EDITORIAL: Refinery blaze adds fuel to oil and cost-of-living fire
The gathering economic storm clouds mean we may be hit by hard decisions sooner rather than later.
Just when you thought it couldn’t get any worse, it just did.
The fire overnight at Viva Energy’s Corio oil refinery in Victoria sent flames and smoke high into the night sky.
And coming amid more dark warnings about the economy, the blaze added to fears that Australia’s hopes of avoiding tougher fuel security measures — and perhaps fuel restrictions — may well have gone up in smoke too.
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By continuing you agree to our Terms and Privacy Policy.Viva’s refinery supplies about 50 per cent of Victoria’s fuel and 10 per cent of the nation’s.
Energy Minister Chris Bowen confirmed the incident would affect supply from one of Australia’s two remaining oil refineries, with early indications pointing to disruption to petrol production.
There are fears it could push petrol prices higher for motorists if supply cuts stoke the domestic scramble for fuel.
As Prime Minister Anthony Albanese continued his lap of Asian fuel providers trying to ensure continued supply, the impact of the refinery fire has raised the prospect that Australia will need to move from level two to level three of its fuel security plan — the second highest stage.
Level three would include the Federal Government working with States and Territories to “develop a nationally consistent approach for practical measures to reduce fuel demand”. The plan says at level three the States and Territories would also “use relevant legislative provisions to secure petrol station and bulk supply”.
Level four would include all governments working to “implement stronger demand measures”.
It is unclear at which stage fuel rationing would be deemed necessary under the plan.
And a gloomy assessment came on Thursday from Reserve Bank of Australia deputy governor Andrew Hauser, who warned Australia faced becoming poorer as it suffered a 1970s-style inflation shock stemming from the Middle East oil crisis.
Mr Hauser had flagged the prospect of stagflation — simultaneously high inflation and unemployment — even before new data on Thursday showed the jobless level in March holding steady at 4.3 per cent, during the first full month of the Iran war.
With the labour force still tight, the RBA is expected to focus on tackling high inflation ahead of maintaining jobs as higher oil prices make consumer goods more expensive. Australia’s inflation rate of 3.7 per cent in February before the war was already well above the RBA’s 2-3 per cent target, and economists are expecting it to soar past 5 per cent by mid-year for the first time since 2023.
“In Australia, we went into the Iran shock already running quite hot and that created some challenges,” Mr Hauser said. He suggested Treasurer Jim Chalmers needed to back the independent RBA’s rate hikes, even if they were unpopular with home loan borrowers. “You need rock-solid support from governments, at a time when you’re making hard decisions,” he said.
The gathering economic storm means we may be hit by hard decisions sooner rather than later.
