\u201cIf you lower a price, you increase demand, you just do.\u201d<\/p>\n
Fuel, he explains, is currently a \u201csupply-constrained good\u201d.<\/p>\n
\u201cSo, we will use more fuel – more constrained fuel – because of a lower price,\u201d he says.<\/p>\n
![\"Scott](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/04\/7f1faa2024935af9f7bb328155b28183e2bd5802-16x9-x0y0w1280h720.jpg\")
Scott Phillips warns that the cut in the fuel excise will cause inflation Credit: AAP\/7NEWS<\/p>\n
The combined effect of federal and state government decisions to cut the tax on fuel will – at least in theory – bring down pump prices by 32 cents a litre.<\/p>\n
A well-known adviser with investment service, The Motley Fool, Phillips is wonderfully blunt in his assessments, including on Australia\u2019s fuel price cut in the middle of a global oil crisis.<\/p>\n
\u201cIt adds $2.5 billion to the deficit and to government debt. That\u2019s (got to be) be paid back at some point.\u201d<\/p>\n
Thirdly, inflation is going to be created \u2026 because of that.\u201d<\/p>\n<\/p>\n
\u201cHow? Because the government is adding $2.5 billion of stimulus.\u201d<\/p>\n
Of course, politicians are rarely economic purists. They wouldn\u2019t get elected if they were. The fuel excise cut was a political no brainer, even if it made little sense to an economist.<\/p>\n
But the war around Iran\u2019s has unleashed big economic forces and Phillips is again blunt as to where that is heading.<\/p>\n
\u201cWe cannot escape a recession globally or locally if this drags on for months,\u201d he said.<\/p>\n
\u201cIf we can\u2019t keep employment and spending at a business level on an even keel, we probably don\u2019t have a lot of safety nets to fall back on economically over the next six or 12 months.\u201d<\/p>\n
![\"Australia](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/04\/42164907058dd20647dd73b04019df53fdf92b64.jpg\")
Australia faces the prospect of sliding into a recession if the war in the Middle East lingers. Credit: AAP<\/p>\n
He says numbers on business confidence could act as a canary in the coal mine if the Australian economy is in trouble.<\/p>\n
\u201cThat is the one that I really do worry about. If that falls over, you end up with business closures, obviously; you end up with greater unemployment probably.\u201d<\/p>\n
Sounds pessimistic?<\/p>\n
Not according to Phillips.<\/p>\n
\u201cYou should absolutely be optimistic about the future of the world; humanity, progress, economics,\u201d he says.<\/p>\n
\u201cWe\u2019re improving the environment too slowly, but we\u2019re doing it. We\u2019re heading in the right direction. So I\u2019m absolutely totally optimistic.\u201d<\/p>\n
He\u2019s smiling, even though politics – no economics – won out on the price of petrol.<\/p>\n
You can catch more of The Issue on Listnr<\/a> or watch full episodes on our YouTube channel.<\/a><\/p>\n <\/p>\n Murder charge after young woman found unresponsive in home<\/p>\n 0 min read<\/p>\n