Motorists should shop around to avoid being ripped off for petrol, the chairman of the consumer watchdog says.

With petrol soaring as high as $1.90 a litre at the weekend, Australian Competition and Consumer Commission chair Rod Sims said motorists were paying at least two cents a litre more than they should.

“In our view, margins are two to three cents a litre too high,” Mr Sims told Melbourne’s 3AW on Monday.

“That’s $400-$600 million – a lot of money for Australian motorists.”

Mr Sims said it wasn’t against the law for consumers to be overcharged for goods. But motorists could work out the best time to buy based on price fluctuations.

“When prices are at bottom of the cycle, you’re probably getting petrol below cost and when they’re at the top of the cycle you’re getting ripped off big time,” he said.

“It just fluctuates in a way that irritates the hell out of motorists, but it’s not against the law the way that’s happening.”

Treasurer Josh Frydenberg said the government would consider any suggestions from the ACCC to push down petrol prices after the cost of premium petrol hit $1.90 a litre in the past week.

“If they make any recommendations to government then, of course, we will favourably consider those,” he told the Nine Network.

“What we understand about our petrol market is that it is driven to some extent by what happens overseas, with the Australian dollar, but also with global oil prices.

“But if companies here are ripping off consumers, then we will take action.”

Mr Sims said consumers were bearing the brunt of three rip-offs.

The main issue was the overseas cost of crude oil, and the oil-producing nations that controlled the supply of fuel. The ACCC was powerless on such international factors, he said, and could do little about price-gouging.

The third issue is the complicated and confusing way fuel is taxed.

Mr Sims said 35 per cent of the cost of petrol is tax – including fuel excise of 41 cents, which is levied on top of the GST.

The excise is meant to pay for roads but Mr Sims said it was questionable whether the taxation level was appropriate.

“It’s there to fund the roads that governments build. But the link is so poor, you have no idea whether this level of taxation is the right one or not,” he said.

“If we could just try to get some better road-user charging, so motorists know as they pay money, it’s actually going to build roads and they’re not paying more than they should, that’d be a good step. That’s 85 per cent of it.”

-with AAP