\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\tThe Middle East conflict has driven large increases in global energy
\n\t\t\t\t\t\t\t\t\tprices. This chapter sets out the channels through which increases
\n\t\t\t\t\t\t\t\tin energy prices can affect output and inflation, and provides some estimates of
\n\t\t\t\t\t\t\t\tthe size of these effects for Australia. The chapter focuses on higher energy
\n\t\t\t\t\t\t\t\tprices as this is likely to be the main channel by which the conflict will affect
\n\t\t\t\t\t\t\t\tthe Australian economy. But there are also likely to be important spillovers via
\n\t\t\t\t\t\t\t\tthe prices of other commodities, including fertiliser, rural commodities and
\n\t\t\t\t\t\t\t\taluminium, as well as an increase in global uncertainty.
\n\t\t\t\t\t\t\tIn general, energy price increases add to inflation for a period, but
\n\t\t\t\t\t\t\t\t\ttheir effect on output in Australia is less certain. Higher energy
\n\t\t\t\t\t\t\t\tprices can reduce demand through some channels and boost demand through others.
\n\t\t\t\t\t\t\t\tFor example, energy price increases reduce aggregate household real incomes,
\n\t\t\t\t\t\t\t\tweighing on spending (though the strong financial position of Australian
\n\t\t\t\t\t\t\t\thouseholds in aggregate could act as a buffer). On the other hand, Australia is a
\n\t\t\t\t\t\t\t\tnet energy exporter, so higher energy prices may raise national income; and
\n\t\t\t\t\t\t\t\tenergy price increases tend to raise the price of imports relative to domestic
\n\t\t\t\t\t\t\t\tproduction, which could weigh on imports and support GDP growth.
\n\t\t\t\t\t\t\tIn practice, the extent to which the conflict affects the Australian
\n\t\t\t\t\t\t\t\t\teconomy will depend on its duration and intensity, its effect on global
\n\t\t\t\t\t\t\t\t\tenergy supply, relative price movements of the energy commodities Australia
\n\t\t\t\t\t\t\t\t\texports and imports, and domestic supply and demand conditions. The
\n\t\t\t\t\t\t\t\tpass-through of higher energy prices to inflation may be larger and occur more
\n\t\t\t\t\t\t\t\tquickly when inflation and short-term inflation expectations are elevated and the
\n\t\t\t\t\t\t\t\teconomy is operating with capacity pressures, as is currently the case.
\n\t\t\t\t\t\t\t\tChapter\u00a03: Outlook<\/a> presents scenarios that illustrate how the economy might
\n\t\t\t\t\t\t\t\tevolve under some specific alternative assumptions about energy and commodity
\n\t\t\t\t\t\t\t\tprices; in the baseline forecast energy price increases are expected to boost
\n\t\t\t\t\t\t\t\tinflation in the near term but have only a modest negative effect on GDP growth.
\n\t\t\t\t\t\t\t <\/p>\n
\t\t\t\t\t4.1 Energy commodities play an important role in the Australian economy
\n\t\t\t\t\tAustralia imports oil and refined products but is a net exporter of energy overall.<\/p>\n
Australia is a substantial net exporter of energy, in particular of thermal coal and liquefied natural gas
Australia has stocks of around 30\u00a0days of diesel and jet fuel, and around 45\u00a0days of petrol.
