Fuel rationing can't be ruled out says government

The federal government has acknowledged fuel rationing could occur if the conflict involving Iran continues for longer than expected. However, the Labor government insists there is no immediate need for motorists to panic, with fuel supplies continuing to arrive in Australia as normal.

The federal government has conceded fuel rationing remains a possibility should the conflict involving Iran continue for an extended period, while maintaining there is currently no need for motorists to alter their behaviour.

This comes on the back of calls from the federal Minister for Energy, Chris Bowen, for Aussies to stop panic buying fuel, which is only exacerbating the rising fuel prices.

Now the Deputy Prime Minister, Richard Marles, told the Today Show that fuel rationing would depend on how long the conflict continues, stressing the government is focused on keeping fuel moving through the system and discouraging panic-buying.

“Obviously, this is a function of how long this conflict continues,” Marles explained.

“But we are taking the measures that we’re taking right now, and it is a matter of people just going about their business normally and calmly,” he said.

Marles later confirmed there are no plans to introduce fuel rationing at this stage, pointing to several steps taken to ease supply pressures.

These include the release of 20% of Australia’s fuel reserves and temporary 60-day relaxation of fuel quality standards to allow higher-sulphur products (up to 50 ppm, compared to the 10 ppm limit introduced in 2025) to be used locally.

The disruption from the war has been estimated to remove approximately 20% of global oil supply, or 15 million barrels per day since the closure of the Strait of Hormuz, a critical shipping route that the world’s oil supply passes through.

In an interview with ABC, AMP’s head of investment strategy and chief economist Shane Oliver described the situation as the worst supply shock to the global oil market since the Iranian Revolution oil crises in the 1970s.

Despite the global turmoil, Marles said Australia continues to receive oil shipments at normal levels.

“As we speak, the same amount of ships that are supplying Australia are doing that,” he told ABC news.

Fuel shortages reported at some service stations, particularly in regional areas, have been attributed to panic-buying rather than an overall lack of supply, insists the government.

Treasurer Jim Chalmers said suppliers had sufficient fuel for usual demand patterns, but not for elevated levels of purchasing.

At the same time, the Australian Competition and Consumer Commission (ACCC) is meeting with major fuel retailers to scrutinise sharp price increases seen over the past two weeks.

Chalmers said the regulator would require companies to justify their pricing, warning penalties for misconduct have been doubled since the conflict began.

“I've made it very clear that if they find evidence of misconduct, we expect the ACCC to throw the book at them,” he said.

While fuel rationing remains a last-resort option, the government says it is monitoring the situation closely as global tensions continue.

In the short term, authorities are focused on stabilising supply chains, addressing regional shortages and ensuring fuel retailers can justify price hikes during a period of heightened volatility.

Persistently higher fuel prices could also have longer-term implications for vehicle purchasing trends.

A study published last month analysed petrol prices alongside electric and combustion vehicle registrations in Denmark, Finland, Norway and Sweden between early 2019 and late 2022, finding a one per cent rise in petrol prices increased EV sales by an average of 0.85%.

Pricing data from the ACCC shows a daily average retail petrol prices across the five largest cities reached 219.7 cents per litre on March 11, up 48.8 cents per litre since February 20.

If elevated prices are sustained, it may add further momentum to electrified vehicle uptake, particularly given electric and hybrid vehicle sales in Australia were already up 38 per cent year-on-year in 2025.

Looking at pure electric vehicles, or BEVs, that figure rose by just over 13%.

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