More Than $550 Billion in Fuel Duty. So Why Is Australia Still This Exposed?
Australia has taxed fuel for generations.
Stand Up Now Australia’s reconstruction of published Commonwealth figures indicates that more than $550 billion in gross fuel excise and excise-equivalent customs duty passed through Commonwealth accounts between 1986–87 and 2025–26.
That number needs an important qualification.
It is a nominal, gross figure. It is not adjusted for inflation. It is not the amount the Commonwealth ultimately retained after fuel-tax credits. It does not include GST. And it was never a dedicated $550 billion fuel-security account waiting to be spent.
But it raises a legitimate question nonetheless.
After four decades of substantial revenue from the fuel Australians depend on to move people, food, freight, machinery and essential services, how did we arrive at a system in which four-fifths of the refined petroleum we consume is imported, almost all the crude oil we produce is exported, only two major refineries remain, and government is now spending billions to build fuel resilience back into the system?
That is the question worth answering.
First, what does the $550 billion actually mean?
Treasury records show gross fuel-excise collections rising from $5.2 billion in 1986–87 to $12.2 billion in 2001–02. Those first 16 financial years alone total approximately $139.6 billion.
Later Commonwealth budget accounts record petrol, diesel and other fuel duties continuing to raise substantial sums. By 2023–24, for example, Commonwealth budget figures recorded approximately $6.9 billion from petrol, $16.1 billion from diesel and $2 billion from other fuel products.
SUNA’s reconstruction across the changing historical classifications puts gross fuel duty over the 40 years to 2025–26 at more than $550 billion.
But gross excise is not the same as net revenue.
Eligible businesses can receive fuel-tax credits. The Parliamentary Budget Office illustrates the difference neatly: in 2020–21, approximately $18.8 billion in gross petrol and diesel excise was collected, while about $7.3 billion was returned through fuel-tax credits, leaving roughly $11.5 billion in net excise from those fuels.
So $550 billion should not be described as "$550 billion kept by government".
Nor should it be described as "$550 billion collected for fuel security".
That distinction matters.
So where did the fuel excise go?
Into the budget.
For periods of Australian history there was a formal relationship between fuel excise and road funding. But the Parliamentary Budget Office says that formal link most recently ended in 1992. Since then, petroleum fuel excise has principally been a general revenue-raising tax, with road spending determined separately. A limited form of hypothecation returned with fuel-excise indexation in 2014, but it accounted for only a portion of collections.
In other words, there is no missing $550 billion fuel-security fund.
The harder question is a policy question:
During the decades in which governments collected substantial revenue from liquid fuel, what level of fuel resilience did Australia decide it needed?
The answer changed dramatically over time.
Australia chose the global market
For years, Australian policy rested heavily on the proposition that international markets themselves provided security.
A 2009 National Energy Security Assessment rated Australia's overall liquid-fuel security as high. It pointed to flexible supply chains, domestic refining and access to well-functioning international markets.
The same broad philosophy survived as local refining contracted.
The Parliamentary Library notes that the 2015 Energy White Paper remained confident that supply reliability would be supported by the "depth, liquidity and diversity" of international crude and fuel markets.
There was an economic case for that approach.
Large Asian refineries could often produce fuel more cheaply than ageing Australian plants. Import terminals could replace local refineries. Supply could be sourced from multiple countries rather than depending on a small domestic production base.
And refinery closures were commercial decisions, not government orders.
BP cited commercial conditions, the age of its Kwinana plant and international competition when it announced that refinery's closure in 2020. ExxonMobil similarly pointed to commercial factors when it closed Altona.
But policy determines what capabilities a country is prepared to allow markets to dispense with — and what it is prepared to pay to retain.
By 2021, the Commonwealth had reached a different conclusion. Its Fuel Security Services Payment was explicitly created to help maintain Australia's remaining sovereign refining capability.
That policy reversal tells its own story.
The result: Australia exports crude and imports finished fuel
The latest Australian Energy Statistics make the structure unusually clear.
In 2024–25:
95.7 per cent of Australian crude-oil production was exported.
