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Australia will begin releasing its stockpile of fuel after the government directed fuel companies to release nearly a fifth of reserve petrol and diesel supplies.
The energy minister, Chris Bowen, acknowledged fuel supplies could face further pressure but ruled out a cut to the fuel excise or rationing fuel purchases.
Bowen said he had cut fuel companies’ minimum stock obligations to about 700m litres of petrol and 2.2bn litres of diesel respectively, freeing up about 300m and 500m respectively to be directed towards regional Australia.
Australia held about 36 days of petrol and 32 days of diesel in reserve on 3 March. Each importer and refinery will now be able to release about five days’ worth of petrol and six days of diesel stockholding.
The fuel would not be released immediately and Bowen said he could not be sure when it would reach regional Australia, where some places no longer have access to fuel, “because it’s a big country and every town is different”.
Australia’s release will count towards the world’s largest-ever coordinated release of oil reserves, ordered by the International Energy Agency on Wednesday.
Bowen said petrol usage and imports had not changed since the US began its war on Iran but demand for petrol and diesel had doubled across Australia.
Petrol prices rose nearly 50 cents per litre across Australia’s five largest cities from 20 February to 11 March, now averaging close to 220 cents, the Australian Competition and Consumer Commission has found.
Perth saw the largest petrol price hike, now paying nearly 60 cents per litre more, while Sydney saw the biggest diesel price jump, up nearly 68 cents.
Releasing nearly a week’s worth of reserves could allay shortage fears and ease panic-buying, according to Tony Wood, a senior fellow at the Grattan Institute’s energy and climate change program.
“If we’re not actually using any more, it’s not as though we’re going to use all that up … [so] a week extra on top of what we’ve already got I think is more significant.”
The decision was the “logical next step” but Australian supply could still be disrupted, Wood warned.
China on Thursday reportedly banned exports of refined fuel, to ensure Chinese households and industry would not face a shortage as conflict in the Middle East limits the world’s oil supply. China accounts for nearly a fifth of Australia’s jet fuel imports.
Bowen acknowledged a prolonged US war on Iran could put more pressure on fuel suppliers but said Australia was “nowhere near” running out of petrol.
“Will there be further threats to fuel suppliers if the international circumstance continues to worsen? Of course,” he said.
The federal government on Thursday announced it would allow lower-quality petrol with more sulfur to be used on Australian roads but did not change the standards for diesel.
The opposition’s energy spokesperson, Dan Tehan, called for Bowen to consider lower fuel standards for diesel.
“He did it for petrol,” Tehan said. “Should he do the same for diesel? Australia’s economy runs on diesel.”
The National Farmers’ Federation and One Nation have called for the government to ration fuel supply in the cities to ensure regional areas would continue to have access.
Bowen ruled out adjusting the fuel excise and said the government was not contemplating fuel rationing, though there were federal and state powers to do so.
“What we’re doing is to try to increase supply for everyone,” he said.
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said industry groups were “concerned” but “not panicking” about the fuel issue, but raised concerns about future impacts of a prolonged oil supply issue.
A longer-term fuel issue, with associated price rises, would feed into inflation and higher consumer prices, he told 5AA radio.
“We can ride this out for a period,” McKellar said.
“But if we face a prolonged conflict in the Middle East that goes beyond another three or four weeks, then the pressures in the global economy will be significant and will have a big flow on here in Australia.”