\t\t\t\t\t\t
Graph 4.1<\/p>\n
\t\t\t\t\tOil products are important inputs to production, but GDP is less oil-intensive than in the past.<\/p>\n Almost all industries use fuel, notably diesel, as an input to production, with the transport, mining and
That said, as in other advanced economies, the amount of oil needed to produce a unit of output (the
\t\t\t\t\t\t\t
Graph 4.2<\/p>\n
\t\t\t\t\tIn addition to oil products, gas is an important energy source for the Australian economy.<\/p>\n Gas is used both directly by households and businesses, and as an input to electricity production. Gas
\t\t\t\t\t4.2 Higher energy prices will have direct and indirect effects on inflation<\/p>\n Higher fuel prices will push up consumer price inflation through several channels. The higher cost of
The speed with which the indirect effects of higher fuel prices flow through to consumer prices is
\t\t\t\t\tThe price of fuel used by households directly affects CPI inflation.<\/p>\n The large recent increase in energy prices is already adding directly to headline inflation through higher
\t\t\t\t\tFuel price increases also affect inflation indirectly over time via higher input costs.<\/p>\n Higher fuel and other oil-sensitive prices also influence inflation indirectly and over a longer period
\t\t\t\t\t\t
Graph 4.3<\/p>\n
Overall, we estimate that the indirect domestic cost effects of a 10\u00a0per\u00a0cent
If fuel price increases were only temporary, or expected to be temporary, the indirect cost
An increase in fuel costs will affect specific consumer prices differently, reflecting \u2013 among other
\t\t\t\t\t\t
Graph 4.4<\/p>\n
\t\t\t\t\tFuel price increases may also have \u0091second round\u0092 effects via higher inflation expectations and
Higher fuel prices, along with the resulting increase in inflation, can influence short-term inflation
An increase in inflation expectations can flow through to higher inflation now and in the future. If firms
An increase in inflation, and inflation expectations, may also be expected to contribute to higher wages
While wages growth may pick up in response to higher inflation, we would generally still expect real wages
\t\t\t\t\t4.3 Recent energy price increases are likely to weigh on output growth<\/p>\n Increases in energy prices can affect economic activity through several channels, some of which tend to
\t\t\t\t\tWhile higher energy prices are likely to weigh on households\u0092 and firms\u0092 spending, the adverse
Energy price increases can affect economic activity \u2013 and hence aggregate labour demand and
\t\t\t\t\t
The extent to which changes in energy prices affect output growth overall will depend on the relative
Increases in energy price are likely to affect households unevenly. For example, cost pressures from
\t\t\t\t\tA prolonged increase in energy prices may reduce the economy\u0092s medium-term potential supply
\n\t\t\t\t\t\t(LNG), but a net importer of oil, especially refined products like diesel, petrol and jet fuel
\n\t\t\t\t\t\t(Graph\u00a04.1). Almost 80\u00a0per\u00a0cent of Australia\u0092s total demand for these refined
\n\t\t\t\t\t\tproducts (on an energy-equivalent basis) is met via imports, with the bulk of these imports coming from
\n\t\t\t\t\t\tAsian countries such as Singapore, South Korea and Malaysia. Most Asian refiners, in turn, typically
\n\t\t\t\t\t\tsource crude oil from the Middle East, and face technical constraints to using alternative sources in the
\n\t\t\t\t\t\tshort run as their refineries are optimised for specific types of crude oil. This has led to lower fuel
\n\t\t\t\t\t\tproduction across Asia recently \u2013 as refiners adjust to these constraints and conserve limited
\n\t\t\t\t\t\tcrude oil inventories \u2013 and higher fuel prices (see Chapter\u00a02: Economic
\n\t\t\t\t\t\t\tConditions<\/a>).
\n\t\t\t\t\t\tAustralian importers have been able to source refined products from alternative sources on global markets
\n\t\t\t\t\t\twhen necessary, though these have come at substantially higher cost.<\/p>\n
\n\t\t\t\t\t\tWhile these stock levels are lower than some other countries, the risk of shortages affecting Australia
\n\t\t\t\t\t\t(and other higher income economies) may be mitigated if they are willing to pay higher prices than lower
\n\t\t\t\t\t\tincome countries to secure supplies in global markets.<\/p>\n
\n\t\t\t\t\t\t\t
<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/smp\/2026\/may\/images\/graph-4.01.svg\")
<\/p>\n
\n\t\t\t\t\t\tagriculture sectors in particular accounting for a large share of fuel use by Australian businesses.
\n\t\t\t\t\t\tAround 90\u00a0per\u00a0cent of Australia\u0092s diesel consumption is by businesses. By contrast, most
\n\t\t\t\t\t\tpetrol consumption in Australia is directly by households.<\/p>\n
\n\t\t\t\t\t\t\t\u0091oil intensity\u0092 of GDP) in Australia has declined over time, alongside declining energy
\n\t\t\t\t\t\t\tintensity of the economy more broadly (Graph\u00a04.2). The declining oil intensity of GDP has reflected
\n\t\t\t\t\t\t\ta structural shift in the composition of domestic output away from oil-intensive sectors towards services
\n\t\t\t\t\t\t\tindustries, improved energy and fuel efficiency, and a decline in the use of oil for electricity
\n\t\t\t\t\t\t\tgeneration. An important exception to this trend has been diesel. Australia\u0092s use of diesel per unit
\n\t\t\t\t\t\t\tof GDP has increased since the 2000s (though not by so much as to offset the decline in the use of crude
\n\t\t\t\t\t\t\toil and other refined fuels). This has reflected strong demand from diesel-intensive sectors such as
\n\t\t\t\t\t\t\tmining and agriculture, greater reliance on diesel-powered road freight \u2013 where substitution
\n\t\t\t\t\t\t\toptions are limited in the short run \u2013 and the increased popularity of diesel passenger vehicles.
