Article Summary: 

Fuel prices across Australia have surged in early 2026, placing pressure on small and medium-sized businesses — particularly in regional Queensland. For businesses relying on vehicles, freight, or machinery, rising fuel costs can quietly erode margins and disrupt cash flow. This article explains why fuel costs are increasing, how to track fuel expenses in Xero and MYOB, and what actions you should take now to manage the impact. We also cover fuel tax credits, pricing strategies, and common mistakes business owners make when tracking fuel costs.

Why Are Fuel Prices Rising in Australia in 2026?

Fuel prices have increased significantly in 2026 due to global supply disruptions and local cost pressures — and yes, Australian businesses are feeling it immediately.

According to global energy market updates, disruptions in key shipping routes like the Strait of Hormuz have tightened supply, pushing prices higher. At the same time, Australian distribution costs — particularly in regional areas — are amplifying those increases.

In practical terms:

  • Petrol prices have risen by ~50-100 cents per litre nationally
  • Regional Queensland is often 10–30 cents higher again
  • Diesel has peaked over $3 per litre in Queensland

For many businesses, fuel is no longer a minor expense — it’s embedded across:

  • Cost of goods sold
  • Delivery and logistics
  • Staff travel between job sites
  • Supplier pricing

The Australian Government has introduced temporary relief, including:

  • Fuel excise reduced to 26.3 cents per litre (April 2026, 3 months)
  • Heavy vehicle road user charge reduced to zero

However, as noted by Treasury announcements, these are short-term measures, meaning businesses still need a longer-term strategy.

How Do Rising Fuel Costs Impact Small Business Profitability?

Fuel costs directly reduce your margins — even if your revenue hasn’t changed.

If your pricing hasn’t adjusted in line with fuel increases, you’re effectively absorbing the cost. This is one of the most common issues we see with SMEs across Queensland.

Key impacts include:

  • Margin compression – higher operating costs without price increases
  • Cash flow pressure – more frequent and larger fuel expenses
  • Hidden cost increases – fuel embedded in supplier pricing
  • Reduced profitability per job or project

For example:
If fuel moves from 3% to 5% of total expenses, that’s a material shift — and often unnoticed without proper reporting.

How Can You Track Fuel Costs in Xero?

Yes — Xero makes it relatively simple to track fuel expenses, but only if your setup is correct.

1. Do You Have a Dedicated Fuel Account?

You should — otherwise your reporting won’t be accurate.

In Xero:

  • Go to Accounting > Chart of Accounts
  • Look for “Motor Vehicle — Fuel”
  • If missing, create a separate fuel expense account

This aligns with best practice for Australian SMEs and improves reporting accuracy.

2. How Do You Run a Fuel Cost Report in Xero?

Use your Profit and Loss report to track trends.

Steps:

  1. Go to Accounting > Reports > Profit and Loss
  2. Set date range (e.g. Jan–Mar 2026 vs 2025)
  3. Locate your fuel expense line
  4. Click the amount to drill into transactions

This gives you both high-level trends and detailed insights.

3. Can You Track Fuel by Job, Location or Vehicle?

Yes — using Tracking Categories.

This allows you to:

  • Compare fuel costs across locations
  • Identify high-cost vehicles
  • Analyse job profitability

How Can You Track Fuel Costs in MYOB?

Yes — MYOB offers similar functionality, though the setup differs slightly.

1. Is Your Fuel Account Set Up Correctly?

You need a dedicated expense account.

In MYOB:

  • Go to Accounts List
  • Locate or create “Motor Vehicle — Fuel”
2. How Do You Run Fuel Reports in MYOB?

Use the Profit and Loss report with comparisons enabled.

Steps:

  • Go to Reporting > Profit and Loss
  • Select date range
  • Enable year-on-year comparison

This shows both dollar and percentage changes.

3. Can You Drill Into Fuel Transactions?

Yes — and you should.

Click the fuel expense line to:

  • Identify spending patterns
  • Spot inefficiencies
  • Review individual transactions

MYOB’s job tracking also allows cost allocation by:

  • Vehicle
  • Project
  • Department

What Should Your Fuel Cost Data Tell You?

Your data should answer key business questions — not just sit in a report.

How much have fuel costs increased?

Compare year-on-year. A 20–30% increase is common in 2026.

What percentage of expenses is fuel?

If rising, your margins are tightening.

Are you recovering fuel costs in pricing?

If not, you’re absorbing the increase.

Which vehicles or jobs cost the most?

Look for inefficiencies or outliers.

Is fuel impacting your cash flow?

Fuel is a frequent expense — it can create timing gaps.

Should You Add a Fuel Surcharge or Adjust Pricing?

Yes — but it depends on your business model.

Common options include:

  • Fuel surcharge or levy (common in freight and trades)
  • Adjusted service pricing
  • Bundled pricing structures
  • Minimum job charges to cover travel

According to ACCC guidance, pricing should remain transparent and justifiable, especially when passing on cost increases.

The key is to be proactive — not reactive.

Can You Claim Fuel Tax Credits in Australia?

Yes — and many businesses miss this opportunity.

You may be eligible if you use fuel for:

  • Heavy vehicles
  • Machinery or equipment
  • Agriculture or primary production
  • Generators or off-road use

Fuel tax credits are claimed through your BAS.

According to the Australian Taxation Office (ATO), this can significantly reduce net fuel costs — particularly for regional and trade-based businesses.

This is one of the most overlooked ways to improve margins


What Are the Best Ways to Reduce Fuel Costs in Your Business?

There’s no single solution — but several practical strategies:

1. Review Pricing Regularly

Ensure fuel increases are reflected in your pricing.

2. Improve Job Scheduling

Reduce unnecessary travel and optimise routes.

3. Maintain Vehicles Properly

Poor maintenance increases fuel consumption.

4. Use Accounting Data More Effectively

Leverage Xero or MYOB tracking features.

5. Forecast Fuel Costs in Cash Flow

Don’t rely on outdated assumptions.

How Often Should You Review Fuel Costs?

Monthly — at a minimum.

In volatile markets like 2026:

  • Monthly review = ideal
  • Quarterly review = minimum

This allows you to adjust pricing and operations before margins are impacted.

FAQs

How do I track fuel expenses in Xero?

Create a dedicated fuel account, run a Profit and Loss report, and use tracking categories for deeper insights.

How do I track fuel costs in MYOB?

Use a separate fuel account, run Profit and Loss reports with comparisons, and drill into transactions for detail.

Can I claim fuel tax credits?

Yes — if eligible, through your BAS. This is common for trades, agriculture, and transport businesses.

Should I charge customers for fuel costs?

Yes, where appropriate. This can be done via pricing adjustments or a fuel surcharge depending on your industry.

Why are fuel prices so high in Australia in 2026?

Global supply disruptions and local distribution costs have driven significant increases, particularly in regional areas.

How do fuel costs affect cash flow?

Fuel is a frequent outgoing expense, which can create cash flow pressure if not forecast correctly.

Fuel Costs Don’t Have to Be a Blind Spot

Rising fuel prices are one of the easiest ways for margins to erode quietly — but also one of the easiest to measure with the right setup.

By understanding your fuel data in Xero or MYOB, you can:

  • Make informed pricing decisions
  • Improve operational efficiency
  • Protect your margins
  • Strengthen your cash flow

At Cosca, our Business Advisory and Strategic Accounting teams work with Australian businesses to turn numbers into actionable insights. Whether it’s setting up better reporting, reviewing your pricing strategy, or building a cash flow forecast that reflects today’s fuel environment — we help you stay ahead.

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