Subtitle:
The infrastructure funding model behind fuel… and why it no longer works
In the last article, we looked at biofuels and a simple question:
Why does Australia import so much fuel when we have the resources to produce it ourselves?
That was a supply question.
This one is different.
Because regardless of where fuel comes from, imported, biofuel, or electricity, the real system sits underneath it:
How we fund the infrastructure that keeps everything moving.
The System Most People Don’t See
Fuel prices are one of the most visible costs in the economy.
But what they represent is not.
Every litre sold does more than move a vehicle. It contributes to a funding model that has supported Australia’s road network for decades.
Not directly. Not transparently.
But effectively.
At a typical about $2.00 per litre:
About 51 - 52 cents is fuel excise (adjusted with inflation)
Around 20 cents is GST
The remainder covers global supply and delivery
That excise component is critical.
Because it scales.
The more fuel consumed, the more revenue generated.
And historically, that aligned with usage.
Why It Worked
The system was never designed as a precise model.
It was a proxy.
Drive more, consume more fuel, and contribute more tax.
That relationship held for decades.
It didn’t require tracking, monitoring, or behavioural change.
It just worked in the background.
And importantly: It funded infrastructure without being visible enough to resist.
Where It Starts to Break
That alignment no longer holds.
Electric vehicles remove the link between usage and contribution.
They don’t consume fuel.
Which means:
No fuel excise
No contribution to that model
But nothing else changes.
They still:
Use the same roads
Depend on the same infrastructure
Add to network demand
And in many cases, they carry more weight.
Not enough to matter individually.
Enough to matter at scale.
This Isn’t About Energy
This is where most discussions drift.
Fuel vs EV. Emissions. Technology.
That’s not the constraint.
The constraint is infrastructure.
Roads don’t care what powers the vehicle.
They still need:
Capital
Maintenance
Expansion
And that funding has been tied, imperfectly, but effectively, to fuel.
Remove the fuel.
You remove the mechanism.
Where Execution Breaks
Governments are now trying to run two systems at once.
Encourage transition:
EV adoption
Emissions reduction
While maintaining:
Infrastructure funding
Cost-of-living stability
Those objectives don’t align.
Tax EVs too early:
You slow adoption.
Don’t tax them:
You erode revenue.
Delay the decision:
The gap widens.
This is not a policy problem on paper.
It’s an execution problem at scale.
The Emerging Reality
The existing model is declining.
The replacement model is not yet accepted.
Infrastructure demand continues regardless.
That creates a structural gap.
Not theoretical.
Financial.
And infrastructure does not pause while models catch up.
What Replaces It
The direction is already clear.
Not immediately. Not cleanly.
But inevitably.
Fuel based taxation transitions to usage based charging.
Distance.
Potentially weight.
Potentially time or location.
On paper, it is more accurate.
In practice, it introduces something the current system avoids: Visibility.
Fuel tax is embedded.
Usage charging is explicit.
And that changes behaviour, and resistance.
Linking Back to Biofuels
Biofuels address a different part of the system.
They reduce reliance on imported supply.
They improve resilience.
They leverage existing infrastructure.
But they don’t solve this.
Because the issue is not what fuel we use.
It’s how the system behind it is funded.
Whether the litre is:
fossil fuel
ethanol
biodiesel
The structure remains the same.
And it is that structure that is now under pressure.
What This Means
We are moving into a period where:
Legacy systems continue to operate
New systems are introduced cautiously
Funding models are tested in parallel
It will not be a clean transition.
It will be staged.
And likely inconsistent before it stabilises.
Final Thought
Fuel prices were never just about fuel.
They were a mechanism.
A way to fund the physical backbone of the economy without drawing attention to it.
Electric vehicles didn’t just change what we drive.
They exposed that mechanism.
And more importantly:
They exposed that it doesn’t translate to what comes next.
References
Australian Competition and Consumer Commission (ACCC) – Fuel price monitoring
International Energy Agency (IEA) – Oil market analysis
Australian Treasury – Fuel excise revenue
Bureau of Infrastructure and Transport Research Economics (BITRE) – Infrastructure funding
AEMO – Energy transition insights
Footnote
This article is part of a series exploring the physical infrastructure behind the AI economy.
Disclaimer
The views expressed in this article are my own and are intended for general information and discussion purposes only. They do not represent the views of any employer, organisation, or client.