GasBuddy or MotorMouth to identify the cheapest stations during the low point of the Sydney/Melbourne/Brisbane fuel price cycle (typically Tuesday/Wednesday mornings). The cycle variation can be 20-30 cents/litre between peak and trough. Filling up at the right time saves approximately AUD 200-300/year for an average driver.

Electricity: Compare energy plans on the government-run Energy Made Easy (NSW, ACT, SA, TAS, QLD) or Victorian Energy Compare. Many households are on default market offers significantly above the cheapest available plan. Solar panels, now cost-effective in most Australian capitals with payback periods of 4-6 years, eliminate exposure to electricity price increases for daytime consumption.

Driving: For high-mileage drivers in capital cities, an EV comparison is increasingly compelling. At AUD 2.09/litre petrol and AUD 0.30-0.35/kWh electricity, a typical EV costs approximately 60-70% less per kilometre to run than a comparable petrol vehicle. Federal and state EV incentives (fringe benefits tax exemption for salary-sacrificed EVs, state rebates) further improve the economics.

Frequently asked questions