We import 90 per cent of our fuel. It doesn't have to be that way |
In 40 years of advising company directors, I have seen boards deal with recessions, regulatory upheaval, trade wars, and pandemic. The organisations that fared best were those whose directors understood which risks were fleeting and which were baked into their landscape. The risks that produced the 2026 fuel crisis are not new. The consequence is not temporary.
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As I write this, hundreds of service stations across Australia have run dry. Petrol has risen a dollar a litre since February. Diesel, the fuel that moves our food, powers our mines, and runs our farms, has exceeded three dollars. The National Farmers' Federation is warning of food price increases of up to 50 per cent. Sticking its finger in the dyke, the federal government has halved the fuel excise, released reserves and relaxed fuel quality standards.
All of these responses address the symptom. None address the cause. None of this was difficult to foresee. And even a temporary reprieve by way of the current, shaky ceasefire is no panacea.
Australia imports 90 per cent of its refined fuel. We hold roughly thirty days of reserves. This is the lowest of any International Energy Agency member, against a binding obligation of at least ninety days. Where we once had eight domestic refineries, we now have just two. Almost every litre instead arrives on foreign-owned vessels from Asian refineries that source their crude through the Strait of Hormuz.
Applying a corporate governance ruler, that is a fail. It was a fail before the rules-based international trading order began to fracture. It was a fail before the US launched military strikes against Iran in mid-2025. By the time Iran closed the strait in February 2026, the only surprise was that anyone was surprised.
While petrol prices were surging through March, wholesale electricity prices in Australia were falling. Midway through the crisis, the energy regulator proposed cutting the price of residential electricity by up to 10 per cent. The reason is plain: renewable energy now supplies more than half of Australia's electricity grid. Solar panels on 4.3 million Australian rooftops kept generating through March exactly as they did in February. The wind and water kept turbines turning. The batteries kept dispatching. None of them required a tanker through the Strait of Hormuz.
At crisis-era prices, running a mid-size petrol car costs roughly eighteen cents per kilometre. Running a comparable electric vehicle on rooftop solar costs approximately one cent. Over a year at 15,000 kilometres, that is a difference between $2700 and $150. One of those figures is set by global commodity markets and foreign conflicts. The other is set by the sun, the wind and the rain.
I spent nearly twenty years facilitating the Australian Institute of Company Directors' course on director duties and responsibilities. The core obligation is familiar to every director in the country: act with care and diligence; assess the available information and apply it to the issues at hand. A director who fails to identify and manage a foreseeable risk is not meeting that standard.
I would put a question to every board in Australia: what is your organisation's exposure to imported liquid fuel, and what is your plan to reduce it? If you have not assessed it, current events have made that position difficult to defend. If you are waiting for the crisis to pass, consider the conditions that produced it: the concentrated supply chains, the geopolitical volatility, the declining conventional reserves. Are these likely to improve or worsen over the next decade?
The obvious path forward is not complicated, though it is long. Australia has resource and capability to generate the great majority of its energy domestically. Every rooftop solar installation, every battery, every electric vehicle, each hydro turbine, every wind farm permanently reduces our exposure to the next shock. The billions we send overseas annually for refined fuel could instead circulate through the Australian economy. But most importantly, it takes a step towards a greater prize: sovereign independence of energy supply.
I want to be precise about what I am arguing. I am not making a climate argument, though the climate benefits are real. I am making a sovereignty argument. Energy generated on Australian soil, from Australian resources, is energy that no foreign government can withhold, which no foreign conflict can disrupt.
This pathway is not simple. The supply chains for solar panels, turbines and batteries run substantially through China, and that dependency warrants serious attention. Presently, aviation, heavy shipping, and parts of mining cannot yet be electrified. The grid requires enormous investment in storage and transmission.
But the honest comparison is not between a perfect domestic energy system and the imperfect one we have built. It is a choice between an energy source that improves with every installation, contrasted against fuel dependency that worsens with every disruption. A solar panel purchased from China generates electricity for twenty-five years. A shipment of refined fuel from Singapore must be repeated every few weeks, through supply chains we do not control, on vessels we do not own.
The 1970s oil shocks produced a generation of political rhetoric about energy independence. Very little of it lasted. When prices fell, urgency evaporated. I would urge Australian directors and policymakers not to repeat that mistake. The Strait of Hormuz will reopen, either as part of the current ceasefire, or the next. Oil prices will moderate. But if we stay on the current path, if we continue to do nothing to grasp the energy independence that is available to us, the next crisis will find us in exactly the same position.
Every kilowatt-hour generated domestically is a kilowatt-hour immune to whatever happens in the Middle East. That is not ideology. It is arithmetic.
Mark Love is Legal Director at BAL Lawyers in Canberra and an NSW Law Society Accredited Specialist in Business Law.
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We import 90 per cent of our fuel. It doesn't have to be that way
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