The Federal Government has announced two more initiatives to help free up domestic fuel supplies. Photo: Michelle Kroll.
Australia will reduce minimum stock obligations for both diesel and petrol to give fuel companies greater flexibility to manage their supply chains.
Obligations for diesel will be reduced from 2.7 billion litres to 2.2 billion litres, and for petrol from 1 billion litres to 700 million litres.
Energy Minister Chris Bowen said the fuel will be directed primarily to regional areas.
The move will release up to 20 per cent of the baseline minimum stockholding obligation, but it won’t flow to consumers immediately.
“It’s not like they can just press a button and get fuel out the door,” Mr Bowen said.
“But it will make a difference going forward and help them help regional communities, in particular.
“The government will allow fuel companies to hold less in storage and get more into pumps in our regional areas struggling with fuel shortages.
“These are the stocks of fuel held in Australia, which must be maintained each week by bulk importers and refineries.”
It comes as Australia’s fuel quality standards are being eased for 60 days to allow higher sulphur levels in the mix and free up an extra 100 million litres of petrol a month for domestic supply.
It will provide just over two more days of petrol across the Australian market.
The Opposition raised concerns that the initiative did not include diesel.
Sulphur levels have been restricted in Australian fuel for some years now, but the current war in the Middle East is having an impact on consumption in Australia.
The higher-sulphur fuel normally goes overseas, sold to countries with lower quality standards than Australia has.
It will now be blended with domestic petrol supplies for two months.
Working with Ampol Australia, the Federal Government has given the green light for its Brisbane refinery to temporarily sell the lower-grade fuel domestically.
Ampol has given the government assurances that the additional 100 million litres a month will be prioritised for regional and rural Australia, as well as the wholesale spot market that supports independent distributors and harvesters.
A blockade in the Strait of Hormuz has slowed the transit of oil to world markets, leading to fears of shortages and panic buying.
Fuel prices have already spiked sharply in Australia, with stark differences in per-litre costs from one bowser to another.
Mr Bowen insists Australia’s fuel delivery and actual consumption have not changed, but the new measures will help relieve pressure on distribution chains disrupted by elevated demand.
“The government has been unequivocal – this additional supply must help the people who need it, including farmers, fishers and regional communities,” the minister said.
“We continue to see expected ships arrive in our ports, and we continue to act to relieve the distribution pressure we are seeing in our regions.
“It is clear there will be supply impacts if this war continues – this is the world acting to mitigate those impacts.”
The National Coordination Mechanism, which brings together all levels of government, continues to convene to respond to emerging fuel supply chain issues.
Mr Bowen said further action will be taken as necessary.
The International Energy Agency, of which Australia is a member, agreed to voluntary collective action to address disruptions to oil markets stemming from the war.
An extra 400 million barrels of oil will be released. Australia’s voluntary contribution to the global effort is being met by the latest announcement to reduce minimum stock obligations.
Member countries are encouraged to release fuel in a coordinated way to help calm the global oil market.
The Federal Government’s endorsement of the IEA action also means its contribution will be released directly to the Australian market.
The minister has urged Australians to buy only as much fuel as they need and not to panic buy or stockpile.
Opposition Leader Angus Taylor accused Mr Bowen of being “asleep at the wheel” over the fuel issue.
“The first thing you’ve gotta do if you’re going to fix a problem is admit there’s a problem,” Mr Taylor said.
“Sadly, the real problem here is Chris Bowen.”
Before the announcement to reduce minimum stock obligations for both diesel and petrol, Shadow Resources Minister Susan McDonald criticised the minister over the fuel quality initiative.
“Chris Bowen has dropped fuel standards and released reserves, but it’s petrol, not diesel,” Senator McDonald said.
“This equates to just over two days of national petrol use and it does nothing to increase diesel supply for farmers, truck drivers or regional industries.
“Big fuel distributors have shut the gates to independent outlets, miners are rationing diesel, truckies are reporting fuel prices are up 50 per cent in a week, trawlers are tied up at wharves … some small towns have no diesel at all.”
Australia’s fuel reserves currently stand at about 30 days, below the IEA’s expectation that member nations maintain a minimum of 90 days of reserves.
Australia holds reserves of 36 days for petrol supply, 32 days for diesel, and 29 days for jet fuel.
Original Article published by Chris Johnson on Region Canberra.
