Albanese Government is allowing dirtier fuel into Australia for two months to tackle petrol price crisis

Australian motorists will be allowed to use dirtier fuel for the next two months with Climate Change and Energy Minister Chris Bowen announcing new measures to tackle record-high petrol prices and a looming food inflation crisis.

The relaxation of emissions standards was made on Thursday after the International Energy Agency called on member countries to release 400 million barrels of oil from their emergency reserves to deal with the effects of the US-led war with Iran.

“In order to assist with getting more supply, and secure downwards pressure on prices, I am temporarily amending Australia’s fuel quality standards to allow higher sulfur levels for the next 60 days,” Mr Bowen said.

“This will allow around 100 million litres a month of new petrol supply that would otherwise have been exported to be blended instead into Australian domestic supply.”

As part of the new measures, Ampol Australia has agreed to ensure this redirected supply will be prioritised for regions in short supply, including the wholesale spot market that underpins independent distributors supplying diesel to desperate farmers, who are running low on fuel needed for tractors and generators.

“While Australian fuel consumption has not changed, this will help relieve pressure on distribution chains disrupted by elevated demand,” Mr Bowen said.

He told Parliament that Australia had 36 days of petrol, 29 days of jet fuel and 32 days of diesel.

Prime Minister Anthony Albanese told the House of Representatives more measures would be considered as fuel continued arriving in Australia.

“Our government is looking at every practical measure required to shield our nation and household budgets from the worst of this global uncertainty ensuring that our farmers, our regional communities and the services all Australians rely on can continue to access the fuel they need,” he told Question Time.

“Overnight, the International Energy Agency said the challenge facing the world oil market is unprecedented in scale, which is why the IEA have agreed to the release of 400 million barrels of oil, the largest ever collective action.

“Australia’s carefully considering our next steps in response to the IEA announcement and today the minister has directed more fuels into the Australian market, keeping more of the fuel that we make here in Australia here for Australians to use.”

Australian consumers are facing a spike in food prices with farmers still struggling to secure diesel from independent wholesalers who deliver fuel from the depot to the farmgate.

Inland Petroleum, an independent wholesaler based at Dubbo in western NSW, on Thursday morning was unable to pick up diesel at a Newcastle oil company depot destined for farmers and had to go to another supplier charging 35 cents a litre more.

Chief operating officer Nathan Laing said the inability to get sufficient wholesale diesel supplies meant they had to charge more to their agricultural customers, which would eventually push up food prices.

“We need to be able to supply that farmer so we either take the loss ourselves or it gets passed on downstream and it always gets passed on downstream — we wouldn’t be able to run the trucks if we took $14,000 losses every day,” he told The Nightly.

“Well, yes, it will push food prices higher.”

Amid soaring demand at service stations, oil companies are prioritising the bigger service station retailers with contracts and reducing allocations to independent wholesalers who supply farmers.

“In the face of reasonably excessive demand, we’re getting access to less than a quarter to two-thirds of the volume we ordinarily would at prices that are remarkably higher than those publicly advertised,” Mr Laing said.

The Australian Institute of Petroleum confirmed oil suppliers were “being forced” to prioritise bulk fuel buyers from trucking companies to service station retailers who had existing contracts.

“All fuel suppliers have seen their spare (ie. uncontracted) fuel disappear in the last fortnight with the surge of buying across the country,” the group’s chief executive Malcolm Roberts told The Nightly.

The Australian Institute of Petroleum, which represents the likes of Ampol, BP, Mobil Oil Australia and Viva Energy, has gone on the defensive with crude oil prices climbing closer to $US100 a barrel again on Thursday, a day after the Federal Government announced new $100 million fines for cartel behaviour and deceptive conduct.

“The fuel industry is more transparent to the customer in the street than any industry I can think of,” Mr Roberts said.

“Obviously, AIP members don’t and won’t price gouge.”

Even before the latest crude oil spike flows through to the bowser, motorists in some parts of Brisbane are now paying $2.28 a litre for basic E10 unleaded, just a week after this fuel was selling for $2 a litre.

Diesel is now selling for $2.60 a litre in parts of Perth. It’s $3 a litre in parts of Outback South Australia and $3.20 a litre in remote parts of the Northern Territory.

Treasurer Jim Chalmers has expressed concern about skyrocketing fuel prices, after giving the Australian Competition and Consumer Commission extra resources to monitor fuel prices.

“Well, we’re concerned about these price spikes, and that’s why we are taking the important and decisive action that we are taking to empower the ACCC to issue those bigger fines if they need to,” he told Sunrise’s Natalie Barr on Thursday.

“Your viewers should know, Nat, you know, I was speaking to the ACCC before dawn this morning.”

The AIP hit back, saying it published weekly updates on wholesale petrol prices.

“The industry is very experienced with a high level of public scrutiny and supports that transparency,” Mr Roberts said.

Soaring fuel prices are expected to add to already high inflation levels with ANZ on Thursday joining the Commonwealth Bank, NAB and Westpac in predicting a Reserve Bank of Australia rate hike on Tuesday next week, in addition to a predicted May increase.

A 25-basis point increase would take the RBA cash rate to 4.1 per cent on March 17 for the first time since May last year.

“The clearest and most immediate impact of the Middle East conflict on Australia is higher inflation,” ANZ economists Adam Boyton and Adelaide Timbrell said.

“We expect a 25 basis point rate hike from the RBA in its 16–17 March meeting, though the decision will not be as clear cut as February’s.”