Fuel crisis: Reserves bumped up to 46 days as national cabinet keeps watch on supply

Western Australia has added 8 million litres of diesel to the State’s reserves after Rio Tinto agreed to relinquish the fuel.

Premier Roger Cook and Energy Minister Amber-Jade Sanderson announced the boost, which will bring WA’s stockpile up to 12 million litres, on Thursday after national cabinet met for an update on the ongoing fuel crisis.

The diesel from supplier Viva Energy will be added to the State’s stockpile and sold into areas of “acute need”, mainly regional areas and agricultural users in the Wheatbelt and Great Southern areas.

“It won’t cost the taxpayer, because we will on-sell that fuel at times when it is needed most into the market. This isn’t fuel that’s going to be given, this is fuel that will be made available to the market,” Ms Sanderson said.

“This is fuel that would have gone into storage tanks and mining operations. So this is actually additional fuel on top of the fuel that the Prime Minister and the Federal Minister is procuring on behalf of the nation. It’s additional fuel that the industry doesn’t need, and it’s additional to the fuel … that comes through supply.”

She described it as a lifeline for those communities.

“We are a vast state. We have a number of priority regional communities and priority industries that need access to fuel quickly and efficiently when we have supply and distribution disruptions,” she said.

Nationally, Australia’s fuel reserves have been boosted by nearly a third compared to before the Iran conflict started, and petrol and diesel supplies are secured into June.

Just four service stations across WA reported fuel shortages on Thursday – well down from the peak of 61 before Easter.

Australia is also diversifying its sources for fuel beyond traditional major suppliers in Singapore, Malaysia and Korea, all of whom are dependent on crude oil from the Middle East for refining.

The proportion of Australia’s fuel coming from the US has increased sixfold, up to 18 per cent of the current supply, and Argentina, which wasn’t among the top 20 sources last year, is into double digits.

“The key here is achieving supply. That is our top priority. The reality remains, of course, that the Strait is still closed and has been closed now for two months,” Prime Minister Anthony Albanese said.

“We’re in deeply tumultuous and turbulent global times, and people are aware of that, and can see that that is the case. We are doing what we can to alleviate this issue.

“We’ll continue to do what we can to see if there are further cargoes that are available for purchase in the spot market.”

Earlier this month, US President Donald Trump said countries complaining about the protracted conflict had two options: buy American oil or send military help to reopen the vital shipping route through the Strait of Hormuz.

National cabinet met again on Thursday to discuss the ongoing fuel crisis sparked by the near-closure of the Strait of Hormuz, with Mr Albanese saying afterwards that the outlook remained secure in the near-term.

“However, we’re working hard to prepare for contingencies in the event of supply disruptions in fuel and in fertiliser,” he said.

Petrol reserves – which are supplies in storage beyond what is available for sale around the country – are sitting at 46 days now, compared with 36 days’ worth at the end of February.

“(This) shows that while we are facing international headwinds and risks and uncertainties into the medium term, nevertheless, nothing is being left on the field when it comes to ensuring that Australia is very well placed,” Federal Energy Minister Chris Bowen said.

“That is a good thing, because it means that those Australians who are looking at the forward supply and making decisions can know that as well as these things can be forecast, Australia is well placed.”

Diesel reserves are at 31 days and aviation fuel 30 days.

The national cabinet meeting came a day after the Prime Minister announced government underwriting had helped fuel suppliers secure an additional four shiploads of diesel fuel that would arrive in late May and early June.

There are now some 65 ships carrying oil, diesel, petrol and aviation fuel on their way to Australia.

It has also been making efforts to secure fertiliser supplies.

Agriculture Minister Julie Collins said there was now enough supply either in Australia on on the water on its way here for the initial planting season.

Mr Albanese said any shift to the more severe stage three of the national fuel emergency plan was “certainly not imminent”.

“The trigger is very clear, which is supply. Now, at this stage, what we have is normal supply,” he said.

Mr Cook said it was clear, however, that things could shift rapidly.

“I think one of the key things that came out of the national cabinet meeting is that there’s no certainty at the moment, and we need to continue to be vigilant, and we need to be ready to move swiftly in relation to any developments that might take place as a result of the conflict in the Middle East,” he said.

“As I’ve said before, we are hoping for the best, but we are preparing for the worst. In fact, we want to be overprepared.”

Mr Albanese rubbished reports the Government was in talks about reopening or building a new fuel refinery.

There are just two remaining refineries, one in Brisbane and one in Geelong, down from six in 2013.

The Prime Minister said he was open to discussion on “any constructive proposals” but at the moment the Government was focusing on immediate solutions, not things that would take a long time.

The country had been buffered from the full impact of the Middle East crisis by its distance, giving the Government time it should be using to prepare especially for a squeeze on diesel, according to a briefing note from Institute for Energy Economics and Financial Analysis chief executive Amandine Denis-Ryan.

She says Australia is one of the world’s highest per-capita users of diesel, but there are ways to mitigate the impact of the fuel crisis by making swift improvements to fuel efficiency in road transport.

“Australia’s location means it may feel the crisis for longer than other countries, but it is also buying the country time to prepare for a possible diesel squeeze. The government should not squander this opportunity,” she said.