Australia’s Fuel Security Drive: Karratha Refinery Initiative and End of Fuel Excise Discount

Here's what the records show across the three pillars of Australia's fuel security strategy.

Stockpile-building

As of 25 July, the Minister for Climate Change and Energy, Mr Bowen, reported 42 days of petrol, 38 days of diesel, and 32 days of jet fuel — 6.2 billion litres total, up 15% since Iran was first bombed on 28 February [TA-260725-climat-de00a5e6da8e]. The government's stated target is to grow national reserves of jet fuel and diesel to 50 days [TA-000000-policy-95d7c8e5c99c]. A further 3.1 billion litres was locked in for delivery within four weeks, carried by 51 vessels in transit [TA-260725-climat-de00a5e6da8e]. The most recent record in the Minister's file — dated 28 July — announces a first step toward developing a potential new domestic oil refinery, though the full text of that release isn't in our loaded records.

Fiscal instruments

Treasury's 2026–27 Budget cut the fuel excise by 60.9% from 1 April to 30 June 2026 — a 32 cents per litre reduction for petrol and diesel, with the Heavy Vehicle Road User Charge reduced to zero over the same period [TA-260623-agrep-fc680ac7a6e8:sec002]. Net cost to the Commonwealth: approximately $2.5 billion. The government also asked gas companies to reserve 20% of exports for domestic use [TA-000000-policy-95d7c8e5c99c].

Low-carbon domestic fuel production

ARENA committed $32 million to HAMR Energy's project converting forestry residues into sustainable aviation fuel and low-carbon liquid fuels — $12.5 million for front-end engineering design, with a further $19.5 million contingent on co-funding. This was a joint announcement across the Climate and Infrastructure portfolios on 22 July. Separately, $30 million in grid-enhancing grants was announced the same day.

What's unresolved

The HAMR Energy second tranche ($19.5m) depends on co-funding being secured. The refinery announcement of 28 July is the most significant new development but needs the full record to assess its scope and funding structure.

---

A few angles worth exploring:

What did the 28 July oil refinery announcement actually say — who are the co-proponents and what funding is involved? How has the Opposition responded to the fuel security measures, particularly the excise cut and the gas export reservation policy? What does the Greens' gas export tax position mean for the domestic fuel reservation policy the government is relying on?