At the same time:
80.8 per cent of the refined petroleum products consumed in Australia were supplied by imports.
And even Australia's remaining domestic refineries imported about two-thirds of their feedstock.
That can sound absurd: dig or pump an energy resource out of Australia, send most of it overseas, then import the fuels we actually use.
There is an important technical explanation.
Crude oils are not interchangeable. Different refineries are configured for particular feedstocks, and much of Australia's locally produced crude is not well matched to the requirements of the remaining domestic refineries. The Parliamentary Library notes that this is one reason much Australian crude is exported.
So simply ordering that "Australian oil must stay in Australia" would not solve the problem.
Nor would building refineries automatically produce energy independence. Refineries need crude, storage, shipping, infrastructure, skilled workers and commercially viable throughput.
But the numbers still reveal the central strategic fact:
Australia's transport economy relies overwhelmingly on international oil and refined-fuel supply chains.
We went from seven refineries to two
In 2010 Australia had seven operating oil refineries.
By 2015 there were four.
The conversion of Kwinana and Altona into import terminals left just Geelong in Victoria and Lytton in Queensland.
In 2025 those two plants produced about 12 billion litres of petrol, diesel and jet fuel — roughly 20 per cent of Australia's annual requirements.
That does not mean Australia should necessarily rebuild the old refinery network.
A refinery is not a strategic reserve. A refinery without crude cannot refine. A refinery damaged during an emergency provides no security. And preserving uneconomic industrial capacity indefinitely imposes real costs.
The stronger policy question is this:
What minimum domestic capability is worth paying for because its value during disruption exceeds its cost during normal times?
Successive governments increasingly appear to have answered: more than the market would otherwise retain.
The Commonwealth now subsidises Australia's remaining refineries during specified loss-making periods through the Fuel Security Services Payment. It is also funding feasibility work for new or expanded refining capacity.
That is effectively an insurance premium.
The argument is now about how much insurance Australia needs.
Storage matters just as much as refining
Australia is a member of the International Energy Agency, whose members are required to maintain oil stocks equivalent to at least 90 days of the previous year's net oil imports.
Australia has struggled with that obligation for years.
Government data shows that Australia averaged about 50 IEA days during 2024–25 — well short of 90 days.
That number requires care.
An "IEA day" is not the same thing as saying Australia has enough petrol for 50 days if every tanker suddenly stops.
The Department of Climate Change, Energy, the Environment and Water publishes several different measures and specifically warns that they are not directly comparable.
On average during 2024–25, domestic consumption-cover stocks amounted to approximately:
28 days of petrol.
20 days of jet fuel.
25 days of diesel.
The IEA measure, by contrast, combines eligible crude and petroleum-product stocks and divides them by net imports rather than normal consumption.
Those distinctions are technical.
The underlying message is not.
For an island nation dependent on long maritime supply chains, Australia has historically carried a relatively limited physical buffer.
Then the world reminded us what supply-chain risk looks like
The case for global sourcing is strongest when global trade works normally.
The weakness appears when it does not.
The Middle East disruption of 2026 forced Australia to act quickly.
The Commonwealth used the new Fuel and Fertiliser Security Facility to support additional cargoes. Export Finance Australia reports securing approximately 795 million litres of diesel and 155 million litres of jet fuel across 19 shipments.
Government also temporarily reduced Minimum Stockholding Obligation requirements to free fuel into the domestic market.
As of September 2026 that temporary arrangement had been extended until 31 January 2027, allowing participating suppliers to hold 20 per cent less petrol and diesel than the normal baseline where they met conditions around domestic and regional supply.
That measure may be entirely defensible during a disruption.
But it illustrates the bind perfectly.
Australia introduced minimum stocks because fuel security required a larger buffer.
Then, when the supply system came under pressure, part of that buffer had to be released.
That is what reserves are for.
The question becomes what sits behind them.
Australia is now spending billions to rebuild the buffer
The 2026–27 Budget marked a substantial shift.
The Commonwealth committed $3.2 billion to establish an Australian Fuel Security Reserve intended to hold around one billion litres of diesel and jet fuel.
