Drivers would have to pay an extra one cent per litre at the petrol pump under a new Coalition plan to boost Australia’s onshore fuel reserves.
The Coalition’s $800 million energy security policy, to be unveiled by Opposition Leader Angus Taylor today, sets out a plan to increase Australia’s fuel stocks to a 60-day supply, with at least 1 billion litres of additional storage capacity.
But Nationals leader Matt Canavan has revealed the $800 million outlined in the policy would not cover the cost of increasing the storage capacity to what would be required, which he said was an estimated 4.4 billion litres.
“The total cost would be around $6 billion, along with both the storage, extra storage costs, and the cost of actually filling the storage and maintaining that,” he told AM.
“It wouldn’t fund the entire amount of that extra storage, but it would help make a contribution, help ease the transition here over a few years.
“We’re suggesting that $800 million from Export Finance Australia, which is a government bank effectively, be used to help the private sector fund this.”
He said that funding would happen in the form of loans.
After the war in Iran and the closure of the Strait of Hormuz exposed Australia’s vulnerability to global oil supply shocks, Mr Canavan said the one-cent-per-litre cost was a price people would be willing to bear.
“That is an extra cost, we recognise that, but given what we’re facing right now, we think it’s a reasonable insurance premium to improve the security of all Australians.”
The move would bring Australia closer to the 90 days of storage agreed to under International Energy Agency agreements.
Resources Minister Madeleine King has previously said reaching that threshold would come at an estimated cost of $20 billion.
Double the stockpile
As Labor prepares to hand down its own response at the federal budget on May 12, Mr Taylor will announce that a future Coalition government will aim to double the minimum stockholding obligation to 60 days by 2030.
This would require the nation’s fuel importers and refineries to develop significantly more storage capacity, which Mr Taylor said the Coalition would support through the new $800 million Australian Fuel Security Facility.
Under the plan, the funds would deliver at least an extra 1 billion litres in onshore storage for petrol, diesel and jet fuel.
Describing the costs that would be passed on to consumers as “a very reasonable insurance policy”, Mr Taylor said the fuel industry would lead with where and how the additional storage was added to the system.
“We would go out to industry players … and say, ‘What options have you got for building extra storage? Let’s get moving on it,'” he said.
Three diesel oil storage tanks holding 30 million litres of fuel. (ABC News: Andy Ware)
Mr Taylor is also calling on Labor to lift the baseline fuel stockholding levels from January 1, 2027 to lock in the current average level as the new minimum.
Energy and Climate Change Minister Chris Bowen revealed on Sunday that Australia had 44 days’ worth of petrol, 33 days of diesel, and 30 days of jet fuel in reserve.
Mr Taylor said the Coalition was putting forward a “practical plan” to make sure Australia could “stand on its own two feet” regarding fuel supply.
“This is a plan the prime minister should pick up today. No excuses, no delays,” Mr Taylor said.
“If fuel stops, Australia stops. It’s that simple. Trucks don’t move, supermarkets don’t stock, businesses shut their doors.“
Mr Canavan said families and businesses needed confidence that fuel would be there when they needed it.
“People in the regions know how serious this is. If the diesel doesn’t turn up, the farm doesn’t run, and the shelves go empty,” he said.
“This plan is just common sense. Keep more fuel here in Australia so we are not relying on overseas supply lines that can be cut overnight.
“We cannot keep hoping for the best. We need to be ready, and this plan gets us there.”
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Shadow Minister for Energy and Emissions Reduction Dan Tehan said the plan would work alongside industry, build storage where it was needed, and make sure Australia had a “buffer to withstand global shocks”.
Members of the International Energy Agency, including Australia, are technically required to hold oil stocks equal to at least 90 days of net imports to provide a buffer that can be released during global supply disruptions.
The Coalition has claimed its policy to lift the minimum stockholding obligation would put Australia within “range” of achieving that 90-day ambition.
Australia’s fuel stockpile higher than when Iran war began
Mr Canavan suggests the Coalition would back the construction of new refineries, particularly projects prioritising diesel refining.
“We should support a new refinery,” he said.
The Coalition would, Mr Canavan said, offer government support to a new refinery by extending current subsidies already offered to the country’s existing two.
He said the Coalition would “provide the environment, the fertile ground to encourage someone to build a new refinery”, but didn’t go as far as announcing specific financial support above what was already available.
Mr Canavan pointed to a proposal for a Gladstone refinery as a project worth supporting, as well as the potential for another “out in the west” where there’s high demand for diesel.
Matt Canavan says the Coalition would provide fertile ground for the development of new refineries. (ABC News: Matt Roberts)
Over the weekend, Mr Bowen revealed Australia had more petrol in reserve than before the Iran war began, confirming supply continued to arrive, with 58 oil tankers on their way to Australia.
“As this international crisis continues with… uncertainty around the world about when and how it will end, the government will continue to take every step necessary to ensure security of fuel supply to Australia,” he said.
Labor has indicated Australia’s energy resilience will be a feature of the upcoming federal budget, but Mr Bowen has not foreshadowed specific measures.
“I don’t comment on budget deliberations other than to say this government’s commitment to resilience and sovereignty through the ‘Future Made in Australia’ agenda is very, very strong and very, very clear,” he said earlier this month.
Mr Bowen said the government had already announced commitments to support Australia’s two remaining oil refineries in Brisbane and Geelong, and has played down the prospect of Labor funding another facility.
He acknowledged the country would have been in a better position to deal with the oil crisis sparked by the Iran war if other refineries had not been shuttered in the past decade, which he blamed on the past Coalition government.
Mr Bowen last week indicated it was not realistic for Australia to build another oil refinery, but he has left the door open to expanding the capacity of two existing facilities.
“It’s a lot cheaper to intervene, to save the refinery, while it’s still there, than to rebuild one after it’s been dismantled,” Mr Bowen told The Australian.
“So, the idea that we would come along and rebuild a refinery that’s been closed for 10 years is not one that I would urge people to regard as, ultimately, very realistic.”
Energy security tops Japan, China, South Korea agenda for Wong
Foreign Minister Penny Wong on Monday departed for Japan, where she plans to discuss energy security and how to coordinate during the oil crisis, before travelling to China and South Korea by the end of the week.
Penny Wong is travelling to Japan, China and South Korea for talks this week. (ABC News: Matt Roberts)
“We want to remain a reliable [energy and food] supplier, and we want to see Australia prioritised when it comes to diesel, petrol and fertiliser,” Senator Wong said.
“That requires face-to-face engagement.”
Senator Wong said the Asia region, which gets about 80 per cent of its oil through the Strait of Hormuz, was “disproportionately affected” by the critical shipping lane’s ongoing closure.
“We want to see the crisis de-escalate, we want to see negotiations, and we want to see the strait open for the benefit of Australians, [and] for the benefit of the people of the world,” she said.
