Coming into harvest season, we're all aware of the many factors that come into play. One such factor was brought up last week when State Parliament listened to submissions for the inquiry into regional fuel prices.
Energy security is one of the key issues facing farmers. Cast your mind back to 2012, when the Geelong Shell diesel refinery demonstrated the extent of the agricultural industry’s vulnerability to shortages. The refinery supplied more than 50 per cent of Victoria’s fuel requirements, and subsequently diesel had to be rationed in the peak of harvest. People couldn’t access enough fuel, and while this is inconvenient for everyone, for farmers, that has a serious economic impact. For perishable goods, security of supply and security of timelines are essential. Crops can’t wait for the price to come down, or for another shipment. Delays during harvest put farm business revenue at risk. In the intervening years, we still haven’t shored up our supply line. Australia has fewer domestic refineries today than in 2000 – more than half have closed. We also don’t have enough fuel in reserve. The International Energy Agency requires members to have 90 days of fuel reserves. In Australia, we have significantly less than that: five to 12 days at refineries, two weeks at sea and three days at service stations.
Wholesale supply isn’t the only vulnerable link in the chain. Retail has problems too. It’s widely known that fuel prices are higher in the country. This is not without reason: fuel has to be transported further, for one. But while distance can’t be controlled, we can improve other factors. Competition is vital. More retailers in a town put downward pressure on price, but it’s hard to keep the competition up when there are fewer players in the market. There’s been a flurry of mergers and acquisitions in the fuel industry of late, at service stations and higher up the chain.
Greater transparency is the other tool in the box. More information allows people to go to the retailers with lower prices. Western Australia’s FuelWatch is a great example – a quick look at their fuel prices over the last year shows they’re far more stable than Victoria’s. Farming is a major driver of Victoria’s economy, producing $13.16 billion in food and fibre each year. Fuel is vital for our farming industry, and we need to ensure the supply is affordable and accessible. The government has a responsibility to secure our fuel into the future.