Energy analysts expect the federal government will have to announce restrictions on fuel use for motorists and non-essential industries soon after Easter, as Treasurer Jim Chalmers said the government was trying to avoid imposing pandemic-style restrictions.
There is now a sense of inevitability among Australian energy experts that the government will be forced to pull the trigger this month on fuel limits for households and non-essential industries, either through voluntary or imposed caps.
Chalmers on Wednesday said the Australian Taxation Office and banks had agreed to provide temporary relief on payments for small businesses struggling to pay their bills because of the spike in fuel prices.
Asked about possible fuel restrictions, Chalmers said the government was doing its best to avoid COVID-like interventions even as some European and Asian countries mandate fuel caps for motorists, restrictions on diesel use and encourage working from home.
“This is a significant economic shock, a bit like the others, including COVID-19, but it’s not the same, and we [will] go to great lengths to make sure that people understand that we are doing our best to avoid COVID-style interventions,” he said.
“All of the work that we’re doing, whether it’s with business, communities, unions and others and within the cabinet, is about trying to avoid those kinds of eventualities.”
US President Donald Trump announced on Wednesday he expected the war in Iran to end in the next two to three weeks. However, he told other countries to “get your own oil” from the blocked Strait of Hormuz, through which more than 20 per cent of the world’s oil and fertiliser is usually shipped.
Rystad Energy head of Australia Gero Farruggio said he understood why the government was trying not to incite panic before the Easter break, when holidaymakers and businesses had already made plans.
But after the holiday period, that would have to change, he said. “We are facing a COVID-like situation where we’ll have to be working from home like some other countries who already are and restrictions for non-essential diesel users.”
Farruggio said it was difficult to see restrictions being avoided because of the uncertainty about whether enough refined petrol and diesel would arrive in Australia.
“The challenge is not at what price we can get these [oil] ships, it’s whether we can get them at all,” he said.
“I think you will see a narrative change soon after Easter and I fear measures will come in to get on top of the situation and plan for the long haul.”
The government has said there is 30 to 40 days’ supply of key liquid fuels and enough secured fuel to guarantee domestic supply until May, but has admitted that beyond that, there is no guarantee of supply.
MST Marquee energy analyst Saul Kavonic said voluntary measures such as working from home, more use of public transport and, potentially, driving restrictions based on odd and even number plates on alternate days would be required because the nation’s stockpile of fuel would need to be reserved for critical industries.
“The second half of this month is where the real crunch point is on supply,” said Kavonic. “The 30 to 40 days of fuel stocks is not fuel in a tank ready to go because it includes stuff in trucks and ships and not at every servo.
“The truth is we will face a structural shortage by the time stocks get to around 15 days.”
Kavonic said Australia could cope with a 5 per cent to 10 per cent decline in oil and other refined fuel supplies through voluntary measures to reduce demand, such as working from home and taking public transport.
“It’s terrible economically, but hospitals are not going to stop functioning,” he said.
Australia should be able to avoid more drastic rationing of fuel for critical sectors such as health, aged care, police and military, he said.
The government is at level 2 of its fuel security plan, which aims to keep fuel flowing and secure extra supplies from trading partners.
Work is under way with the states to determine specific steps for level 3 and level 4 rules, should they be required. Broadly, level 3 is about taking targeted action and level 4 is protecting critical services.
Climate and Energy Minister Chris Bowen announced last week the government had managed to replace six fuel shipments that were due after mid-April that had been cancelled or deferred.
Albanese has been lobbying Asian neighbours who sell oil to this country to keep the supply coming in return for liquefied natural gas being shipped from Australia.
Rystad’s Farruggio said farming communities were most exposed to limits on diesel imports.
“Rural communities that rely on diesel the most are already struggling to get supplies,” he said. “Miners could possibly weather the price hike and continue, but farmers will be affected the most by fertiliser and the cost of diesel.”
Domestic diesel demand has increased 50 per cent after four refineries closed since 2021, leaving only two Australian refineries in action.
Extracted in full from: https://www.afr.com/politics/federal/fuel-restrictions-tipped-to-kick-off-after-easter-20260401-p5zkiq
