Australia's response to an unfolding fuel crisis has drawn sharp criticism from energy experts, who argue that governments have left the nation dangerously exposed to global supply shocks.
The current pressure stems from escalating conflict in the Middle East. Iran has effectively closed the Strait of Hormuz, a critical passageway that carries 20 per cent of the world's oil supply, disrupting a route that Australia heavily depends on. The consequences have been immediate: petrol prices have jumped 50 cents a litre across Australia since the start of the US-Iran war, from $1.69 to $2.19.
What concerns experts most, however, is not the temporary spike in prices but Australia's underlying fragility. Australia is the only member of the IEA that does not hold the mandatory 90-day fuel reserve requirement, something the country has failed to meet since 2012. Currently, Australia holds 36 days of petrol supply, 29 days of jet fuel, and 32 days of diesel. With daily consumption at roughly 44 million litres of petrol and 92 million litres of diesel, the system functions only because imports arrive continuously.
The government has responded with emergency measures. Climate Change and Energy Minister Chris Bowen announced the government will be temporarily lowering fuel quality standards for 60 days to allow higher-sulphur fuel to be sold, adding roughly 100 million litres to the market each month. Up to 762 million litres of petrol and diesel will be released from domestic reserves as the Labor administration claims that panic buying is the major driver of fuel shortages seen in some parts of regional Australia.
These are band-aid measures, experts say. Energy market researcher Dr Lurion De Mello has warned that Australia will not run out of petrol tomorrow, but in a world where a single conflict can immobilise a fifth of global oil trade overnight, relying on luck is not a strategy. The core problem is structural, not temporary.
The Maritime Union of Australia has been blunt in its assessment. For decades, successive governments have allowed our domestic fuel capacity to be dismantled. Australia used to have eight oil refineries of its own, but with the closure of six in the space of the last two decades, the country has come to rely mostly on international imports for its fuel supply. This hollowing-out of domestic capacity means Australia now imports the vast majority of its refined fuel, making it vulnerable to any disruption in the global supply chain.
The political accountability question is complex. Under the former Liberal-National Coalition government in particular, Australia's strategic fuel reserves were effectively offshored, with public money spent storing fuel overseas. But the current Labor government has been in office for four years without fundamentally reversing this trajectory.
On the ground, the impact is real. Regional towns are reporting fuel shortages, with some stations running out completely as prices rise in the wake of fresh conflict in the Middle East. Farmers have sounded the alarm, with National Farmers' Federation president Hamish McIntyre telling The Daily Telegraph food prices could rise by as much as 50 per cent.
The broader question facing Australia is whether the current crisis will trigger the structural reform that experts say is needed. The Maritime Union says that Australia must rebuild its sovereign fuel storage capacity onshore and maintain reserves that comfortably exceed international minimums and that it must protect and expand domestic refining capability to reduce reliance on imported finished fuels.
This is not an abstract policy debate. Without secure and accessible supplies, supermarket shelves will wind up bare, transport will grind to a halt, regional communities will be cut off and emergency services will be compromised.
The tension between fiscal responsibility and national security is genuine. Large-scale fuel storage is expensive, and governments understandably hesitate to commit substantial public funds to reserves that sit idle during calm geopolitical periods. Yet the cost of being caught without adequate reserves, as the current crisis demonstrates, may ultimately be far higher. The question is whether Australia's political leadership will use this moment to rebuild sovereign capacity, or whether the memory of the crisis will fade once global supply routes reopen.