Australia is dangerously unprepared for another global fuel crisis and risks losing its last two oil refineries unless the Albanese government moves to secure the industry’s future for another 20 years, a new report warns.
The call, backed by one of the nation’s oldest trade unions and energy giant Viva Energy, warns decades of industrial decline have left Australia dependent on foreign fuel supplies and vulnerable to international conflict.
The report by the Labor-aligned John Curtin Research Centre reveals Australia imports about 80 per cent of its refined fuel, while domestic refining capacity has collapsed by 70 per cent since 2012.
Just two refineries remain – Viva Energy’s Geelong facility in Victoria and Ampol’s Lytton operation in Queensland – together supplying about one-fifth of the nation’s petrol, diesel and aviation fuel.
“Australia is structurally unprepared to pass them,” the report warns of future tests of the nation’s fuel security.
The warning follows conflict in the Middle East that disrupted shipping through the Strait of Hormuz, exposing Australia’s reliance on overseas producers and maritime routes it cannot control.
The report forecasts that another prolonged disruption could threaten food production, freight, mining and essential services, and it calls for a 20-year commitment to domestic refining, stronger fuel reserves and investment in Australian-made renewable fuels.
It also urges a national workforce and skills strategy and investment in Australian-produced renewable diesel and sustainable aviation fuel.
Its eight recommendations follow the Albanese government’s $14.8 billion fuel security package, including a proposed one-billion-litre strategic reserve and expanded mandatory stockholdings.
While welcoming the measures, the report argues stockpiles must be strategically located and readily accessible during emergencies rather than simply meeting national volume targets.
It comes as Treasurer Jim Chalmers warned surging fuel costs were driving inflation higher , with automotive fuel prices jumping 9.4 per cent in September and 23.6 per cent over the year.
“We’ve seen higher oil prices driving higher inflation around the world. And today’s figures confirmed that we are not immune from that,” Chalmers said in Canberra.
Australia consumed about 62 billion litres of petroleum products in 2024-25 – more than half of it diesel, which powers freight, farming, mining and construction.
An April fire at Geelong’s refinery , which temporarily reduced production, exposed the fragility of a system reliant on just two domestic facilities. A $2 billion refinery support scheme introduced under the Morrison government has paid out just over $37 million in its first five years, raising questions about whether existing protections are sufficient.
Australian Workers’ Union national secretary Paul Farrow said the latest fuel crisis had prompted overdue scrutiny of how Australia allowed six of its eight major refineries to close.
“Our fuel security is our national security – but for a generation or more, Australia rarely treated it as the basic guarantor of our wellbeing that it is,” Farrow writes in the report’s foreword.
Viva Energy chief executive Scott Wyatt, whose company supplies about 30 per cent of Australia’s liquid fuels, has joined the union in calling for stronger long-term protection of domestic refining.
”Together we proudly advocate for sustaining domestic refining capability, ensuring that we retain highly skilled workforces which is necessary to support energy security and the transition to renewable fuels into the future,” Wyatt writes.
The report warns losing another refinery would mean surrendering specialised workers, industrial expertise and manufacturing capacity that could take years and billions of dollars to replace.
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