The Australian government is preparing plans for retail fuel rationing due to potential supply shortages, as warned by the International Energy Agency. A proposed measure includes limiting fuel purchases per vehicle to manage the situation if necessary.
Key points
Australian government outlines plans for fuel rationing
International Energy Agency warns of oil market shortages
Proposed rationing limits fuel purchases per vehicle daily
Rationing is a worst-case scenario, not currently needed
Pressure on fuel supplies expected to increase internationally
The federal government has outlined plans for retail fuel rationing, documents reveal, as the International Energy Agency warned on Friday that oil markets would enter the “red zone” by August.
Contained in documents obtained by Guardian Australian under freedom of information, one option the government has outlined to arrest a local fuel supply shortage is to impose a “maximum transaction value per vehicle per day” – a rationing rule limiting how much fuel a single vehicle can buy at a service station over a 24-hour period.
Rationing has not been needed, and the government has said it does not expect it to be required, with the March plan a “worst-case scenario”. But there is now expected to be increasing pressure on fuel supplies internationally, with the International Energy Agency warning on Friday that oil markets will enter the “red zone” by August as stocks dwindle amid an export shortage from the Middle East.
Documents from the Department of Climate Change, Energy, the Environment and Water (DCCEEW), show government officials have options for rationing if management of fuel by the petrol industry – stressed as the government’s first preference – proves inadequate.
The documents span the period from 21 February to 17 March, covering the early part of the Iran war after US-Israel strikes on Iran began on 28 February.
Under the Liquid Fuels Emergency Act, the federal energy minister, Chris Bowen, can declare a liquid fuel emergency (LFE), with powers including directing fuel supply and even rationing in extreme examples.
Bowen said on 26 March a liquid fuel emergency plan, which has existed since 2006 and discussed rationing measures like banning jerry cans, “was just a guide” and the government “wouldn’t do it that way”.
Q&A
What is the Australian government's plan for fuel rationing?
The government plans to impose a maximum transaction value per vehicle per day to limit fuel purchases if supply shortages occur.
Why is the Australian government considering fuel rationing?
Fuel rationing is being considered due to warnings from the International Energy Agency about oil markets entering a critical supply shortage by August.
What does the 'red zone' mean for oil markets?
'Red zone' indicates a critical level of oil supply where shortages are imminent, as highlighted by the International Energy Agency.
When is the fuel rationing expected to take effect in Australia?
While the government does not expect to implement rationing immediately, it is preparing for a worst-case scenario as fuel supply pressures increase.
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Other countries have enacted various responses to the fuel crisis, including limiting purchases and asking citizens to reduce travel, according to the IEA. The Australian government asked people to consider voluntary measures such as using public transport.
According to notes from a 13 March meeting of the National Oil Supply Emergency Committee (Nosec), representatives from Victoria raised interest in “thinking in future about what will rationing look like”. One participant – details of which were redacted – wanted to “consider what demand rationing might look like and messaging around this”.
The meeting resolved that DCCEEW would “consider work on how rationing under an LFE declaration would work under a future worst-case scenario, and what messaging might look like”.
The release of other documents, including a cabinet document titled “Triggers to support liquid fuel security” and an Executive Council document on regulations for a liquid fuel emergency, were refused.
By 17 March, Nosec was advancing discussions around rationing. An executive summary of that meeting stated it would “begin conversations next week around planning for fuel rationing/restrictions, noting hesitations around signalling and tempering public panic”.
As early as 9 March, documents from a liquid fuel group note that fuel rationing was among options “to respond to supply disruptions”. The heavily redacted document notes the minister’s powers under the Liquid Fuels Emergency Act, including rationing – “restriction on the amount of fuel users can purchase” – or directing that fuel suppliers make supply available for certain users.
The government has added to stocks since the crisis began, securing 600m litres of diesel and 100m litres of jet fuel in 14 additional cargoes from Singapore, China, Brunei and other nations. The budget also included a $10bn fuel security package.
Another document titled Background to the National Oil Emergency Demand Restraint Strategy, which is otherwise heavily redacted, discusses possible settings around “regulated retail rationing”.
It suggests, in a serious fuel shortage, controls could be placed “on either bulk or retail sales of petroleum products and further customer demand side management responses”, in hopes of “ensuring other users have petroleum supply for as long as possible”.
The document goes on to say the government’s preference was for industry to respond to a fuel emergency in the first instance, before the minister’s powers were enacted to direct supply.
“Depending on the severity and expected/actual duration of an emergency, people may be restricted in their fuel consumption for certain periods of time,” it states.
“It is anticipated that mandatory controls would only be introduced if market based measures did not achieve desired outcomes.”
State and territory governments, as well as the petroleum industry and “other key stakeholders”, would be consulted and given input to such measures.
