Energy minister Chris Bowen.
ENERGY minister Chris Bowen has announced that fuel suppliers will be allowed to draw down their reserves for petrol and diesel, if they can prove it is going to regional areas.
The move is estimated to unlock another six days of diesel and five days of petrol.
The Government has been under fire this week for its handling of a fuel shortage created by the Iran war, with dozens of regional fuel distributors saying they have been cut off by big oil companies prioritising metropolitan areas.
Today the Government announced a 20pc relaxation of the “minimum stock obligation” (MSO), which requires big oil companies to keep a certain amount of fuel. The Government says companies will only be allowed to relax their storage if:
- They are taking steps to prioritise supply to regional customers, with a focus for supply to regional, agricultural and maritime customers experiencing supply shortages;
- They are taking steps to allocate reasonable additional supply to bulk customers such as independent regional distributors
- They are providing volumes needed to help meet usual demand, not to customers seeking to profiteer from global price spikes, panic purchasing or stockpiling with above normal quantities of fuel.
Minister Bowen today said the adjustment to the MSO will enable companies to better handle and better manage their supply chain more flexibly as they try to get more fuel to regional Australia.
“The minimum stock obligation, which was introduced by the Albanese Government in 2023, for this purpose, for, if you like, the rainy day, is now necessary.
“So we have decided, on my recommendation, to reduce the minimum stock obligation for diesel from 2.7 billion litres to 2.2 billion litres, and for petrol from a billion litres to 700 million litres, in round terms,” he said.
“This will enable the fuel companies to more flexibly manage their supply chain.”
Mr Bowen said the fuel will not be released immediately.
“Indeed, I will be having conversations, have had conversations, over the last 24 hours, with fuel companies about ensuring that this flows to regional Australia,” he said.
“The minimum stock obligation will be reduced for each company in return for an undertaking from them that they will work within the constraints they have and as cooperatively as they can, to ensure that this extra supply flows to the regions of shortage.”
NFF welcomes announcement
Farm lobby groups had this week been sounding the alarm about the lack of action being taken from the Government, with hundreds of producers told they could not get diesel.
Minister Bowen responded with an announcement yesterday that it will lower fuel quality standards, however, that did not include diesel – which caused farming groups across the country to put out statements calling for more action.
Hamish McIntyre
National Farmers’ Federation president Hamish McIntyre said reducing the MSO was an important step.
“This is an important step by the Government that acknowledges the shortages being experienced in regional Australia, particularly as independent fuel retailers struggle to access supply through the spot market,” NFF President Hamish McIntyre said.
“The release of diesel supplies is especially important, given how critical it is to agricultural production.
“Trucks, tractors and fishing boats all run on diesel. It’s essential for harvesting crops, transporting livestock and fodder, and getting food and fibre to market.
“We will continue working closely with its members and Government to understand the exact composition of this release and ensure the fuel is reaching the regional communities and industries that need it most.”
Mr McIntyre said the NFF had been calling for the Government to use the policy levers available to stabilise fuel supply, and the announcement showed those concerns were being heard.
“It’s imperative the Government address the shortages being experienced across regional Australia and ensure farmers and fishers have the fuel they need to keep producing and transporting food.”
Australia’s fuel reserves are here in Australia, ATA
Australian Trucking Association says it will be working with the Federal Government to pinpoint the areas where there are shortages.
“In our meetings with ministers this week, the ATA urged the Government to keep Australians up to date about our fuel stocks and to address the regional supply issues that are occurring,” ATA CEO Mathew Munro said.
“These shortages are due to high demand, not to a lack of fuel in Australia. Fuel shipments are continuing to arrive.
“Australia’s fuel reserves are here in Australia or on ships nearby, not in the United States or anywhere else.
“Coupled with the Government’s commitment to release fuel supply information to the market weekly, today’s announcement will help make sure that regional trucking businesses have the fuel they normally use to keep freight moving,” he said.
This fuel shortage is an absolute disgrace and it shows a great mismanagement of productivity in Australia by the Government who should be forced to step down.