Why Is Diesel More Expensive Than Petrol In Australia?

Petrol has not seen the same supply and demand problems. Furthermore, because diesel is sold in smaller amounts at retail outlets than gasoline, the cost of selling each litre of diesel may be higher.

Is diesel more expensive in Australia than gasoline?

Buying a new car is a thrilling experience… but it can also be perplexing and even frightening at times. We look at the advantages and disadvantages of petrol versus diesel in the first in a new series on wise new car buying…

The rattle of diesel engines in suburban driveways grows louder every time gasoline prices surpass $1.50 per litre. With historically high gasoline prices, Europe has embraced the diesel-fueled passenger car for decades, but many Australians are skeptical.

Because diesel has a lesser volatility than gasoline, it need increased engine compression and specific heaters within the combustion chamber for cold starting. A diesel engine’s heat is sufficient to ignite measured injections of vaporized fuel once it is running.

Diesel engines in light vehicles are typically smaller than 3.0 litres and, as of 2011, are virtually routinely turbocharged to improve performance. Since 2006, the victors of every Le Mans 24 Hour endurance event have been diesel-powered, demonstrating the breakthroughs in diesel technology. Modern diesels emit substantially less carbon monoxide and are far more environmentally benign than older smoke belchers.

So, what should you think about before buying a diesel-powered ‘family’ vehicle?

Yes, in the long run. Diesel engines typically consume 30% less fuel than comparable gasoline engines. Their heavier structure and lower working speeds help them last longer, but they must be meticulously serviced with the proper lubricants and filter-change intervals. Despite the fact that diesel is more expensive than unleaded petrol in most Australian towns (and remote regions), it is often the same as or less expensive than the Premium Unleaded required by an increasing number of newer petrol engine designs.

In passenger-vehicle applications, the ‘rattle’ produced by large diesel engines has been virtually removed. They make more noise than a petrol engine when cold and near idling, but at suburban or highway speeds, with a few exceptions, the engine is nearly inaudible. Modern car-based diesels have been designed to emit the least amount of smoke and odour while also using maintenance-free filters to reduce soot emissions. Once the engine reaches working temperature, any smoke or odor should almost totally dissipate.


Not any longer, particularly in passenger vehicles. Europe has pioneered the creation of high-efficiency engines that provide significantly more low-speed torque and, when turbocharged, equivalent power output. A Jaguar XF twin-turbo diesel accelerates from 0 to 100 km/h in six seconds, and more mainstream vehicles such as the Volkswagen Golf and Hyundai i30 outperform petrol versions overall.

The diesel may cost 10-15% more than a comparably equipped petrol car as a new vehicle. However, in some circumstances, the premium is significantly lower. Despite popular opinion, diesel vehicles currently depreciate at a higher rate than petrol ones in Australia’s used car market. As the price of gasoline climbs, the scenario will likely shift in favor of the ‘oil-burner.’

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Why is diesel more expensive in Australia?

As a result of the region’s diesel supply not keeping up with demand, diesel prices have risen in the region, including in Australia.

Is it worthwhile to purchase a diesel vehicle in Australia?

Much of it, like with most things, boils down to your personal preferences, lifestyle, and, of course, budget but how do you decide?

Diesel has gotten a lot of bad press in the previous decade because of its negative environmental impact and potential health risks. Who can forget Volkswagen’s infamous “Dieselgate” incident from 2015?

Diesel vehicles certainly emit significantly greater amounts of toxic fumes that are damaging to our health, but these vehicles are improving, with new features that cut emissions. Despite the global backlash and health consequences, diesel vehicles accounted for one-third of all new vehicles sold in Australia in 2021.

As of January 2021, 26.4 percent of Australia’s 20.1 million registered cars were diesel cars, according to the Australian Bureau of Statistics. This compares to 20.9 percent in 2016. As a result, about one in every four Australian cars is powered by diesel.

There are also electric or hybrid automobiles available today, which are becoming more popular as greener and healthier alternatives.

Upfront cost and fuel efficiency

When it comes to choosing between a diesel and a gasoline-powered car, the initial expenditures as well as prospective fuel consumption and savings are important considerations. Fuel efficiency and environmental performance are also linked, so it’s worth considering while making your decision. On the Australian Government’s Green Vehicle Guide, you may look up a car’s fuel efficiency and emissions data.

For many people, the higher initial cost of a diesel vehicle is enough to dissuade them from any prospective benefits or long-term savings.

For example, if you were to buy a Hyundai Santa Fe Active with the 3.5-litre petrol engine at the time of writing, the estimated driveaway price would be $53,800. The driveaway price starts at $57,650 if you choose the 2.2-litre diesel engine. This equates to a $3,850 difference. Of course, prices vary by make and model, but to get a rough idea, expect to pay an extra $2,500 to $5,000 for a diesel vehicle.

