By Will Nicholas in Canberra

Cuts to the tax on fuel have been ruled out while a proposed “shield” to defend Australians from then worst of global oil shocks has been hammered by the government.

Automatically halving the fuel excise whenever crude oil tops $US100 ($A140) a barrel on average for two weeks was floated by the coalition on Sunday, but has been batted away by Labor frontbenchers.

“We don’t think (it’s a good idea) and again, it’s an unfunded, uncosted promise,” Finance Minister Katy Gallagher told ABC Radio on Monday.

“This is not something that we have been considering … we’ve shifted and including in the budget to providing more permanent cost of living arrangements, including through the tax system.”

Average petrol prices have shot up to about $2.30 per litre in Australia’s five largest cities, while diesel prices are about 40c per litre higher as conflict in the Middle East impacts multiple oil-shipping choke points.

But prices remain well below their levels on March 31, when Canberra halved the fuel excise, shaving about 26 cents a litre from the cost at the bowser.

Brent crude, the benchmark oil price the coalition has nominated as its fuel excise reduction trigger, has rocketed to about $US104 ($A146) a barrel, edging nearer to its May peak of $US114 ($A160).

The May budget forecast prices to return to $US80 by mid-2027, but some experts have since predicted oil prices could reach as high as $US150 per barrel as global stockpiles are depleted.

The developments have heaped renewed pressure on Labor to cut the fuel tax again, but the government had no plans to do so, according to Senator Gallagher.

“These one-off arrangements, which, when we’ve got higher inflation, could be difficult in the economy,” she said.

“The sooner this war in the Middle East stops, the better.”

The coalition says its fuel shield policy would save motorists 27 cents per litre of fuel, or $15 for the typical tank of fuel.

The policy would be fully funded by the opposition’s separate proposal to slash the tobacco excise by 80 per cent, which the coalition says would re-gather $8 billion in revenue currently being lost to black market cigarettes.

Outside critics flagged that routinely meddling with the fuel excise would send drivers the wrong message about when to fill up, sending them racing to bowsers when petrol and diesel are scarce.

But opposition spokesman Dan Tehan said that was only an issue because Labor had under-invested in Australia’s home-grown fuel supply.

“They haven’t been exploring, they haven’t been giving production licences, they haven’t been doing their job in making sure we use our natural resources,” he told ABC Radio on Monday.

How much One Nation plans to cut the fuel excise remained unclear as party spokesman Barnaby Joyce affirmed it supported the policy, but did not nominate a figure.

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