The Australian Fuel Crises

Just over two decades ago eight oil refineries in Australia produced up to 98% of our petroleum.

Today only two remain, one in Brisbane and one in Geelong.

The cull was due purely due to economics.

The infrastructure of the refineries was old. 

Much had been built in the 1940s and 1950s.

It became more cost affective to import refined fuel from the Asia Pacific region.

Now 80-90% comes primarily from Singapore, South Korea, Malaysia, Taiwan and India.

It made sense, given Australia’s high transport and labour costs not to mention stricter environmental laws, to import our fuel requirements from Asia’s large scale oil refineries.

Then in late February in retaliation to USA military strikes, Iran effectively blocked the Strait of Hormuz.

This cut off 20% of the world’s crude oil supply much of which goes to Asian refiners.

Australia held only 44 days of petrol, 33 days of diesel, and 30 days of jet fuel in reserves. 

This included both onshore storage tanks and fuel in transit via shipping and is one of the world’s smallest fuel reserves.

So there was an immediate concern we would have a fuel shortage.

Panic buying and substantial price increases followed.

Rationing raised its ugly head but never eventuated.

Diesel was of the greatest concern where farmers were harvesting their summer crops and preparing for winter sowing. Road transport and the mining industry were also affected.

There were instances of petrol stations running dry, particularly in rural areas.

Before the war I was paying $A1.70/litre for 91octane. It went up to $A2.65/litre.

The government stepped in and managed to secure promises of substantial uninterrupted supplies from our Asian neighbours.

Korea and Japan, as well as Singapore and Taiwan are all locking in crude oil from the Atlantic basin which comes from the USA, Canada and Latin America,

The government also reduced the fuel excise by 50%.

The situation calmed down.

I am back to paying an average of  $A1.70/litre although the fuel excise reduction will finish on 30th June with a resulting increase, probably to over $A2/litre.

Around 50-80 ships deliver around 3.5 billion litres of fuel every four weeks to Australia.

To secure the nation's energy sovereignty, the Australian Government is expanding critical reserves to 50 days by increasing mandatory stockholding obligations and creating a permanent, government owned one billion litre emergency stockpile.

There is no intention to look at new refinery construction.

In addition to onshore tanks, Australia maintains a separate national crude oil reserve housed in the United States (as part of a strategic buffer agreement) to hedge against extreme global shocks.

But this situation is not over and will not be until the USA/Iran conflict is settled.

And there is no end in sight for that.

For USA readers : One US gallon ≈ 3.8litres and $A1= $US0.70

For UK readers: $A1 = £0.75

For European readers: $A1 = €0.60