Diesel cars are frequently the top-of-the-line variety across several model ranges, so if you want the premium variant, diesel may be your only option.

However, there are other ways to save money with diesel. When compared to petrol, diesel fuel can be compressed much more before it ignites, allowing diesel engines to run at much higher compression levels.

When the diesel/air mixture ignites, it expands across a larger area, allowing more energy to be collected.

As a result, diesels can achieve significantly higher fuel efficiency, typically in the region of 30 to 40%.

Diesel fuel prices fluctuate. Diesel has recently become more expensive than unleaded 91. However, in 2021, diesel was 4 cents cheaper than ULP on average.

However, improved fuel efficiency allows you to drive for longer periods of time on a single tank while making fewer trips to the gas station, perhaps saving you money in the long term.

Another issue to consider is that the price of diesel does not fluctuate as much as the price of gasoline in the Perth metropolitan region, which now follows a fortnightly fuel price cycle.

Scandal and emissions challenges

The Volkswagen controversy of 2015, often known as ‘Dieselgate’ or the ‘diesel dupe,’ shattered the reputation of diesel vehicles.

Initially, it was found that the automaker had put a device on around 500,000 of its diesel vehicles sold in the United States that only allowed those vehicles to use their full emissions control technology during exhaust emissions testing. In order to comply with car emissions laws, Volkswagen was able to cheat the emissions test and publish erroneous performance results. Volkswagen later agreed to the deceit after being pressured by the Environmental Protection Agency. As a result, the historic automaker’s reputation was severely damaged.

The emissions cheating software was eventually discovered to be installed in about 10.5 million Volkswagen vehicles sold globally.

Diesel was originally thought to be a more environmentally benign option, owing to its lower carbon dioxide (CO2) emissions. However, whereas CO2 emissions are more detrimental in petrol, the immediate damage to human health is larger in diesel.

Diesel’s hold on the European market has weakened significantly as the focus has shifted to its environmental footprint, health effects, and the increasing uptake of electric vehicles. The reduction in demand has been exacerbated by the announcement by several European cities, including Paris, Rome, and Oslo, that diesel vehicles will be banned by 2024.

Diesel vehicles emit a toxic cocktail of pollutants that are harmful to both human health and the environment. Diesel vehicles emit higher NOx (nitrogen oxides), particulate matter (PM10 and PM2.5) which can be taken directly into the bloodstream when inhaled , SOx (sulphur oxides), carbon monoxide, and polycyclic aromatic hydrocarbons, as well as a variety of other dangerous emissions. When inhaled, any of these can be harmful to our health, especially the respiratory system.

Older trucks, heavy machinery, and some older diesel vehicles are among the worst diesel exhaust emitters. Most diesel vehicles, on the other hand, are now equipped with diesel particulate filters (DPFs), which greatly limit the quantity of dangerous particulates that escape the exhaust pipe in the first place.

Keep in mind that these must be able to burn off the collected soot a process known as DPF regeneration on a regular basis. This usually necessitates driving the car long enough for the exhaust system to heat up enough to initiate the DPF regeneration process. The emissions produced by this process are far less dangerous than raw diesel exhaust. The particular DPF regeneration needs of the car you’re contemplating should be found in the owner’s manual.

There’s also AdBlue, a fluid used in some diesel engines to convert nitrogen and water vapour from exhaust gases.

Find out what has been installed to decrease hazardous emissions when looking at diesel vehicles.

Performance and comfort

You should expect higher torque to be available lower in the rpm range with diesel automobiles. That is why diesel is used in vehicles and machinery since it is better able to handle greater loads and survive longer distance travel. This feature of diesel engines can also help drivers who pull a caravan, boat, or other large trailer on a frequent basis, especially over long distances. When equivalent engine sizes are compared, petrol engines typically produce more peak power at higher revs but less torque. With the growing popularity of tiny, turbocharged petrol engines, the gap is closing.

The diesel is less smooth and produces more noise in terms of comfort, but it has the advantage of being more safer to handle than gasoline, which burns significantly more easily.


Diesel engines are generally more expensive to maintain. Diesel engines, among other things, require engine-specific filters, oils, and coolants to function properly.

That’s why ignoring your diesel’s service needs is a poor choice. If you’re buying used, make sure you check the vehicle’s full service history to verify if it’s been properly maintained.

Take the Mazda CX-8 Sport, which is available with a 2.5-liter gasoline or 2.2-liter diesel tank. The diesel variant will cost you an extra $145 in servicing over the course of five years, or an average of $29 per year more than the petrol version.

