The Federal Government will invest $211 million to build new domestic fuel storage and support local refineries to stay open wherever commercially possible.
The investment, to be delivered through a combined market and regulatory framework, will see the Government create a 200 million competitive grants program to build an additional 780ML of onshore diesel storage; a minimum stockholding obligation for key transport fuels; and support the refining sector by entering into a detailed market design process for a refinery production payment.
Prime Minister Morrison said the three-pronged approach would secure Australia’s long-term fuel supply and keep prices low for consumers.
“Our positive changes to the fuel market will ensure Australian families and businesses can access the fuel they need, when they need it, for the lowest possible price,” the Prime Minister continued.
“Fuel security underpins our entire economy. Not only does it keep Australia moving, the industry supports thousands of people across the country and this plan is also about helping keep them in work.
“Like all sectors of the economy, the COVID-19 pandemic is having an impact on Australia’s fuel industry. The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future.”
Minister for Energy and Emissions Reduction Angus Taylor said the construction of diesel storage would create over 1000 new jobs, with the minimum stockholding obligation to act as a safety net for petrol and jet fuel stocks, increasing diesel stockholdings by 40%.
“The Government will work with industry over the next six months on the legislative and regulatory design of the package,” the Minister noted.
“The Government is committed to a sovereign on-shore refinery capacity despite the threat to the viability of the industry.
“This is why we will design a market system for a production payment that recognises those fuel security benefits.
“It has been designed to protect Australian families and businesses from the around 1 cent per litre increase that modelling shows will hit fuel if all refineries close in Australia. For refineries to receive support, they will be required to commit to stay operating in Australia,” Mr Taylor concluded.
According to the Government’s statement, additional measures will also be introduced to reduce the burden on industry and improve fuel market information.
“This includes modernising the online fuel reporting system to make it easier for industry to report stock levels to Government and improve the timeliness of data,” reads the statement.
“The Government will also remove the application fees for fuel standard variation requests.”