Drivers already face soaring prices at the bowser but there are fears they could spike more than 20 cents a litre as the cut concludes on Wednesday night.

The federal government says the hike shouldn’t happen straight away, with about 700 million litres of petrol having been purchased by retailers beforehand.

“We would look very firmly down on any petrol station that has supplies purchased under the previous arrangement that sees the need overnight to jack the price up 23 cents a litre,” Finance Minister Katy Gallagher said.

Jones warned companies against upping prices immediately, saying the consumer watchdog, the ACCC, would be closely monitoring the situation.

He said the government couldn’t continue to afford the tax cut as it balanced rising interest rates.

“We feel the pain, we know that it is going to hurt households, which is why we haven’t taken this decision lightly,” he told Sky News.

The NRMA’s Peter Khoury is urging oil companies to cut fuel prices, saying oil has plummeted below $US100 a barrel, almost on par with pre-pandemic pricing and wholesale prices have also dropped more than 50c per litre since June.

“Despite falling global prices and the full fuel excise tax not yet reinstated, prices in Sydney are approaching $2 per litre, meaning motorists are paying much more for fuel than they should be in the lead up to the October long weekend, he said on Wednesday.

“We need to see a correction immediately.”

The cut to the fuel excise was put in place by the former coalition government for six months to help Australians struggling with the cost of living and soaring prices at the bowser due to the war in Ukraine.

Labor said it would continue with the six-month time frame without extension due to pressures on the budget.

Treasurer Jim Chalmers said it would cost the government $6 billion a year to keep the excise cut.

The head of the Australasian Convenience and Petroleum Marketers Association said the situation had changed from when prices spiked after Russia invaded Ukraine.

“If ever there was a time where you’d be talking about reinstalling the excise, it’s probably about now,” Mark McKenzie told the ABC.

“Recessionary pressures are actually pushing the global price down.

“We’re likely to see prices after the excise on an average basis … lower than they were before the excise was cut in March.”