Is diesel superior to gasoline in Australia?

Diesel engines are more fuel efficient and release less CO2 than gasoline engines, making them better for the environment.

Diesel engines create far more torque (pulling power) than gasoline engines, making them suitable for towing or transporting big loads such as seven occupants on a regular basis.

You can get up to double the kilometres out of a tank with a diesel engine, which means fewer trips to the service station.

Diesel engines are more durable than gasoline engines because they must sustain higher compression ratios, resulting in longer engine life. Mercedes-Benz maintains the record for vehicle durability, with numerous vehicles exceeding 900,000 miles (1.45 million kilometers!) on their original engines. Diesels typically have higher resale values than their petrol counterparts due to their perceived “toughness.”

Diesel engines have fewer parts than gasoline ones. They don’t need to be tuned or have sparkplugs.

On the highway, diesels are wonderful since they have a lot of overtaking power and can often do so without changing gears.

What is the reason for the high cost of diesel fuel?

As demand recovers following the epidemic, diesel fuel is in short supply, but supply remains tight. Prices have risen to new highs, raising inflationary concerns throughout the economy. According to one researcher, the situation is most serious on the East Coast, where prices have grown “unhinged.”

What caused the price of diesel to skyrocket?

Given that both vehicle fuels are generated from crude oil, some may expect diesel and gasoline prices to be quite similar. However, a number of reasons, ranging from taxes to manufacturing costs, make diesel more expensive to purchase.

The cost gap is partly owing to the high federal and state taxes imposed on diesel, which are largely related to the carbon emissions created. Diesel now has a federal tax of 24.4 cents per gallon, compared to 18.4 cents for gasoline.

States levy a variety of taxes, with some charging as much as 74.1 cents per gallon of fuel.

It’s also worth remembering that diesel demand is frequently extremely different from gasoline demand, implying that they’re influenced by separate variables. Diesel is commonly utilized in manufacturing operations, machinery, generators, and huge delivery trucks. When a result, as the economy grows, so does the demand for fuel, and hence the price. These pressures do not apply to gasoline in the same way.

Why is there a shortage of diesel?

According to Peter Meyer of S&P Global Commodity Insights, “Diesel supply is short all across the world due to sanctions on Russian oil and substantially higher post-pandemic demand while supply restocking takes place.”

Is diesel less expensive to generate than gasoline?

It was previously denounced as a toxic scourge, blamed for billowing clouds of harmful particles into the atmosphere and into our lungs. Now it is hailed as the fuel of the future.

Cars powered by diesel have never been more popular. Only roughly one in every eight automobiles in the UK utilized diesel towards the end of the 1990s; this year, the proportion is expected to approach 50%. It is used in more than seven out of ten cars sold in France.

Modern diesel engines are generally dependable, release little CO2, and black smoke is almost non-existent.

With gasoline prices rising, it’s no surprise that drivers were ready to convert to diesel; who wouldn’t be if it meant a 20-30% reduction in miles per gallon?

But that may not be the case for much longer. Diesel may be environmentally friendly and becoming increasingly clean, but it is no longer inexpensive. Diesel recently overtook unleaded gasoline by a few cents per litre, but the gap is currently widening by up to 13 pence in some filling stations.

Will the owners of Britain’s projected 17 million diesel automobiles discover that they have a white elephant on their hands as the price approaches 6 per gallon?

The popularity of diesel has been on an incredible roller-coaster journey. Looking back, it’s evident that whether diesel or gasoline wins the automotive beauty contest has a lot to do with taxation policies and green fads, rather than science and engineering.

Diesel (named after German inventor Rudolf Diesel, who invented the first diesel-powered engine in 1892) and petrol are distillates made from crude oil.

Vegetable matter, such as leftover cooking oil, and a variety of ‘biodiesels’ generated from crops such as oilseed rape and palm oil, can also be used to power diesel engines. Diesel is heavier and ‘oilier’ than gasoline, with a significantly higher ‘energy density,’ or the amount of power released per unit of fuel consumed.

Diesel produces approximately 40 megajoules of energy per litre, compared to approximately 35 for gasoline. Diesel engines emit 10 to 20 percent less CO2 per mile than identical petrol engines. Diesel is also less prone to evaporation, making it cheaper to produce and store.

What is the source of Australia’s high petrol prices?

Fuel prices are divided into three categories: 50% is importation costs, 30%-40% is taxes (albeit at a lower rate for the next few months), and the rest is what shops have left to compete with.

Petrol v diesel

Petrol, often known as gasoline, is Australia’s most widely utilized fuel, accounting for 72 percent of all road vehicles. Diesel is the second most popular fuel, accounting for 26% of all vehicles on the road.

