Where your fuel money actually goes — taxes, refining, and the 6 cents you can control

When you pay $1.90 for a litre of unleaded, roughly $1.84 of that is determined before the fuel even reaches the servo. The crude oil price, refining costs, shipping, excise tax, and GST are all baked in. The retailer's margin — the part that varies between stations — is typically just 3 to 8 cents per litre.

Understanding where your money goes does not lower the price, but it does explain why prices spike, why they vary between stations, and where your actual leverage sits.

The anatomy of $1.90 per litre

Here is approximately how each dollar breaks down for a litre of U91 unleaded at $1.90, based on ACCC quarterly reporting:

Two things stand out. First, government taxes (excise plus GST) account for about 36% of what you pay — roughly 68 cents of every $1.90 litre. Second, the retailer's margin is the thinnest slice. That small margin is the only part that varies meaningfully between stations.

Fuel excise: the 50.6 cents you cannot avoid

The fuel excise is a flat tax of 50.6 cents per litre (as of February 2026), indexed to CPI every six months. It applies to petrol and diesel equally. The excise is set by the federal government and has not been structurally changed since the temporary halving during 2022 ended.

That 50.6 cents is the same whether fuel costs $1.50 or $2.50 per litre. It does not rise when prices spike — but it does not fall either. On a 50-litre fill, you pay $25.30 in excise alone, plus GST on top of the excise (yes, you pay tax on the tax).

Why prices spike — and why they fall slowly

When crude oil prices jump — due to OPEC decisions, supply disruptions, or geopolitical events — the wholesale cost of fuel rises within days. Retailers pass this through quickly because their next delivery already costs more.

When crude prices drop, the fall at the bowser is slower. This is known as the "rockets and feathers" effect, and the ACCC has documented it extensively. Prices go up like rockets and come down like feathers. The ACCC attributes this partly to the price cycle itself — retailers wait until the bottom of the cycle to pass on wholesale savings.

The 6 cents you can actually control

You cannot change the crude oil price, the excise rate, or the refining margin. But you can influence which station gets your money. The retail margin — that 3 to 8 cent slice — varies between stations, and the total price difference between the cheapest and most expensive station in a suburb can be 20 to 30 cents per litre on any given day.

That variance exists because of the price cycle, different wholesale contracts, brand pricing strategies, and competition density. Two stations buying fuel from the same terminal can charge different prices because one is a major brand with higher overheads and the other is an independent running leaner.

On a 50-litre tank, choosing the cheapest station in your area instead of the nearest one saves $5 to $15 per fill. Over 52 fills per year, that is $260 to $780. It is not going to offset the 68 cents per litre in taxes, but it is real money — and it is the one part of the price you actually get to decide.

What you can do right now

• Check prices before every fill. A 2-minute look saves $5 to $15.
• Fill up at the bottom of the price cycle — usually Tuesday or Wednesday in Sydney and Melbourne.
• Consider independents over major brands. They often price 5 to 10 cents lower.
• Do not drive out of your way for cheap fuel. If the station is more than 5 km further, the extra fuel used eats into savings.