Australia's energy security gamble is playing out at the petrol pump and the car dealership. As unleaded petrol prices have jumped between 61 and 92 per cent in capital cities since late February, Australians are making a rapid economic calculation: switch to an electric vehicle or absorb spiralling fuel costs.
Loans for electric vehicles have doubled during March after attacks began on February 28, according to National Australia Bank data. The trigger is geopolitical but the outcome reveals something more important about Australia's structural vulnerability. The Strait of Hormuz, a choke-point for a fifth of global oil supply, has been effectively closed after attacks on Iran. Australia imports more than half its refined fuel from Asian trading partners including Singapore, South Korea and Malaysia, which themselves source much of their crude from Middle Eastern suppliers.
This is not panic buying. Finance enquiries from businesses for electric vehicles are up 88 per cent. For fleet operators and small businesses with tight margins, the calculus is straightforward. For businesses where vehicles return to the same location each night, electric vehicles offer more predictable energy costs, a genuine advantage when fuel price volatility threatens the viability of operations.
Yet the speed of this shift also reflects something uncomfortable about Australian policy. The nation operates only two refineries. Its petroleum reserves, while recently bolstered, would cover only about a month of domestic demand. Australia, with only two refineries in operation nationally, imports more than half its refined fuel from Asian trading partners. This structural dependency means every geopolitical tremor in the Middle East, every insurance decision by international shipping firms, and every Asian government decision to prioritise domestic supply flows directly to Australian households and businesses.
The counterargument carries weight. Consumer interest in electric vehicles has been rising steadily before this crisis, driven by falling prices, improved battery technology, and government incentives in some states. The current surge may simply accelerate an inevitable transition. A Nordic study found that for every 1 per cent rise in petrol prices, electric vehicle sales rose by 0.85 per cent, suggesting a 20 per cent petrol price increase could spur a 17 per cent surge in EV uptake. From this perspective, the Middle East crisis is not disrupting normal vehicle markets but speeding a transition that consumer preferences and economics already favoured.
Yet there remains a harder question about how Australians experience this transition. More than half of Australian petrol and diesel vehicle drivers are cutting back on driving in March, according to an NRMA survey. This is a significant behavioural shift. For households without the immediate capacity to finance a new vehicle, petrol price spikes function as a direct income loss. Around one in eight NRMA members surveyed are walking or taking public transport more often due to surging fuel prices. In cities with public transport, this is manageable. In regional Australia, where long commutes and limited alternatives are the norm, it is not.
The EV lending surge will help some drivers. But electric vehicles still carry higher upfront purchase prices than equivalent petrol cars. Loans address cash flow but not wealth barriers. For Australian households already pressed by housing costs and inflation, a car loan of any kind may not be financially accessible, regardless of the fuel savings it might eventually deliver.
Australia's import-dependent fuel market is not new. What is new is that households and businesses are now pricing in the cost of that dependency in real time. The Middle East crisis will eventually resolve. Petrol prices will stabilise. But the underlying fragility remains. Australia has made a national choice to import almost all its refined fuel rather than maintain higher-cost domestic refining capacity. That choice has economic logic. It also has costs, and those costs are now visible at the bowser.