Petrol prices are rising again. It’s hard to miss the numbers when we see them signposted at every fuel stop along our commute. For many Australians, those rising prices have direct consequences. Cutting back on essentials, delaying bills, or stretching already tight household budgets.
In 2026, global fuel markets are being driven by instability and conflict. A war of choice in the Middle East is disrupting supply chains and spiking oil and gas prices. As everyday Australians, we feel those effects quickly at the bowser, in freight costs, and across the broader cost of living.
But while we’re paying more, big polluters are making record profits off of the back of global crises. Here’s how fossil fuel subsidies in Australia, crisis profits and low tax rates allow this to happen — and what we can do to change it.
Crisis creates profits for fossil fuel companies
Periods of global crisis create extraordinary profits for fossil fuel companies. You only need to look back a few years to see what we mean.
The last time this happened in 2022 (during the COVID-19 pandemic and the war in Ukraine), Oxfam analysis found that coal, oil and gas corporations made an additional $13.5 billion in windfall crisis profits. Fuel retailers also made around $1 billion in extra profits during the same period.
Windfall profits aren’t earned through improved productivity or innovation. They’re large, unexpected gains driven by external shocks and global turmoil. You can read more about how big corporations are Cashing in on Crisis.
The latest Oxfam research found six of the biggest fossil fuel companies — Chevron, Shell, BP, ConocoPhillips, Exxon and TotalEnergies — are projected to earn $4141 ($2967 USD) a second in profits in 2026.
As prices rise in 2026, history will repeat itself if households keep absorbing the cost while corporations capture the astonishing profits.
Fossil fuel companies aren’t paying their share
At the same time as profits increase, many fossil fuel companies are contributing far less in tax than expected.
A 2026 Oxfam report, Freeloaders, shows that despite reporting $436 billion in total income, fossil fuel companies paid only around $22.8 billion in corporate income tax, essentially paying 5 cents of tax for every dollar of income earned. That’s well below Australia’s standard corporate tax rate of 30%, set by the Australian Taxation Office.
Even more striking, one in three fossil fuel companies paid no corporate income tax at all in the most recent reporting year.
Companies and Industry groups often point to royalties as evidence of their contribution, but royalties are not taxes; they are a basic charge for the right to extract finite resources that belong to the public and are payable regardless of whether a company makes a profit.
In practice, these payments are very low or absent. Offshore gas projects in Commonwealth waters, for example, pay no royalties at all and many large projects have historically paid little or no Petroleum Resource Rent Tax (PRRT) due to accumulated credits.
Findings from the Australia Institute found that between 2020-2021 and 2023-2024, LNG exports worth $265 billion generated zero PRRT revenue and $10.4 billion in state royalties, effectively paying 4 cents on every dollar of revenue made.
This is a glaring structural imbalance between the scale of profits fossil fuel companies are making and how much they’re returning to the Australian public.
When companies pay less tax than expected, the Australian government has less money to spend. Governments still need to fund healthcare, infrastructure, education, disaster response and climate adaptation.
So, that cost is felt elsewhere, through reduced public services and higher taxes on workers.
Fossil fuel subsidies in Australia: public money used for private gain
While tax contributions remain low, public financial support for the industry remains high.
In Australia, fossil fuel subsidies are extensive and ongoing. Fossil fuel projects and programs are expected to receive around $72.7 billion in taxpayer-funded subsidies over the next four years.
In the 2025–2026 financial year alone, state and federal governments are projected to provide $16.3 billion in subsidies to fossil fuel producers and major users.
This includes more than $1 billion each year flowing to coal companies through the Fuel Tax Credit (a policy that effectively reduces fuel costs for large fossil fuel users). You can read the full report from the Australia Institute.
In simple terms, fossil fuel subsidies in Australia mean public money is supporting an industry that is already profiting exorbitantly (especially during crises). Taxpayers are helping to fund the same industry that is benefiting from higher prices at the pump.
Why do fossil fuel companies get subsidies?
There are long-standing policy reasons for these subsidies. They’re often justified as a way to:
- support economic activity
- maintain energy supply
- protect jobs
But over time, these settings have become embedded in the system, even as the context has changed. Today, the result is a set of policies where:
- profits can increase during crises
- tax contributions can remain low
- public subsidies continue to flow
These outcomes are the direct result of policy choices. And with the right momentum, policy choices can change.
The real cost: climate chaos, inequality and poverty
The impacts of our fossil fuel dependence extend beyond fuel prices and public funding. Burning coal, oil and gas is the primary driver of climate change.
Big coal, oil and gas corporations are responsible for three-quarters of Australia’s climate pollution. Yet they continue to receive billions in government subsidies, aren’t paying a fair share of tax and pay little towards climate disasters.
Worse still, the effects of climate change aren’t evenly distributed. Communities that have contributed the least to global emissions are often the most exposed to:
- extreme weather
- food insecurity
- displacement
- loss of livelihoods
You can learn more about how this works in Oxfam’s climate explainer: What is climate change?
This is why Oxfam focuses on the fossil fuel industry and making big polluters pay. Fossil fuel systems don’t just shape our energy markets. They create humanitarian crises and inequality. And crises and inequality, in turn, drives poverty.
The system isn’t working for everyday people
Put these pieces together, and a clear picture emerges. Petrol prices are rising, increasing pressure on households. Fossil fuel companies are generating windfall profits from global crises, but many are paying little (or no) corporate income tax or royalties for use of our resources. At the same time, billions of dollars in public subsidies continue to support the industry.
The system isn’t fair and it’s not working for everyday people. We have some hope, though, because this inequality can be changed.
What needs to change now
There are practical steps that can rebalance this system.
Oxfam is calling for:
- a 25% gas exports levy, so that companies profiting from use of Australia’s natural resources contribute fairly
- a climate pollution levy, to ensure polluting corporations pay for the damage linked to their emissions
- stronger taxation of corporate windfall profits in times of crisis
- an end to fossil fuel subsidies for the mining and freight industries that put public money into industries that are already highly profitable
Billions of dollars raised through these levies and saved by ending fossil fuel subsidies should be directed into a climate compensation fund for communities impacted by climate disasters, and into Australia's transition to renewable energy.
That fund is the centrepiece of what fairer policy could look like. It would direct funds to households facing rising energy bills, to communities recovering from floods and fires, to regions transitioning away from fossil fuel industries, and to Australia's international responsibilities to Pacific neighbours already living with the consequences of a climate crisis they didn't cause.
These are concrete policy tools that can reduce pressure on households, fund essential services and support meaningful climate action.
We can’t let this happen again
We’ve seen this pattern before: prices rise and profits surge, while everyday people are left to foot the bill. The system is working exactly as designed.
We can’t let it keep happening.
Change happens when enough people demand it. Together, we can challenge the system and you can be part of that change. Add your voice to help us make big polluters pay and make tax fair, or support our work directly by donating to Oxfam. (End of financial year can be an especially good time to donate.)
Systems rooted in justice and equality don’t happen by chance. Let’s come together in such numbers that we become impossible to ignore.