\n\t\t\t\t\t\t\tConsistent with this, Australia\u0092s per capita diesel consumption is among the highest globally.<\/p>\n
\n\t\t\t\t\t\t\t\t
<\/p>\n
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/smp\/2026\/may\/images\/graph-4.02.svg\")
<\/p>\n
\n\t\t\t\t\t\taccounted for 5\u00a0per\u00a0cent of electricity generation over the past year. While gas-fired
\n\t\t\t\t\t\tgenerators are not the dominant source of electricity in Australia, they are sometimes used as a source
\n\t\t\t\t\t\tof \u0091marginal supply\u0092 and, under marginal cost pricing, gas-fired generators sometimes set
\n\t\t\t\t\t\twholesale prices. However, domestic wholesale and retail gas prices have recently tended to be quite
\n\t\t\t\t\t\tinsulated from the global gas market, partly due to regulation. They have not responded to recent
\n\t\t\t\t\t\tinternational gas price increases so far, and energy market contacts do not currently expect them to,
\n\t\t\t\t\t\tabsent an increase in domestic demand for gas (for example, in response to disruptions in the
\n\t\t\t\t\t\tavailability of other energy sources).<\/p>\n
\n\t\t\t\t\t\tretail fuel in the CPI will have a direct effect on consumer prices. Over time, higher fuel prices will
\n\t\t\t\t\t\ttend to cause other consumer prices to rise as higher input costs are passed through. An increase in
\n\t\t\t\t\t\tgeneral price inflation could also potentially increase inflation expectations, which could further flow
\n\t\t\t\t\t\tback into price and wage setting behaviour.<\/p>\n
\n\t\t\t\t\t\tuncertain. Empirical exercises suggest that full pass-through typically takes around one to two years,
\n\t\t\t\t\t\tthough the speed and extent of pass-through are likely to depend on the economic backdrop. In circumstances
\n\t\t\t\t\t\t\u2013 such as currently \u2013 in which the increase is large, inflation and short-run inflation
\n\t\t\t\t\t\texpectations are high, and the economy is operating with capacity pressures, firms may respond more
\n\t\t\t\t\t\tquickly than otherwise, and second-round effects via inflation expectations may be larger (see
\n\t\t\t\t\t\tChapter\u00a03: Outlook<\/a>). For example, firms are likely to be reviewing and changing prices more
\n\t\t\t\t\t\tfrequently when inflation is high, and consumers may be less sensitive to price changes when economic
\n\t\t\t\t\t\tconditions are strong.<\/p>\n
\n\t\t\t\t\t\tprices for retail fuel (see Chapter\u00a02: Economic Conditions<\/a>). A rule of thumb is that the
\n\t\t\t\t\t\tdirect effect of a 10\u00a0per\u00a0cent increase in domestic fuel prices will lead to an
\n\t\t\t\t\t\tincrease in headline inflation (via higher retail fuel prices) of a bit over 0.3\u00a0percentage points
\n\t\t\t\t\t\tover one to two quarters. This reflects the fact that fuel directly makes up 3.3\u00a0per\u00a0cent of
\n\t\t\t\t\t\tthe CPI basket. For households, petrol makes up around 90\u00a0per\u00a0cent of fuel consumption, while
\n\t\t\t\t\t\tdiesel is much less important. In Australia, global crude oil prices account for around
\n\t\t\t\t\t\t40\u00a0per\u00a0cent of the final price of retail fuel, and oil price changes tend to flow through
\n\t\t\t\t\t\tquickly to fuel with a lag of up to one to two weeks. However, the change in the local price of retail
\n\t\t\t\t\t\tfuel is not always consistent with the change in crude oil prices (adjusted for the 40\u00a0per\u00a0cent
\n\t\t\t\t\t\tshare of oil in fuel), particularly during periods of disruption to refining or shipping capacity. As
