A fire at the Viva Energy oil refinery occurred on Wednesday night, resulting in a significant reduction of fuel production—diesel and jet fuel output has fallen to 80% of typical levels, while petrol production is down to 60%. The timeline for repairs remains unclear. David Leaney from the Australian National University noted that despite the disruption, Viva Energy’s capacity to supply 50% of Victoria’s fuel demand is not under threat.
Leaney explained that in response to the shortfall, Viva will seek additional fuel from the international market to cover the gap. However, this could lead to price increases for consumers, as the fuel purchased internationally will typically be subject to spot pricing, which can be as much as 8 cents per litre higher than the price under long-term contracts. Leaney predicted that these increased costs might soon translate to higher prices at the pump, potentially impacting Victorians over the next few weeks.
Despite the recent fluctuations, earlier statements from Viva’s CEO, Scott Wyatt, indicated that the company would absorb the costs of the fire, without passing them directly onto consumers. Leaney had noted prior to the fire that fuel prices were on a downward trend, as was the number of petrol stations running out of fuel, suggesting good market stability before this incident.
Leaney expects any price surge stemming from the fire could last several weeks but reassures that petrol prices should generally remain stable for most motorists outside of the impacted region. Another positive development mentioned was the Australian government’s procurement of an additional 100 million litres of fuel from overseas, which, although only enough for 1.3 days of consumption, is part of a broader effort to bolster fuel reserves. Leaney highlighted that these reserves are gradually improving, with current levels rising from 32 days’ supply at the onset of the crisis to nearly 40 days now.
He concluded that these developments represent an optimistic trend in securing the nation’s fuel supply amid the challenges posed by the refinery fire.