Australia has plenty of diesel for now. But running out could upend our economy

It’s been hard to ignore growing fears of a looming fuel shortage in Australia. Conflict in the Middle East has led to what the International Energy Agency has called the “largest supply disruption in the history of the global oil market”.

The federal government has been at pains to reassure the public Australia’s fuel supply is secure until mid-April. Tankers carrying diesel, petrol and jet fuel are already heading here from places such as India, Malaysia, Singapore and South Korea. In the short term, supplies look steady.

However, there’s one fuel where Australia is particularly exposed: diesel. Our whole economy depends on it. Trucks that move our food and goods around, machinery used in farming and mining, and even backup generators all rely on diesel.

And because most of it is imported and takes weeks to arrive, even a small disruption could cause serious problems. Recent price spikes are a sign of how sensitive the system is. Hundreds of service stations around Australia have reportedly run out of fuel due to soaring demand.

This is where our diesel goes now, why switching off supply would cause major problems – and some of the hard choices we could face as a country if things get worse.

Keeping things moving

Diesel is a crucial fuel for a wide range of industries. One of the most important uses of diesel is simply moving people (and small loads) around.

According to the Australian Industry Group, by activity, 26% of diesel consumption goes to powering cars and utes.

After that, trucks and mining sit close behind, each accounting for 24% of consumption. Other significant use activities include agriculture (8%) and manufacturing (7%).

And it’s important not to forget the importance of diesel in various other essential functions for communities. Many remote areas, for example, rely on diesel power as a backup power source.

Similarly, when power goes out at a hospital, diesel generators are an important source of backup electricity, where continuity of power is crucial.

Why is it hard to switch?

There are a few key reasons why switching away from diesel is so hard. One is that diesel is the preferred fuel for large vehicles and heavy industry.

Many of diesel’s key uses – powering freight and long-distance trains, trucks or even large shipping vessels – require a huge amount of energy. In very simple terms, diesel contains more energy per litre than petrol. It’s also more fuel-efficient than petrol. That fuel efficiency has enticed many Australians to buy diesel vehicles.

Over the past 15 years, there’s been a surge in diesel sales, with more small trucks and vans on the road required to keep up with Australia’s booming demand for online deliveries.

Our transport and industry infrastructure in Australia is built around access to diesel. Transitioning away from this fuel can’t be done easily or in a hurry.

Read more: Why do we use gasoline for small vehicles and diesel fuel for big vehicles?

How bad could things get?

If diesel stops flowing to Australia (or is severely restricted), one of the most immediate impacts will be on freight.

It’s highly unlikely there will be no diesel at all. But if we can’t get enough stock into the country, what is available could become extremely expensive.

Many freight companies will be unable to absorb these costs, and so will likely push them onto their customers in the form of higher prices.

It’s more difficult to speculate about the speed and severity of other impacts, such as on food production or the cost of construction. But these effects could be significant in a prolonged crisis.