\n\t\t\t\t\t\tsuch, the effect of changes in global oil prices on Australian inflation can differ over time.<\/p>\n
\n\t\t\t\t\t\tthrough higher input costs, which in turn may be passed on to consumers. These costs can be related to
\n\t\t\t\t\t\tthe cost of imports (including oil-derived products such as fertiliser and plastics), domestic production
\n\t\t\t\t\t\tcosts and transportation costs. For domestic production and transport, diesel is the most important type
\n\t\t\t\t\t\tof fuel, accounting for three-quarters of usage in production (excluding the travel industry, which uses
\n\t\t\t\t\t\tjet fuel). Indirectly, fuel accounts for around 2\u00a0to 2\u00bd\u00a0per\u00a0cent of the domestic costs of
\n\t\t\t\t\t\tproducing and distributing other goods and services in the CPI (Graph\u00a04.3). The contribution of oil
\n\t\t\t\t\t\twithin global supply chains to import prices is more difficult to quantify.<\/p>\n
\n\t\t\t\t\t\t\t
<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/smp\/2026\/may\/images\/graph-4.03.svg\")
<\/p>\n
\n\t\t\t\t\t\tdomestic fuel price increase, via higher input costs, would cause the price level to be around 0.2\u20130.25 per cent higher over one to two years, other things equal. This
\n\t\t\t\t\t\tassumes the increase in domestic fuel prices is expected to persist long enough that all costs are
\n\t\t\t\t\t\teventually fully passed through to prices, and excludes the effect of any changes in non-fuel import
\n\t\t\t\t\t\tcosts. This indirect cost channel would generally be expected to have equal-sized effects on headline and
\n\t\t\t\t\t\tunderlying inflation. The speed of pass-through to prices would vary across different products, depending
\n\t\t\t\t\t\ton where costs are incurred in the supply chain. An empirical exercise suggests the pass-through to
\n\t\t\t\t\t\tprices is faster for goods than it is for market services, for example.<\/p>\n
\n\t\t\t\t\t\teffects on consumer prices are less clear. On the one hand, some firms \u2013 for example, in sectors
\n\t\t\t\t\t\twhere consumer demand is more sensitive to price changes \u2013 may look through an increase in fuel
\n\t\t\t\t\t\tprices that is widely expected to be temporary, absorbing the higher costs in their margins for a time.
\n\t\t\t\t\t\tOn the other hand, in the event of a large but temporary shock, firms may raise prices initially and then
\n\t\t\t\t\t\treduce them. This may be more likely to occur when the economy is operating with limited spare capacity.
\n\t\t\t\t\t<\/p>\n
\n\t\t\t\t\t\tfactors \u2013 the share of fuel-related costs in total costs of production and distribution. Higher
\n\t\t\t\t\t\tfuel costs will tend to push up the cost of most goods via higher transportation costs, such as road
\n\t\t\t\t\t\tfreight costs (Graph\u00a04.4). Food and dwelling construction are more reliant than most items on fuel
\n\t\t\t\t\t\tand fuel-related costs (for example, domestically produced materials) (Graph\u00a04.3). Unsurprisingly,
\n\t\t\t\t\t\tholiday travel is heavily reliant on jet fuel, and so travel prices may be most sensitive to higher fuel
\n\t\t\t\t\t\tcosts.<\/p>\n
\n\t\t\t\t\t\t\t
<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/smp\/2026\/may\/images\/graph-4.04.svg\")
<\/p>\n
\n\t\t\t\t\t\twages growth, particularly when the increase in fuel prices is large and\/or sustained.<\/p>\n
\n\t\t\t\t\t\texpectations. Research in Australia and elsewhere finds that changes in fuel prices can affect
\n\t\t\t\t\t\thouseholds\u0092 inflation expectations by more than might be expected given its share in overall
\n\t\t\t\t\t\tconsumption.
