With petrol prices looking to hit $1.50 a barrel, families like the Wheatley's are struggling to afford a holiday.
Petrol retailers have been warned against pumping up oil prices above $US100 a barrel as an excuse to profit from motorists.
Unleaded petrol prices jumped to just under $1.50 a litre in Sydney and Melbourne yesterday and will pass that threshold over coming weeks if the new oil price record is maintained.
"There is no doubt that world oil prices will have an impact on Australian petrol prices, but if there is anyone thinking of using the spike in the market to make extra profits, they will be dealt with," Assistant Treasurer Chris Bowen said.
The jump in petrol prices is a challenge both to the Rudd Government's commitment to stop price gouging in the petrol industry and to its economic strategy.
Treasurer Wayne Swan said yesterday that in addition to the burden on motorists, higher petrol prices could flow through to other prices.
"Higher world oil prices may well put upward pressure on production costs and the costs of other goods and services, meaning the already difficult inflation challenge we've inherited from the previous government could be exacerbated."
Economists expect the jump in petrol prices to flow rapidly through to inflation, forcing the Reserve Bank to raise rates further to slow the economy.
Opposition Leader Brendan Nelson said the Government had an obligation to explain the spike in petrol prices to voters.
"Kevin Rudd spent most of 2007 trying to convince Australians he had a silver bullet for petrol pricing," he said.
"Mr Rudd now needs to explain in 2008 why it is that petrol that was put into a service station on one day increases by 12c a litre overnight."
Motoring organisations said the jump in petrol prices on Wednesday night could not be justified.
"We've seen jumps of around 10c a litre, which is not warranted by this movement in world oil prices," NRMA president Alan Evans said.
Australian Competition and Consumer Commission chairman Graeme Samuel said the NRMA's assessment may be correct and that he was concerned some recent increases may be excessive.
"My warning to the oil companies and the petrol companies is to say to them, 'Do not use the $US100 headline oil price as an excuse for artificially inflating prices because now you are subject to formal price monitoring'.”
The Government gave the ACCC the power to monitor petrol prices shortly before Christmas after it had subpoenaed information from oil companies. It is also appointing a new commissioner to the ACCC to take charge of petrol pricing.
It may take until next month before the ACCC is ready to start collecting price information, but Mr Bowen said it had the power to investigate any unusual price movements going back to December when he issued the instruction.
Mr Samuel said the $US100 a barrel price was only about a 3 per cent increase and there was usually a lag of at least a week before higher oil prices were reflected at the bowser.
“Any attempt to connect the current price increases to the $US100 barrel price of crude oil is ingenuous,” he said.
Oil companies and retailers denied recent increases in petrol prices were the result of anything other than rises in costs.
A spokesman for Coles Express said fuel prices were largely determined by prices beyond the control of retailers, including the oil price, the exchange rate, refiners' margins and taxes. “Fuel retailing is very competitive and motorists are keenly aware of even the smallest price differential,” he said.
A spokesman for BP said the ACCC itself had found that their retail prices were based on international market movements: “We have been, and will continue to be, more than co-operative from the ACCC.”
What do you think about the artificially inflated petrol prices? Do you believe the ACCC are doing their job effectively?
