Billions in taxpayer relief, record refinery margins – and not a cent coming back. I bet you feel good that 95 octane has sunk from somewhere north of $2.70 a litre to a still-eye-watering $2.40-ish at most servos. And I bet you’ve noticed that everyone in Canberra wants you to know they’ve come to your rescue.

The 32c story (and what’s missing)

The Prime Minister cut the fuel excise in half. The Treasurer signed it off. The premiers handed back their GST windfall. The ACCC is threatening servos about “false or misleading representations”. Bottom line: the combined relief is 32c a litre.

Yup, good news, but just don’t ask who’s actually paying.

Because while the taxpayer is giving us a 32c-a-litre break, somebody else is having the financial quarter of their commercial lives. And nobody has told you. Here are the numbers:

The refinery windfall

Ampol’s Lytton refinery in Brisbane reported its first quarter refining margin this week. The “refiner margin” is the super-­secret story here. It’s the difference between what the refiners pay for crude going in and what they collect for petrol, diesel and jet going out.

In the first quarter of last year the refining margin was $US6.07 a barrel. In the first quarter this year, with the Strait of Hormuz not in good shape and somewhere between a third and 40 per cent of Gulf refining capacity stuffed, it was $US25.45 a barrel.

That’s roughly 400 per cent higher than last year. So, at 159 litres to a barrel, $US25.45 a barrel is something like 25 Australian cents per litre of pure refining margin. Before crude. Before shipping. Before excise. Before GST. Before the servo’s cut.

Lytton processed 1434 million litres in the quarter. Viva Geelong is roughly the same size and will, when it reports, almost certainly tell a similar story. So, the two refineries that supply about 20 per cent of Australia’s on-ground fuel are earning hundreds of millions of dollars in extra refining margin a single quarter, off the back of the Trumpster’s battle for God in the Gulf.

The subsidy nobody noticed

That’s the windfall profits side. But, and you and I know that there must be a subsidy side.

On March 20 – three weeks into the war, with Singapore wholesale benchmarks at all-time highs – Energy Minister Chris Bowen announced the government would expand and extend the Fuel Security Services Payment, the scheme under which the commonwealth pays Ampol and Viva up to 1.8c a litre when their refining margins fall below a set floor.

The trigger has been more than doubled, from $7.30 to $15.90 a barrel. The scheme has been extended to 2030.

The minister’s published rationale was that “the design was flawed”; because the refiners had only managed to qualify for the payment twice since 2021. In other words, they’d been too profitable to claim it. So, the government has made it easier for them to claim it next time. On the same day, Lytton was earning its biggest margins in a decade.

A week later, Export Finance Australia signed deals to underwrite Ampol and Viva’s spot crude purchases. Translation: Australian taxpayers absorb the credit risk on cargoes that don’t pan out. Shareholders keep the upside if they do.

It is, when you stand back and look at it, a beautifully one-sided deal. Downside protected by the commonwealth. Sovereign credit underwriting on the inputs. And on the upside, when crisis margins are running at four times normal, no levy, no clawback, no contribution. Not a cent.

How the rest of the world handles it

Compare things in the Soap Dodger Kingdom, which since the Ukraine war in 2022 has run an Energy Profits Levy on oil and gas that now sits at 38 per cent on top of the existing tax rates, taking the headline rate to 78 per cent. The EU introduced a “solidarity contribution” and made a point of including refining in scope. Brussels worked out where the crisis money was going.

Canberra, faced with the largest disruption to global oil markets since the 1970s, has chosen to give more subsidies to the local refiners, underwrite their cargo risk, and ask the taxpayer to pick up the consumer relief tab.

The arithmetic isn’t subtle.

Three months of excise and GST relief at 32c a litre across roughly 50 billion litres of annual petrol and diesel consumption works out to about $4bn in forgone revenue.

The crisis margin increase at the two Australian refineries will run into hundreds of millions before the quarter is out.

The jet fuel nobody’s talking about

And that’s just petrol and diesel. The 32c package doesn’t touch jet fuel, which is the third stream coming out of every refinery and which has seen middle-distillate margins in Singa­pore reach all-time highs.

Australia uses about 10 billion litres of jet fuel a year. Every cent of refining margin on that stream goes straight to the refiner and straight onto airline cost bases – and from there onto your next ticket, your freight bill and the price of anything that gets flown anywhere. No taxpayer cushion. No political circuit-breaker. Just the quiet sound of margin moving up the chain.

The uncomfortable trade-off

Now, you can argue Ampol and Viva are critical infrastructure that need protecting. Fair enough. Australia’s fuel reserves are already thin, and losing the last two refineries would be a disaster. But “we need them” isn’t the same as “they should keep every cent of a war windfall while you and I subsidise the relief”.

Next time you fill up and someone tells you the government has come to the rescue, have a think about whose pocket the rescue actually came from. And whose pocket it ended up in.

Because in this market, the only thing moving faster than fuel prices is the margin.