\n\t\t\t\t\t\tThis is likely to be because fuel is frequently purchased, and its price is highly visible and widely
\n\t\t\t\t\t\tcovered in the press.<\/p>\n
\n\t\t\t\t\t\texpect costs and their competitors\u0092 prices to increase, they could be more likely to increase their
\n\t\t\t\t\t\town prices by more than otherwise.<\/p>\n
\n\t\t\t\t\t\tgrowth. Workers who expect higher inflation may build this into their bargaining for wages, and an
\n\t\t\t\t\t\tunexpected pick-up in inflation could influence subsequent negotiations as workers seek to catch up with
\n\t\t\t\t\t\tthe higher level of prices. Since enterprise bargaining agreements are re-set every three years, on
\n\t\t\t\t\t\taverage, some of the effect of higher inflation would flow through to wages growth with a lag.<\/p>\n
\n\t\t\t\t\t\tto decline. Indeed, empirical evidence suggests oil supply shocks have tended to push up nominal wages
\n\t\t\t\t\t\tgrowth in Australia, but by less than the increase in inflation. Nonetheless, the extent of this decline
\n\t\t\t\t\t\tin real wages would be likely to depend on the extent of tightness or otherwise in the labour market at
\n\t\t\t\t\t\tthe time.<\/p>\n
\n\t\t\t\t\t\tboost aggregate demand and some of which tend to reduce aggregate demand. Overall, the net effect of
\n\t\t\t\t\t\thigher energy prices on Australian GDP is uncertain but, if a range of energy commodity prices increase
\n\t\t\t\t\t\tat the same time, is likely to be only modestly adverse (though the scale of the effect on
\n\t\t\t\t\t\teconomic activity will depend on the size and duration of the price increases, and how the
\n\t\t\t\t\t\trelative prices of key energy commodities change). That
\n\t\t\t\t\t\treflects the buffers available to many households to smooth their consumption, Australia\u0092s position as a
\n\t\t\t\t\t\tnet energy exporter, and the potential for substitution towards domestically produced goods and services.<\/p>\n
\n\t\t\t\t\t\teffect on output may be mitigated by the relatively strong financial position of the Australian household
\n\t\t\t\t\t\tsector and other channels that could provide an offsetting boost to growth.<\/p>\n
\n\t\t\t\t\t\temployment \u2013 through a number of channels:<\/p>\n
\n\t\t\t\t\t\tHigher energy prices will (all else equal) tend to reduce total real household
\n\t\t\t\t\t\t\t\tincome. That will tend to reduce aggregate household spending in real terms, as demand
\n\t\t\t\t\t\t\tfor energy products is relatively insensitive to price changes in the short run and many households
\n\t\t\t\t\t\t\twill need to allocate a larger share of their budgets to energy. The size of the spending impact will
\n\t\t\t\t\t\t\tdepend in part on the degree to which households are willing and able to reduce saving to maintain
\n\t\t\t\t\t\t\ttheir consumption of non-fuel goods and services and housing investment; the strong financial
\n\t\t\t\t\t\t\tposition of most Australian households should enable them to smooth their spending if
\n\t\t\t\t\t\t\tdesired. Households with minimal savings buffers and those who need to spend a relatively
\n\t\t\t\t\t\t\thigh share of their income on fuel will, however, be more likely to need to reduce their
\n\t\t\t\t\t\t\tconsumption of other goods and services.
\n\t\t\t\t\t\t
\n\t\t\t\t\t\tA deterioration in sentiment or heightened uncertainty about future economic prospects could
\n\t\t\t\t\t\t\t\treduce asset prices, household spending and business investment. Alongside the effect of
\n\t\t\t\t\t\t\thigher energy prices on real incomes, the impact on household spending will depend on factors such
\n\t\t\t\t\t\t\tas: whether fuel prices are expected to stay high; the extent of households\u0092 uncertainty about
\n\t\t\t\t\t\t\ttheir future economic position; and the effect of changes in sentiment on equity and housing prices,
\n\t\t\t\t\t\t\twhich affect household wealth. Business investment could also be lower, for example if higher energy
\n\t\t\t\t\t\t\tinput costs compress firms\u0092 expected margins, or lead to heightened uncertainty around future
\n\t\t\t\t\t\t\tdemand or input availability. Lower overall household and business spending in the economy would also
\n\t\t\t\t\t\t\tbe expected to weigh on investment.
\n\t\t\t\t\t\tHigher prices for oil- and fuel-intensive imports could encourage households and firms to
\n\t\t\t\t\t\t\t\tsubstitute towards different goods and services that are produced domestically.
