A significant fire broke out at the Viva Energy oil refinery on Wednesday evening, leading to a reduction in fuel production. Diesel and jet fuel output is now at 80% of its usual capacity, while petrol output has dropped to 60%. The timeline for repairs remains uncertain.
David Leaney, a supply chain expert from the Australian National University, reassured that, despite these reductions, the company’s output—which caters to 50% of Victoria’s fuel requirements—is not in jeopardy. He noted that Viva Energy plans to offset the shortfall by sourcing additional fuel from international markets, which might lead to price increases for consumers due to higher spot prices compared to long-term contracts.
According to Leaney, this spike in costs could add up to 8 cents per litre and may soon reflect at the pump. He anticipates that any such increases might linger for a few weeks until replacement contracts are established. However, earlier this morning, Viva’s CEO Scott Wyatt indicated that they would absorb the costs from the fire without passing them on to consumers. Leaney commented that prior to the fire, both fuel prices and the number of petrol stations reporting fuel shortages were on a downward trend.
While Victorian motorists may see fluctuations over the coming weeks, Leaney predicts overall petrol prices across Australia will remain stable. Additionally, Prime Minister Anthony Albanese recently announced that the government secured an extra 100 million litres of fuel from overseas, which is a significant boost but only covers around 1.3 days of national consumption. Fortunately, Australia’s fuel reserves have improved, rising from 32 days at the crisis’s outset to nearly 40 days now, which Leaney views as a positive development.
Overall, while some challenges persist, particularly for Victoria, the broader outlook for fuel supply appears to be stabilising.