The federal government has announced it will spend $211 million as part of its 2020-21 budget to secure Australia’s long-term fuel supply, investing in building new domestic diesel storage facilities and supporting local refineries.
The package will be delivered through a combined market and regulatory framework, with three key elements:
- investing $200 million in a competitive grants program to build an additional 780ML of onshore diesel storage;
- creating a minimum stockholding obligation for key transport fuels; and
- backing the refining sector by entering into a detailed market design process for a refinery production payment.
Prime Minister Scott Morrison said Australia’s fuel security was “essential for our national security” and that Australia “had been fortunate to not have experienced a significant fuel supply shock in over 40 years”.
“Our positive changes to the fuel market will ensure Australian families and businesses can access the fuel they need, when they need it, for the lowest possible price,” the Prime Minister said.
“Fuel security underpins our entire economy. Not only does it keep Australia moving, the industry supports thousands of people across the country and this plan is also about helping keep them in work.
“Like all sectors of the economy, the COVID-19 pandemic is having an impact on Australia’s fuel industry.
“The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future.”
Federal Minister for Energy and Emissions Reduction Angus Taylor said the government recognised that Australian refineries are “under significant financial pressure” and that it is “committed to working with the sector to ensure it has a long-term future”.
“Almost all Australians are reliant on fuel and it is the lifeblood of so many sectors in our economy. Our farmers and miners rely heavily on diesel to do their jobs and provide services, while the transport sector sources 98 per cent of its energy from liquid fuels,” he said.
“That’s why it is critical that Australia has control over its fuel security arrangements and the Government is making sure of that.”
The government has taken action to purchase up to $94 million of crude oil “at record low global prices” which will be stored in the US Strategic Petroleum Reserve for access during a global emergency.
The Australian Trucking Association (ATA) has welcomed the announcement.
“The ATA has long argued for increased fuel security, and we are pleased the government is taking the next steps to ensure this,” ATA CEO Ben Maguire said.
“Fuel security is crucial to trucking, our economy, and keeping Australian communities supplied.”
Mr Maguire said the announcement “will see action to increase our onshore stocks, in particular diesel due to its critical importance to the trucking industry.”