Australia’s fuel supply chain explained

There’s no question the global fuel crisis is starting to bite, with service stations both regional and metro running low on stocks, especially diesel.

But just how serious is the situation, and how quickly is it likely to deteriorate further?

To properly understand Australia’s fuel situation, it’s necessary to examine the supply chain – how much fuel do we import and how much of that is affected by Iran closing access to the Strait of Hormuz?

Below, we answer some burning questions about Australia’s fuel supply chain and its ongoing security.

The government said we have a month of fuel in reserve. What does that mean?

According to data from ABC News, Australia had around 1.6 billion litres of petrol and 2.7 billion litres of diesel in reserve as of mid-March, while SBS Australia reported that Australia uses on average 44 million litres of petrol and 92 million litres of diesel per day.

Assuming these figures are accurate, that means Australia had around 36 days of petrol and 29 days of diesel in reserve as of March 15.

Extrapolating these figures indicates that as of March 27 Australia has 1.072 billion litres (24 days) of petrol and 1.596 billion litres (17 days) of diesel remaining in reserve.

This calculation does not take into account shipments of fuel currently in ports and en route to Australia, or the relaxing of sulphur content laws, both of which will extend supply.

What is the NRMA’s take on the fuel crisis?

“We support any measures the government is taking to try to ensure that supply is available,” says Wal Setkiewicz, the NRMA’s principal advisor on infrastructure and economy. “It’s especially important that the distribution gets to the regional areas, because that’s the major problem at the moment.”

How much of the world oil supply is affected by the war in Iran?

Approximately 20 per cent of the world’s oil and liquefied natural gas supply passes through the Strait of Hormuz. Iran is blocking this narrow waterway in retaliation for US military strikes. Oil exporting nations affected by this closure include Iraq, Qatar, Saudi Arabia and the United Arab Emirates. 

Which countries export the other 80 per cent?

The United States remains the world’s largest oil producer, extracting more than 600 million barrels per month. Russia, Canada, China and Brazil also number among the top 10 oil-rich nations, each producing well in excess of 100 million barrels a month.

China and Malaysia are already looking at curbing fuel exports to ensure they do not run low domestically.

Does Australia produce oil?

Yes, Australia produces around 12 million barrels of oil per month. Most of this oil is exported to countries in the Asia-Pacific region.

Does Australia refine its own fuel?

Eight major refineries operated in Australia as recently as 2005, but today only two remain: Viva Energy’s refinery in Geelong, and Ampol’s Lytton refinery in Brisbane. The fall in local supply created a commensurate need to import fuel. Around 80-90 per cent of Australia’s fuel supply is now imported.

Why did Australia stop refining its own fuel?

Economics. Australia has high transport and labour costs compared to many countries in the Asia-Pacific region, so it became more cost-effective to export oil and import refined fuel products.

Which countries supply Australia’s fuel?

Australia primarily obtains its refined fuel products from countries in the Asian region, including Singapore, South Korea, India, Malaysia and China.

Where does Australia’s petrol come from?

Source: Australian Petroleum Statistics

Where does Australia’s diesel come from?

Source: Australian Petroleum Statistics