Coalition proposes $800m plan to double stockpile amid Hormuz closure
Australia’s fuel stock will be doubled under the $800 million Coalition offer, which comes as Foreign Minister Penny Wong flies to China, Japan and Korea to scout the region for diesel and petrol deals.
Oil prices rose once again US-Iran peace talks It stalled throughout the weekend, raising the possibility that the Strait of Hormuz will remain closed for even longer due to depletion of alternative fuel sources.
Speaking to this imprint two weeks ago, Energy Minister Chris Bowen pointed out that larger reserves could be announced in the budget on May 12 as Australia is still dependent on imports for 90 percent of its fuel.
The hundreds of millions of dollars required for new storage would deal an unwelcome blow to May’s budget, but it is shaping up to be the government’s only option.
Bowen has already ruled out upgrades to the country’s two remaining fuel refineries because of the costs. Similarly, financing a new refinery would cost tens of billions of dollars, and fuel industry experts say there are no private companies available to finance the construction.
One Nation, which is fighting the Coalition in the upcoming by-election in NSW, has been campaigning widely on social media over fuel adequacy.
Opposition Leader Angus Taylor hopes to put forward his own fuel resilience plan ahead of Labor’s budget plan. He announced that if the coalition wins government in the next election, it will increase the number of days that fuel companies must have on standby to 60. The rule will come into force from 2027, with the aim of increasing reserves by 2030.
A new $800 million Fuel Security Facility will provide financial assistance to companies building large-scale storage; private storage is where Australia’s reserves are held, rather than government facilities. Neither side is proposing to build new refineries that would cost billions of dollars.
“This is a plan that the Prime Minister must implement today. No excuses, no delays,” Taylor said. “If the fuel stops, Australia stops too. It’s that simple.”
Taylor while Minister of Energy in 2020 Morrison government spent $94 million to create a 1.7 million barrel oil stockpile in the United States, with plans to increase domestic storage at a later date.
In 2022, the Morrison government sold this stockpile of fuel for approximately $230 million as part of a global effort to calm world oil markets following Russia’s invasion of Ukraine.
Current rules require companies to stock 27 days worth of gasoline and 32 days worth of diesel. The government has spent billions of dollars in recent weeks to secure purchases of expensive cargo, and in doing so has increased its stockpiles to 44-day diesel, 33-day diesel and 30-day jet fuel.
The coalition has completed modeling showing that if the country had 60 days of reserves, the average oil price would increase by about 1 cent per liter; because companies would pass on the cost of building new warehouses to consumers.
The blockade in the Strait of Hormuz has halted nearly 20 percent of global oil exports and sparked a crisis in Asian countries that are disproportionately dependent on Middle Eastern crude oil while Asian refineries produce liquid fuel. Australia has begun purchasing fuel-filled tankers from distant countries including Algeria and Argentina.
Wong will travel to Japan, South Korea and China this week to make agreements to give Australia priority in case the war drags on.
Albanese claimed he made similar commitments during trips to Singapore, Brunei and Malaysia earlier this month. China is a major supplier of aviation fuel, while Japan and Korea are home to some of the region’s largest refineries.
“We want to remain a reliable supplier and we want to see Australia prioritized when it comes to diesel, petrol and fertiliser. This requires face-to-face interaction,” Wong told reporters on Monday.
The prospect of Australia introducing a new tax on gas exports, spurred on by Greens, Labor backers and independent senator David Pocock, has alarmed Japanese and Korean trading partners, but Albanese has dismissed the campaign all month, promising “there will be no surprises” as he tries to lock in fuel deals abroad.
Pocock says Albanese has embraced the misleading arguments of gas companies, which pay minimal taxes on the resources they extract but contribute more than $20 billion in company tax and state royalties.
Japan, Malaysia and South Korea depend on oil and gas imports to secure gas supplies vital to their power grids. Each country made major public investments decades ago to help establish Australia’s gas export industry.
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Paul Sakkal is the Chief Political Correspondent. He has previously covered Victorian politics and won the Walkley award as well as the 2025 Press Gallery Journalist of the Year award. Contact him securely on Signal @paulsakkal.14.Connect with: X or email.
Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.
