If you are trying to work out what’s going on right now with fuel pricing and supply, you are not alone. Prices are moving quickly and supply is tightening, with several global factors driving it.
The majority of Australia’s fuel comes from refineries in Singapore, Malaysia, South Korea, Japan and China. Generally, a steady stream of ships (tankers) comes into South Australia through three ports: Port Adelaide’s Birkenhead terminal (Mobil), Largs Bay (BP and Ampol) and Whyalla’s Port Bonython (IOR, a large independent).
However, the conflict involving Iran is heavily impacting supply. Reduced exports from China have further tightened availability.
At the time of writing (15 March), the spot price of Brent crude oil was sitting at about $103.00 a barrel. It recently peaked near $115.00 and, just three weeks ago, was sitting at about $70, so you can see the correlation.
Fuel company allocations are now in place and, if you are genuinely out of diesel, emergency delivery is available, but it is expensive. On the weekend, prices were $2.60 at some service stations.
If you have some fuel on hand, do not panic buy, it is going to cost you. Ideally, if you have diesel on farm to get you started with seeding, fill your utes and trucks when you are out and about, and leave your on-farm supplies for seeding and spraying.
Fuel companies will still be able to supply fuel for emergencies, and farming supplies will fall into that category once seeding begins.
We saw supply tighten during the Ukraine invasion and, unfortunately, the government has not acted since by increasing Australia’s onshore storage from 30 days to the international expectation of 90 days.
This is despite consistent lobbying for over a decade.
The red flags were there when local refineries began closing. Australia now has only two refineries left: Viva Energy in Geelong and Ampol in Brisbane.
We had eight refineries 20 years ago, and Australia produced about 70–80 per cent of its required fuel. Today we produce just 10 per cent.
This issue is not something that has happened overnight. Successive governments have stuck their heads in the sand because storing refined fuel is expensive and it must be recycled constantly as it degrades, unlike crude oil, which is far more stable.
Had Australia increased its onshore storage capacity and maintained more refining capacity, we would not be in this situation. It is going to be very hard for them to spin their way out of this one.
You cannot run a country the size of Australia on feel-good green ideology.
