Fuel 
An Australian petrol price is built up in layers. It starts with an international benchmark for refined fuel (not crude oil directly) priced in US dollars, which gets converted into Australian dollars at the day's exchange rate. On top of that sits the terminal gate price (the wholesale rate servos buy at), then the retailer's margin, and finally two taxes the government adds: fuel excise of roughly 50 cents a litre and 10% GST on the lot. Stack those together and you get the number on the price board.
Understanding that chain explains a lot: why prices move with the dollar, why the same brand charges different amounts in different suburbs, and why the price at one servo can swing day to day even when the cost of fuel hasn't budged. If you only want today's cheapest number rather than the theory, the live Fuel Daddy map shows real prices at every station near you, free and without sign-up. But if you want to actually understand what you're paying for, read on.
It starts with a global benchmark, not crude oil
People assume the petrol price tracks the crude oil price, and it roughly does, but not directly. What Australian wholesalers actually price against is the cost of already-refined petrol and diesel traded in the Asia-Pacific region. The common benchmark is the Singapore refined-product market, because Australia imports most of its fuel and a lot of it comes through that hub.
This matters because crude and refined fuel don't always move in lockstep. When refineries are stretched, the refining margin (the gap between crude and finished fuel) widens, and pump prices can climb even if crude is flat. So the first link in the chain is a regional benchmark for the finished product, set by global supply and demand well beyond Australia's control.
The exchange rate converts it to Aussie dollars
That benchmark is quoted in US dollars per barrel. We buy fuel in Australian dollars, so every price has to be converted at the prevailing AUD/USD exchange rate. This is a second, separate lever on what you pay.
When the Aussie dollar is weak against the greenback, imported fuel costs more in local terms even if the US-dollar benchmark hasn't moved at all. A falling dollar can quietly push pump prices up on its own. So two of the biggest drivers, the global benchmark and the exchange rate, are both set overseas and have nothing to do with the servo down the road.
The terminal gate price: the wholesale starting line
Once the benchmark is converted to AUD, fuel companies set a terminal gate price (TGP). This is the published wholesale price at the fuel terminal, the rate a service station effectively buys its fuel at before it adds anything of its own. It already bundles in the converted benchmark, shipping, terminal handling and the wholesaler's margin.
The TGP is the real "cost base" for the servo on the corner. Everything you see on the board is the terminal gate price plus the retailer's own markup plus tax. Because the TGP moves with the benchmark and the dollar, it shifts day to day, which is one reason board prices are never static for long.
The retailer's margin: where competition lives
On top of the wholesale TGP, the service station adds a retail margin to cover its rent, staff, card fees and profit. This margin is the part of the price the retailer actually controls, and it's where local competition plays out.
A station on a busy strip surrounded by rivals will run a thin margin to win volume. A lone servo on a quiet country road, or one in a captive spot like an airport or motorway, can charge more because there's nowhere else to go. This is the single biggest reason two stations a few kilometres apart can differ by 20, 30, even 40 cents a litre on the same day, and exactly why fuel prices vary so much within one city. Comparing the retail margin servo by servo is the one part of the price you can beat, which is the whole point of the live map.
Then the government adds excise and GST
Two taxes are layered on near the end. First is fuel excise, a flat federal tax of roughly 50 cents per litre on petrol and diesel (the exact rate is indexed to inflation twice a year, so it nudges up over time). It's the same cents-per-litre everywhere in the country, because it's set federally, not by the states.
Then GST of 10% is applied on top of everything, including on the excise itself. So you pay tax on a tax. That's why a change in the excise hits your wallet by more than the headline figure once GST is stacked on. The excise has been in the news lately because of a temporary change to the rate, and we cover exactly what that means for your tank in our guide to the 2026 fuel excise change.
What a litre is roughly made of
It helps to see the layers side by side. The split below is illustrative and approximate, not exact, because the wholesale and retail portions move every single day with the benchmark, the dollar and local competition. The tax layers are far more stable. Treat this as a rough mental model, not a quote.
| Component | Roughly what it covers |
|---|---|
| Wholesale / terminal gate price | The biggest single slice. The international refined-fuel benchmark in USD, converted to AUD, plus shipping and the wholesaler's margin. |
| Fuel excise | A flat federal tax of around 50c a litre, the same everywhere in Australia. |
| GST (10%) | Applied on top of the whole lot, including on the excise. |
| Retailer margin | The smallest and most variable slice. Rent, wages, card fees and profit, set by local competition. |
The takeaway: tax and wholesale costs make up the bulk of every litre and you can't touch those. The retailer's margin is the only lever in your control, and it's exactly the part that swings most between suburbs.
So why does the same servo change price day to day?
Here's the part that confuses everyone. If the underlying cost of fuel only drifts gently, why does one station rocket up 25 cents overnight and then sag back down over the following weeks? The answer is that the day-to-day swing usually isn't a cost change at all, it's retailer behaviour.
In the bigger metro markets, retailers move in a deliberate pattern called the price cycle. Prices are hiked sharply on a chosen day (the "restore"), then drift slowly down as servos undercut each other for business, until someone hikes again and the cycle restarts. The cost of the fuel barely moved across that whole arc, the margin did. You can watch this play out on the live price-trend charts, and we break the timing down in our guides to the Queensland 42-day fuel cycle and the NSW fuel price cycle.
Once you understand the cycle is margin-driven, the strategy is obvious: buy near the bottom, never near the top. That's the core of our best time to buy fuel guide, and timing it right can save more per tank than the entire fuel excise costs you.
Why do prices differ between states?
The federal layers (excise and GST) are identical everywhere, so the differences between states come from the other links in the chain plus local market structure. The wholesale cost varies a little with freight and distance from the fuel terminals, which is part of why regional and remote prices run higher than the capitals.
The bigger factor is competition and regulation. Some markets run obvious price cycles; others barely cycle at all. Western Australia is the standout: its FuelWatch scheme forces stations to set a price by 2pm the day before and hold it for 24 hours, which produces a far more predictable, regulated pattern than the free-for-all in Brisbane or Sydney. So the same global benchmark and the same federal tax can land at very different board prices depending on where you fill up.
What this means for you at the bowser
You can't influence the Singapore benchmark, the exchange rate, the terminal gate price or the tax, and together those are the lion's share of what you pay. What you can control is the only flexible link in the chain: which retailer you buy from, and when. Those two choices, the right servo at the right point in the cycle, are where all the real savings live.
That's the whole reason Fuel Daddy exists. Rather than guessing, you can compare every station's live price across Queensland, New South Wales, Victoria and Western Australia, work out where the cycle is sitting, and fill up at the cheapest point. Pop your distance and tank size into the fuel cost calculators to see what the difference is worth over a year, then check the live map before your next fill.
The bottom line
An Australian fuel price is a stack: a US-dollar refined-fuel benchmark, converted to AUD, plus the terminal gate wholesale price, plus the retailer's margin, plus roughly 50c of fuel excise, plus 10% GST on the lot. The benchmark, the dollar and the tax are out of your hands. The retailer's margin, the bit that swings day to day with the price cycle, is the one part you can beat by comparing live and timing your fill. Do that consistently and you'll routinely pay well under the suburb average.
