Australian Government Deploys ‘Strategic Reserve’ Power to Secure 100 Million Litres of Diesel

The new powers were introduced to help manage the fuel crisis caused by the war in the Middle East.

An oil tanker seized by Iranian naval forces at the Gulf port of Bandar Abbas in southern Iran, on Oct. 31, 2022. IRNA/AFP via Getty Images

The federal government has used “strategic reserve powers” to secure 100 million litres of diesel fuel in two shipments, from Brunei and South Korea, by partly subsidising the purchase.

This is the first time those powers have been invoked during the present fuel crisis. Around 90 percent of the country’s fuel is imported.

They are granted by the 1984 Liquid Fuel Emergency Act and allow the government of the day to direct companies to supply fuel in specified quantities, or to specified customers, control how fuel is distributed across regions or industries, and override normal commercial arrangements.

Export Finance Australia (EFA) has partnered with Viva Energy—which supplies about a quarter of the country’s fuel requirements—to purchase more than 570,000 barrels of additional diesel.

EFA has also agreed to commercial terms with Ampol, Park Fuels, and IOR, a company that operates a network of diesel stops designed for heavy vehicles and delivers bulk fuel throughout Australia. These agreements support the companies in purchasing additional fuel to address regional shortages and critical supply gaps.

The government helps acquire additional supplies only when it would be cost-prohibitive for private suppliers to source on commercial terms without a subsidy.

Prime Minister Anthony Albanese, announcing the move, said the agreement “strengthens Australia’s fuel security by ensuring additional cargoes are delivered to the domestic market when and where they are needed most. We’re taking every practical measure required to shield our nation and household budgets from the worst of this global uncertainty.”

Don Farrell, minister for trade, said the government’s powers go “further than fuel” and will secure the supply of other goods vital to the economy, including fertiliser.

Viva Energy is the company that suffered a major fire at its Geelong refinery’s gasoline complex on April 15 near midnight. The facility produces around 120,000 barrels of fuel every day, supplying around half of Victoria’s fuel and 10 percent nationally. It also produces jet fuel.

Locals described the sky changing colour and a “shockwave” of heat as the blaze grew.

Viva said in a statement that it anticipated replacing lost production through imports; however, the government’s use of reserve powers suggests that this course would not be feasible without the government’s financial support.

Australia consumes around 554,000 barrels of diesel a day, and 270,000 barrels of petrol.

The government may need to use its powers to secure fertiliser supplies after an electrical surge reportedly shut down Australia’s largest ammonia plant in the Pilbara, owned by Yara. It is expected to take two months to come back online.

The Epoch Times has contacted Yara for comment.