Australia will begin releasing its fuel reserves after the government ordered fuel companies to release almost a fifth of reserve supplies of gasoline and diesel.
Energy Minister Chris Bowen acknowledged fuel supplies could face further pressure but ruled out a cut to fuel excise duty or rationing of fuel purchases.
Bowen said he had reduced fuel companies’ minimum stock obligations to about 700 million liters of petrol and 2.2 billion liters of diesel respectively, freeing up about 300 million and 500 million respectively for regional Australia.
Australia had about 36 days of gasoline and 32 days of diesel in reserve on March 3. Each importer and refiner will now be able to release the equivalent of five days of gasoline and six days of diesel reserves.
The fuel would not be released immediately and Bowen said he could not be sure when it would reach regional Australia, where some places no longer have access to the fuel, “because it’s a big country and every city is different.”
Australia’s release will count toward the world’s largest-ever coordinated release of oil reserves, ordered by the International Energy Agency on Wednesday.
Mr Bowen said petrol use had not changed but demand for petrol and diesel had doubled across Australia. He acknowledged that a prolonged US war against Iran could put more pressure on oil suppliers, but said Australia was “nowhere near” running out of fuel.
“Will there be more threats to fuel suppliers if international circumstances continue to worsen? Absolutely,” he said.
Fuel supplies continued to arrive in Australia and 80% of reserves, or minimum stock requirements, remain in place, he said.
The federal government announced on Thursday it would allow lower quality gasoline with more sulfur to be used on Australian roads, but did not change standards for diesel.
Opposition energy spokesman Dan Tehan called on Bowen to consider lower standards for diesel fuel.
“He did it for the gas,” Tehan said. “Should I do the same for diesel? Australia’s economy runs on diesel.”
The National Farmers Federation and One Nation have called on the government to ration fuel supplies in cities to ensure regional areas continue to have access.
Bowen ruled out adjusting the fuel tax and said the government was not contemplating fuel rationing, although there were federal and state powers to do so.
“What we are doing is trying to increase the supply for everyone,” he said.
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said industry groups were “concerned” but “not panicked” about the fuel issue, but raised concerns about the future impacts of a prolonged oil supply problem.
A long-term fuel problem, with associated price increases, would fuel inflation and higher consumer prices, he told 5AA radio.
“We can ride this out for a while,” McKellar said.
“But if we are faced with a protracted conflict in the Middle East that lasts more than three or four weeks, then the pressures on the global economy will be significant and will have a large flow on here to Australia.”