Most passenger vehicles, such as cars, motorcycles, and utes, operate on gasoline, but most large vehicles, including as buses, vans, and large commercial trucks, run on diesel. Diesel is also used by 85 percent of farming equipment.

The cost of taxes

The government receives a portion of what motorists spend at the pump in the form of two taxes: fuel excise and goods and services tax (GST).

Fuel excise is a one-time payment to the federal government. Normally, the pricing for gasoline and diesel is 44.2 cents per litre, but from March 30 to September 28, 2022, it will be 22.1 cents per litre, half the typical amount.

To provide temporary respite for motorists, Treasurer Josh Frydenberg announced these tax cuts as part of the 2022-23 budget.

Every day, Australia consumes roughly 1 million barrels of gasoline and diesel, or about 160 million litres.

These taxes, when added together, account for a part of the total fuel price. In general, the lower the percentage of the price of fuel that is taxed, the higher the price of fuel. A price of $1.40 per litre of gasoline or diesel would be subject to 24.9 percent tax, whereas a price of $2.10 would be subject to only 19.6 percent tax.

These rates should rebound to around 30-40% of overall pricing once the excise reduction expire in September. However, when fuel costs particularly for gasoline fluctuate, these percentages will certainly change.

The oil supply chain

Every day, Australia consumes roughly 1 million barrels of gasoline and diesel, or about 160 million litres. A sophisticated international supply system brings this fuel to Australian gas stations.

The international price, or the price at which Australian wholesalers buy petrol on the international market, accounts for 50% of what motorists pay at the pump.

The top petrol suppliers in Australia are Singapore, South Korea, Japan, and Malaysia. Singapore and South Korea supply the majority of our diesel. Singapore’s supply, on the other hand, has drastically decreased. In 2022, their diesel will arrive in California.

These countries buy crude oil, largely from the Middle East and Gulf countries, but also from the United States, Brazil, and sections of Africa, and refine it into fuels.

Certain fuel prices are used by oil market analysts as benchmarks for the going rate of such fuels on the international market. For fuel and diesel, Australia utilizes Singaporean benchmarks as a guide to the price at which our wholesalers acquire these items in bulk. Because international prices account for 50% of the retail cost of gasoline and diesel, a change in benchmark pricing is frequently seen at the pump.

Australian refineries

More over 80% of Australia’s gasoline and diesel is imported, with the remainder processed locally. Even Australian refining, however, is tightly linked to the global supply chain.

Over the last two decades, Australian refineries have struggled to compete with Asia-Pacific operations that are newer. These larger, more advanced refineries can generate petroleum at a lower cost than their Australian counterparts, whose numbers have progressively decreased.

This shift in production has had an impact on Australian crude oil: more than 214,000 barrels per day are exported to overseas refineries, out of a total of 280,000 barrels produced daily. Every day, we import roughly 360,000 people.

Only two refineries remain in operation in Australia: Viva Energy’s plant in Geelong and Ampol’s plant in Brisbane, both owned by Australians. Both of these plants are over 50 years old and rely on imports for the majority of their crude oil.

War! What is it good for? Oil prices

Due to Australia’s strong reliance on imported gasoline, it is extremely exposed to unpredictable worldwide fuel markets. The Russian invasion of Ukraine caused a spike in fuel costs in the first four months of 2022, demonstrating this.

Protesters in Germany set fire to themselves in protest of Russian military aggression in Ukraine… penalties against Russian oil have pushed up gas prices.

After the United States and Saudi Arabia, Russia produces 11% of the world’s oil, making it the third largest producer.

All Russian oil, coal, and gas have been sanctioned by the United States and Canada. However, some Russian diesel continues to pass into US ports. Because the global oil market is so intertwined, the supply shortage has pushed up crude oil prices all across the world, including in Asia Pacific. As a result, the price of gasoline and diesel has increased.

If the European Union imposed sanctions on Russian oil, things would get a lot worse, but don’t hold your breath. Europe imports more than half of Russia’s crude oil, yet this reliance implies that shutting off the flow would be disastrous for the EU.

While it is no longer feasible to build new refineries in Australia, there are other choices.

Refineries in Australia have also stated that they will no longer purchase Russian crude oil. However, this will have a minor impact on retail prices in the United States.

Traders frequently buy speculatively, i.e., betting on what oil prices will be in a few months.

They’ve been stockpiling crude oil and fuel at inflated prices in the hopes of selling at a profit in the coming months if the sanctions are extended. Others, on the other hand, are shorting oil or betting on its decline.

As a result, the international price of crude oil, gasoline, and diesel has risen, pushing up retail costs.