The Russian-Ukraine war has sent the cost of petrol sky-rocketing in Australia. A $2.20 per litre is the most expensive as it has ever been and is putting pressure on household budgets. As in most global economies, inflation in Australia is starting to increase, and these high petrol prices are not helping.

The federal government collects 44.2 cents of excise for every litre of petrol sold, adding more than $12 billion to the national coffers. This money is then channelled into road and transport projects, as it should be. However, many pundits are now saying that the federal government should drop the excise on petrol by half to ease the pressure on those households who find it hard to pay the extra cost of petrol.

With a federal election looming in May, the federal government may see this as a way to curry favour with the electorate by dropping the excise. If they drop part of the excise, the problem will be when to increase it again. It may relieve short-term pain, only to create a longer-term issue for subsequent governments. Unfortunately, governments of all persuasions only think in the current election cycle, so I suspect we will see a drop in the excise quite soon.