The Morrison government has opened the door to forcing motorists to cover the cost of a package to keep Australia’s struggling oil refinery industry afloat.

With a new report outlining the precarious position of Australia’s four oil refineries, the Morrison government has announced one of its first 2020-21 budget measures will be to shore up Australia’s oil security.

That includes $211m for storing an additional 780ML of diesel onshore, reforms in minimum onshore stockholding and entering into “a detailed market-design process for a refinery production payment”.

What that market-based system will look like is unclear: the government plans to consult with industry over the next six month.

The Australian Workers’ Union has supported recommendations in an Australasian Refineries Operatives Committee-commissioned Bis Oxford Economics report to increase fuel taxes, to stave off stark increases at the pump if refineries close.

A genuine fuel supply crisis would make Covid-19 look like a blip. Everyone one of us should be worried about how precarious our energy supply has become,” said Daniel Walton, the AWU national secretary.

“We can’t let Geelong or any of our other four refineries shut. The government must safeguard now before it’s too late. This is a genuine Team Australia moment, where the government needs to act to back the national interest instead of just letting short-term market forces rip.

“Australians are understandably sensitive about the thought of paying more at the pump, but we actually have some of the cheapest petrol on the planet. A 1.1-cent-a-litre rise is a small price to pay to ensure we have enough fuel to last more than three weeks.

Coming in, on average, at about $40 a week, petrol remains the single biggest weekly expense for Australian households. Australians consume about 1 million barrels of fuel a day.

The AWU wants the federal government to underwrite storage capacity, including introducing a fuel excise tax on all petrol-production consumption, equivalent to 0.70 cents a litre, to fund the stocking and construction of Australia’s fuel stockpile.

Three of Australia’s refineries have closed in the last eight years, limiting Australia’s production capabilities. The government purchased $94m worth of petrol during record low prices in a bid to shore up the emergency supply, but was been forced to store it in the US, due to a lack of domestic storage capacity.

The Bismark report found Australia was about 40 days short of the International Energy Agency’s minimum 90-day emergency supply.

The energy minister, Angus Taylor, said the government, as part of its coming reform package, would work on creating a “minimum stockholding obligation for key transport fuels”, to increase petrol and jet fuel stocks, as well as increase diesel stockholdings by 40%.

The government has also committed to modernising the online fuel reporting system, for a more accurate, real-time monitoring of Australia’s stock levels.

“Almost all Australians are reliant on fuel and it is the lifeblood of so many sectors in our economy,” Taylor said in a statement.

“Our farmers and miners rely heavily on diesel to do their jobs and provide services, while the transport sector sources 98% of its energy from liquid fuels.

“That’s why it is critical that Australia has control over its fuel security arrangements and the government is making sure of that.”

There have been longstanding calls for governments to shore up Australia’s fuel security. Recent trade impasses and potential for conflict have increased the pressure, and were among the reasons for the recent $94m purchase – which works out to about three days of fuel.

The Bis Oxford analysis showed if what was left of Australia’s local refinery sector was allowed to fail, GDP would take a $6.7bn hit, with approximately 5,000 jobs put at risk.Advertisement

In releasing the report, Mick Denton, the chair of the Australasian Refineries Operatives Committee said losing any of the four remaining refineries – Geelong or Altona in Victoria, Kwinana in Western Australia or Lytton in Brisbane “would be devastating”.

“We need to lock down the employment of our workers in fuel refining so they can continue to help power the economy.

“We should be shoring up this capacity and looking to build on it in the years ahead.”

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