Australia has finally started having a serious conversation about fuel security. Unfortunately, it took a crisis to make it happen and diesel to rise in some places to over $3 per litre.
The Australian Government has committed $3.2 billion to establish an Australian Fuel Security Reserve of around one billion litres, focused primarily on diesel and aviation fuel. Importantly, there is recognition that the reserve needs to address regional stockouts and supply constraints affecting essential users.
That is a significant and welcome change in national policy. So, where will the fuel actually be?
Having a billion litres of fuel stored somewhere in Australia is not the same as having fuel available in Dubbo, Roma, Longreach, Moree, Katherine or another regional freight hub when a road is cut, a bridge is closed or a supply chain fails.
For regional Australia, fuel security is ultimately as much a distribution problem as it is a stockholding problem.
That is why the Livestock, Bulk and Rural Carriers Association has proposed a Regional Fuel Storage Scheme – the RFSS.
The concept is straightforward. The Australian Fuel Security Reserve should be complemented by a network of additional, verified diesel storage capacity strategically located across regional, rural and remote Australia.
Under the proposal, the government would work with existing regional industries, farmers, machinery operators, road transport businesses, fuel providers and others with the capacity to develop additional storage where regional vulnerability is greatest.
We have proposed a 50 million litre pilot, before progressively building towards at least 250 million litres of additional verified regional diesel storage capacity over five years. It is about building the infrastructure needed to hold that diesel so it is available when it is needed and can be deployed during an emergency.
Government would support the construction or expansion of storage capacity, while commercial operators would continue to operate facilities, rotate stock and maintain the infrastructure.
Any strategic reserve arrangements would have clear rules governing availability, reporting and government access during a genuine disruption.
This is not about giving any business free diesel. Australia does not need the government to build and operate a network of fuel depots from scratch. There is already significant private sector expertise and infrastructure throughout regional Australia.
What is missing in many locations is the commercial incentive to build additional capacity, and transport operators, farmers, and depots that do not have the cash flow to make it happen.
That is precisely where government investment can play a useful role.
The economics of a fuel terminal in a major metropolitan market are very different from those of storage serving a relatively small regional community.
Yet when a flood, bushfire, cyclone or major transport disruption occurs, that regional storage can suddenly become nationally important. It supports the people in that community, it enables recovery, it ensures that the food, fibre, and minerals in that region keep moving, it enables emergency services to operate, and provides backup power for the essentials.
We saw during the fuel disruptions of 2026 how quickly international events can translate into pressure on Australian supply chains.
The Commonwealth subsequently moved to increase minimum fuel holdings, secure additional international supply and establish the permanent Australian Fuel Security Reserve. The Government has said its reserve will specifically focus on regional shortages and essential users.
The RFSS takes that principle one step further, if regional shortages are among the problems the national reserve is designed to address, regional storage should be part of the solution.
Consider northern Australia.
Long freight distances, limited alternative routes and seasonal weather disruptions mean a relatively small break in the supply chain can have disproportionately large consequences.
A major strategic facility in Brisbane, Sydney, Adelaide or any other major centre can contribute to national resilience.
But it cannot, on its own, guarantee that diesel reaches a transport operator or cattle property, that trucks can access fuel to move groceries and medicine, or that fuel, fertiliser and emergency supplies can reach communities hundreds or thousands of kilometres away when the connecting transport network is disrupted.
Australia needs both strategic stocks and a distribution network capable of delivering fuel to those who need it.
The same principle applies throughout regional Australia. Road freight is particularly important because almost every other essential supply chain ultimately depends on it.
Food does not reach supermarkets without trucks, livestock do not move between properties, saleyards and processors without trucks.
Grain, fertiliser, agricultural inputs, mining supplies and many other essential goods depend on diesel-powered heavy vehicles.
When diesel stops moving, much of regional Australia stops moving with it. And when that happens, the broader economy feels it.
That is why location should be one of the central considerations in the final design of Australia’s fuel security framework.
Projects should be assessed according to regional vulnerability, proximity to important freight corridors, access for essential users and exposure to natural disasters.
The RFSS should also be designed to strengthen, rather than displace, the commercial fuel market.
Public investment should create additional resilience, not simply subsidise storage that would have been built anyway or improve the bottom line of major fuel providers. Facilities should therefore demonstrate that capacity is additional, available when required and maintained for an agreed period.
The RFSS is primarily about creating the physical capacity needed to hold and distribute strategic fuel where Australians need it.
The Commonwealth’s current fuel security reforms provide a rare opportunity to get the architecture right. The RFSS is designed to support regional Australia, provide genuine operational reserve capacity and ensure fuel can be made available during a crisis.
The policy design of the strategic reserve will determine whether our national reserve simply looks impressive on a spreadsheet or becomes a fuel security system built for the future – one that works when the highway is cut, the river is up and the next fuel delivery has not arrived.
A fuel reserve only provides resilience if the fuel can reach the people who need it. The Regional Fuel Storage Scheme is about making sure it can.
Extracted in full from: https://bigrigs.com.au/2026/09/18/a-billion-litres-means-little-if-the-fuel-is-in-the-wrong-place/
