Anthony Albanese has announced the government will spend $10 billion on a permanent national, government-owned fuel reserve and increase Australia’s minimum fuel stockholdings to 50 days.
Key Highlights
- Australia will invest A$10 billion in creating a permanent public national fuel reserve and increasing the government stockpile.
- The reserve will contain approximately 1 billion litres, enough to provide an onshore fuel supply for at least 50 days.
- In total, A$3.2 billion will be spent on the fuel reserve itself, and A$7.5 billion on loans, equity, guarantees, insurance and price support for stockpiles of fuel and fertiliser over five years
- The bill will be front and centre in the federal budget to be delivered next week.
Australia Announces Its Own Reserve For Fuel
Prime Minister Anthony Albanese announced on Wednesday that the government will invest A$10 billion (USD9.99 billion) to set up an Australian-owned permanent fuel stockpile and ramp up the nation’s fuel supplies. The stockpile will have a capacity of 1 billion litres, ensuring Australia has at least 50 days of fuel left onshore, at all times. The fuel reserve is expected to cost A$3.2 billion. Australia sources roughly 80% of its fuel locally but has suffered localised shortages since escalating tensions in the Middle East. Next week’s budget from the federal government will prominently feature the announcement.
What Is Australia Doing, and What Does It Pay For
In mid-2017, it was discovered that Australia had been one of the few nations in the International Energy Agency not having a government-owned fuel reserve, a fact brutally by the Middle East conflict. Energy Minister Chris Bowen has since claimed there would be changes to this. The government will provide 1 billion litres of fuel reserve to supplement those minimum stocks that the private sector will be required to hold, with a particular focus on diesel and jet fuel, said Mr Kuehne.
The existing minimum stockholding requirement, which importers and refiners have on average around 30 days of fuel, has been raised by 10 days for A$34.7 million to the taxpayer. An additional A$7.5 billion will be used on loans, equity, guarantees, insurance, and price support to build up reserves for both fuel and fertiliser.
What this means for Australia’s energy security, and what the Government says
Albanese pitched the announcement as a permanent change in how Australia approaches energy security, rather than a crisis response only. As 80% of Australia’s fuel is imported, a stockpile of this size is the most substantive measure the government has proposed by far to protect Australia from major global supply shocks.
FAQs
- How much is Australia paying for a fuel stockpile?
US$10 billion in total, US$3.2 billion for the Government reserve, US$34.7 million to raise the minimum stockholding requirement and US$7.5 billion for broader fuel & fertiliser storage assistance
- The government reserve will be focused on what?
Diesel and jet fuel, especially in preventing regional stockouts, and also protecting essential users during crisis-level supply shocks.
- When is this going to be made official?
This is the centrepiece of next week’s federal budget.
- Why didn’t Australia have a government fuel reserve already?
It did not have one of the few remaining OEEC (now IEA) members without a strategic pipeline, the Middle East conflict demonstrated how uniquely vulnerable this left it to supply interruptions.
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