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Where does our petrol come from and how secure is the supply?

·News Reporter
·5-min read
7 Eleven petrol station in Sydney
Petrol prices sharply increased last month. (Source: Getty)

While petrol prices in Australia have eased a little, since the Government halved the fuel excise for the next six months, many have asked why prices go so high during crises that are far from our shores.

The war in Ukraine was blamed for the massive hike in fuel prices across Australia and the globe, but with Australia sourcing the bulk of its supply from Asia, why would a war in Eastern Europe affect prices here?

It seems oil companies will use any excuse to pump up prices: war, natural disasters, instability in a particular region.

And there are also instances where the only excuse appears to be increasing profits, like during holiday periods when prices creep higher than average.

But when you understand where Australia’s petrol comes from, it makes even less sense when price rises are blamed on events like a war on the other side of the planet.

Where Australia's petrol comes from

Australia relies on imports - about 90 per cent - for the majority of its petrol supply. We do produce some crude oil domestically - about 350 barrels per day - however, the majority of this is exported.

Most of our imported petrol comes from Asia, with around 25 per cent of it coming from Singapore. The remainder is sourced from South Korea, Malaysia, China, the US, Japan and Thailand.

Petrol is either produced at one of two domestic oil refineries, in Brisbane and Geelong, or imported directly in its finished product to a fuel terminal. It is then transported to petrol stations across the nation.

Australia in a vulnerable position

This reliance on overseas petrol products leaves our energy needs in a precarious position, since a major disruption in the areas from where we source petrol and oil could have catastrophic consequences.

And it wouldn’t take long.

Dr Anthony Richardson, who is a tutor and researcher with the Sustainable and Urban Planning Program at the RMIT School for Global and Urban Studies, said Australia operated on a “she’ll be right” mentality with its petrol supply.

Richardson said an incident in Mallacoota in 2020 - where a bushfire cut the only road into the area and disrupted energy supplies - was a key indication of how fragile Australia’s energy situation had become.

“When you have a complex system, it needs a regular supply of energy to keep working. Take away the energy, the system collapses,” Richardson said.

“We basically import 90 per cent of our fuel and that’s increasingly going to be the case, and that makes us fragile in the face of disruptions ... for reasons like flooding.

“You see what happened in Mallacoota in Gippsland. As soon as we lost access to fuel, everything collapses.

"Energy supply is an existential issue for this country, like it is for any country. If we don’t have security of supply, we’re whistling past the graveyard.”

The Mallacoota lesson

Richardson pointed out that, due to our reliance on imported fuel, international incidents that could disrupt our supply at critical times could be disastrous.

About 25 per cent of the world's oil is shipped via the Strait of Hormuz, a narrow sea passage between the Persian Gulf and the Gulf of Oman, before it is refined into the petrol we put into our vehicles at the pump.

A man fills up his car at a petrol station.
International incidents can affect Australian petrol prices because 90 per cent of our supply comes from overseas. (Source: Getty)

Richardson said this was another reason Australia remained in a vulnerable state.

“The day we evacuated people by ship in Mallacoota, the day that happened was when the Americans assassinated an Iranian general,” he said.

“If the Iranians decided to retaliate, the first thing they would do is close the Strait of Hormuz. We would’ve then faced in the next few days fuel supply issues at the heart of the bushfire emergency.

"We dodged a bullet because the Iranians decided not to respond.”

'Need to scare ourselves a little bit'

Richardson said the NRMA Fuel Security Report highlighted the many dangers of Australia’s reliance on imported petrol and found there had been no real action by Australian authorities on a fuel-security plan.

Richardson said it was only a matter of time before this “she’ll be right” mentality got us into major difficulty.

“People don’t want to pay for stuff that they’re not using," he said.

"It costs money to be resilient because you need to have supplies of stuff sitting in a warehouse that you’re not using. That costs money, it’s less efficient and so, our whole system of how our economy works is being efficient to reduce costs and prices for people.

“We need to think about where it comes from and scare ourselves a little bit. When we scare ourselves, we all go and buy food when we think there’s going to be a problem.

“As a country, we need to do the same with our fuel, we need to actually be a bit scared and have some reserves.”

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