Why Fuel Suppliers Can Hold 20 Per Cent Less in Reserve Until January

If you're planning a Christmas drive up the coast, or you grow wheat anywhere between Horsham and Geraldton, a decision made in Canberra last week will shape how much fuel is sitting near you this summer. Hardly anyone noticed it.

On 19 September, Energy Minister Chris Bowen extended a temporary cut to the Minimum Stockholding Obligation, the rule that forces Australia's fuel importers and refiners to keep emergency stocks on hand. The cut was due to lapse on 30 September. It now runs until 31 January 2027.

Running the tanks a little lower

Here's what the announcement actually means for you. Since March, suppliers have been allowed to hold 20 per cent less petrol and diesel than their baseline obligation. They have to earn it, though. Any company taking the discount must commit to pushing more fuel into the domestic market and putting regional customers first, including farmers and maritime users, under written supply plans lodged with the department.

The government's reasoning for keeping it going is seasonal. Grain harvest rolls across the country from spring into early summer, and headers, road trains and chaser bins get through diesel at an extraordinary rate. Then come the summer holidays, when caravans and loaded family wagons pour out of Sydney, Melbourne and Brisbane onto regional highways.

"The Albanese Government is taking practical action to help keep fuel available when and where Australians need it, particularly during busy periods like harvest and the summer holidays," Bowen said.

He also pointed out that 41 fuel ships had arrived in September alone, and that the country holds more fuel now than it did when the Middle East conflict began. The official Fuel Plan dashboard broadly backs that up. As of 18 September it showed 41 days of petrol, 31 days of diesel and 32 days of jet fuel onshore, with 36 tankers of refined product and four crude carriers on the water heading our way. Australia is still sitting at Level 2 of the National Fuel Security Plan.

A safety net only three years old

What most people don't realise is how new this whole arrangement is. The Minimum Stockholding Obligation only came into force on 1 July 2023, under the Fuel Security Act 2021. Before that, the companies bringing fuel into the country had no legal requirement to keep a buffer at all.

Today's baseline asks importers to hold 27 days of petrol and 32 days of diesel, while the two refiners hold 24 and 20 days respectively. Knock 20 per cent off an importer's 32 days of diesel and you're down to roughly 25.6 days. For petrol it's about 21.6 days instead of 27. That difference is fuel that flows out to servos rather than sitting in a terminal.

Here's the fascinating backstory. After the 1973 oil embargo, the big oil consuming nations set up the International Energy Agency and signed a treaty promising to hold stocks equal to 90 days of net imports. Australia joined, and for decades we met the target comfortably, because Bass Strait and later the North West Shelf meant we didn't import all that much.

Then the oil fields ran down and the refineries shut. In the early 2000s Australia had eight refineries. Now there are two: Viva Energy at Geelong and Ampol's Lytton plant in Brisbane. According to SBS, local production has fallen from around 800,000 barrels a day in 2000 to about 220,000 now. Roughly 90 per cent of our fuel is imported, mostly from South Korea, Japan, Singapore, Malaysia and Taiwan. We've been the only IEA member failing the 90 day obligation every year since 2012.

To put this in perspective, lawyers at HWL Ebsworth put the gap between what Australian suppliers hold and the IEA benchmark at roughly 54 to 58 days, depending on the fuel. That's with the obligation at full strength.

So what happens at the bowser?

The practical upshot for your wallet is modest, and I'd rather be straight about that. A stockholding rule doesn't set the price. International benchmarks, the Aussie dollar and the retail price cycle do. The national average for unleaded was 227.3 cents a litre on 20 September and diesel was 273.6, according to figures reported by the ABC. A month earlier they were 201.6 and 248.3. In Queensland, the RACQ has seen some servos charging more than $2.40 for unleaded and $2.90 for diesel in recent weeks.

There is a glimmer of relief. Brent crude has slipped from around US$110 a barrel to about US$98, and the RACQ's Ian Jeffreys says there's potential for prices to fall by up to 5 cents a litre, although not straight away.

Where the extension really earns its keep is availability. The Fuel Plan snapshot for 18 September counted 106 sites out of 8,118 with a supply problem. Of those, 53 were out of diesel only, 15 were out of petrol only, and 38 had run dry of both. Diesel is the pinch point, and it's a regional one. That's exactly the gap the government wants the freed up stock to fill, which is why the condition about prioritising regional supply matters more than the headline 20 per cent.

What does that look like in real life? In grain towns like Wagga Wagga, Dubbo or Toowoomba, hopefully fewer empty bowsers when the headers are running flat out. If you're towing a van to the coast in January, a better chance the servo halfway along isn't showing a handwritten "no diesel" sign. Checking current diesel prices along your route before you leave is a cheap habit worth getting into.

The bigger picture

Let's be honest: this is a stopgap, and Canberra knows it. The longer play sits in this year's Budget and its $14.8 billion fuel resilience package. That includes a $3.2 billion government controlled Australian Fuel Security Reserve holding around a billion litres of diesel and jet fuel, plus an extra 10 days on the stockholding obligation for diesel, jet fuel and petrol. Together, the target is 50 days of diesel and jet fuel onshore. There's also $10 million for studies into expanding local refining, and ongoing support payments to keep Geelong and Lytton open.

The refiners, for their part, have had a cracking year. Ampol's Lytton refiner margin averaged US$28.26 a barrel in the first half of 2026, up from US$7.44 a year earlier. Viva's Geelong margin hit US$21.10, against US$8.20. Both companies concede those numbers are cyclical and will slide if tensions around the Strait of Hormuz ease.

There's an odd tension in all this. Right now the government is asking suppliers to hold less so fuel keeps moving, while the Budget promises they'll hold more in a few years. Both can be sensible at once. But until that 50 day reserve is actually built and filled, the buffer between a shipping disruption in the Gulf and a dry bowser in Parkes stays thinner than most motorists would guess.

What to keep in your back pocket

The fuel industry rarely makes headlines until prices spike, but a rule change like this tells you a lot about how much slack is left in the system. Right now, not much. Keep an eye on this space.