\n\t\t\t\t\t\t\tAustralia\u0092s domestic production is generally less oil-intensive than our imports, so higher oil
\n\t\t\t\t\t\t\tprices may raise the cost of imports relative to goods and services produced in Australia (depending
\n\t\t\t\t\t\t\ton the exchange rate). To the extent households and businesses substitute towards domestically
\n\t\t\t\t\t\t\tproduced items, that would boost GDP growth in Australia (all else equal) by reducing imports. For
\n\t\t\t\t\t\t\texample, consumers could substitute some of their spending away from imports such as international
\n\t\t\t\t\t\t\ttravel. On the other hand, demand for Australia\u0092s non-energy exports may be somewhat lower if
\n\t\t\t\t\t\t\tenergy price increases reduce economic growth in our trading partners.
\n\t\t\t\t\t\tEnergy price increases boost earnings from Australian energy exports such as LNG and thermal
\n\t\t\t\t\t\t\t\tcoal (which is a partial substitute for oil and gas). While Australian production and
\n\t\t\t\t\t\t\texport volumes are unlikely to respond materially to these price movements in the near term, this
\n\t\t\t\t\t\t\twill nevertheless raise Australian exporters\u0092 revenues (provided movements in the Australian
\n\t\t\t\t\t\t\tdollar exchange rate do not fully offset this). If prices were persistently high, exporting firms,
\n\t\t\t\t\t\t\tfor example in the LNG sector, would have a greater incentive to invest to increase production
\n\t\t\t\t\t\t\t(though this is unlikely to happen in the near term, given the very long lead times for such
\n\t\t\t\t\t\t\tinvestment).
\n\t\t\t\t\t\tHigher export prices and profits in energy-producing sectors raise government tax revenues
\n\t\t\t\t\t\t\t\tand household incomes. Higher dividends would boost households\u0092 non-labour income
\n\t\t\t\t\t\t\t(though a large share of dividends accrues to foreign investors), and wages in energy-producing
\n\t\t\t\t\t\t\tsectors could increase. If export prices were to rise by more than import prices \u2013 which is a
\n\t\t\t\t\t\t\tfavourable shift in the terms of trade \u2013 that would increase national income and purchasing
\n\t\t\t\t\t\t\tpower overall, though the size and persistence of the effect would depend on relative commodity price
\n\t\t\t\t\t\t\tmovements as well as the exchange rate. Following the Russian invasion of Ukraine in 2022,
\n\t\t\t\t\t\t\tAustralia\u0092s terms of trade increased sharply, as the effects on thermal coal and LNG export
\n\t\t\t\t\t\t\tprices outweighed higher crude oil and imported fuel prices.
<\/p>\n
\n\t\t\t\t\t\tstrength of these different channels. Estimates of the impact of energy price changes on GDP tend in
\n\t\t\t\t\t\tpractice to be relatively small. For example, a modelling exercise suggests that a 10\u00a0per\u00a0cent
\n\t\t\t\t\t\tincrease in oil and LNG prices, even if it persisted for two years, would reduce the level of Australian
\n\t\t\t\t\t\tGDP by less than 0.1\u00a0percentage point. However, such estimates are uncertain and the impact of higher energy prices in any given
\n\t\t\t\t\t\tepisode will depend on the specific nature of the shock and prevailing economic conditions; in the
\n\t\t\t\t\t\tcurrent episode, we expect higher energy prices to weigh modestly on GDP growth (see Chapter\u00a03:
\n\t\t\t\t\t\t\tOutlook<\/a>), though uncertainty and confidence effects could increase the size of the adverse impact on GDP.
\n\t\t\t\t\t<\/p>\n
\n\t\t\t\t\t\thigher fuel prices would likely fall disproportionately on lower income households, which tend to spend a
\n\t\t\t\t\t\tlarger share of their income on petrol, and on those based in rural or regional areas needing to drive
\n\t\t\t\t\t\tlonger distances and with limited public transport options, while the benefits of higher export incomes
\n\t\t\t\t\t\taccrue elsewhere. That said, Australia\u0092s domestic gas production helps to reduce the extent to which
\n\t\t\t\t\t\tglobal energy price increases would otherwise impact real household incomes.<\/p>\n
\n\t\t\t\t\t\tcapacity, though this effect is likely to be small.<\/p>\n