It also committed to increasing Minimum Stockholding Obligations by another 10 days and says the combined measures are intended to raise diesel and jet-fuel reserves to approximately 50 days.
But there is an important distinction between announcing a reserve and possessing one.
As recently as August and September 2026, DCCEEW was consulting on the reserve's design, implementation, storage arrangements and interaction with the Minimum Stockholding Obligation.
So the one-billion-litre strategic reserve should not yet be imagined as one billion litres sitting in government tanks ready to deploy tomorrow.
It is a commitment being built.
That distinction matters precisely because fuel security is about what is physically available when something goes wrong.
And price is part of security too
Fuel security is not only about whether diesel reaches a service station.
It is also about what happens to the economy when it costs dramatically more to get there.
Diesel moves freight, farm machinery and mining equipment. It supports construction, emergency services and backup generation. Higher fuel costs spread into the price of food and almost every physical good transported across the country.
During the 2026 disruption, Westpac modelled an adverse scenario in which prolonged supply constraints pushed oil above US$155 a barrel and Australian diesel to around $3.07 a litre, with petrol around $2.68 a litre by the end of 2026.
That was explicitly an adverse scenario, not Westpac's central forecast. Its more likely scenario assumed conditions would normalise substantially faster.
That is exactly how such modelling should be read.
The point is not that $3 diesel was inevitable.
It is that a country with high import dependence is exposed not merely to physical shortage, but to international prices, shipping constraints, exchange rates and geopolitical events over which Australian voters and governments have little control.
Does electrification make this problem disappear?
Eventually, it can reduce it.
Not yet.
The OECD reported in its 2023 Economic Survey that fossil fuels still accounted for more than 95 per cent of Australia's transport final energy consumption, while electricity accounted for about 1.7 per cent at the time.
That balance will continue changing as electric vehicles, renewable fuels and other technologies expand.
Reducing oil demand is therefore a legitimate fuel-security strategy in its own right. Every journey or freight task that can be economically shifted away from imported petroleum reduces exposure to an international oil shock.
But transition policy and present-day resilience are not substitutes for one another.
Australia must manage the system it actually has while building the system it wants.
For the foreseeable future, that means securing diesel, petrol and aviation fuel while simultaneously reducing dependence on them where practical.
So did Australia waste $550 billion?
That claim would go further than the evidence permits.
Fuel excise was principally general taxation. Governments were entitled to spend it across defence, health, welfare, infrastructure, debt and every other Commonwealth responsibility.
Nor can refinery closures simply be booked as $550 billion worth of government failure. Private companies closed plants for commercial reasons, global refining economics changed, Australian crude characteristics matter, and importing fuel from large regional refineries can be economically efficient.
But neither does that end the argument.
For decades, Australian policy accepted that exposure to international fuel markets was manageable because those markets were deep, competitive and diversified.
The country's refinery network contracted.
Import dependence rose.
Australia remained below its IEA oil-stockholding obligation.
And governments ultimately decided that the market, left on its own, was not preserving enough refining capacity, domestic stocks or emergency resilience.
That is why taxpayers are now funding refinery support.
It is why a Minimum Stockholding Obligation exists.
It is why government intervened to secure emergency cargoes.
And it is why Australia is now committing another $3.2 billion to build a strategic reserve.
After collecting hundreds of billions of dollars from a fuel-dependent economy, why did Australia wait until its strategic exposure became this obvious before deciding that resilience itself was worth paying for?
That question crosses party lines.
The refinery decline occurred under governments of both political persuasions. The assumptions supporting import dependence developed over decades. Current governments are now spending heavily to insure against risks that earlier governments judged could largely be managed through international markets.
Fuel security deserves better than another round of partisan accounting.
Australians should be able to see the plan.
When will the strategic reserve physically exist?
Where will it be stored?
What level of refining capacity does Australia consider strategically necessary?
When does Australia intend to meet its 90-day IEA commitment?
What happens if the next disruption lasts longer than the stocks and cargoes already on their way?
And what is the long-term plan for reducing exposure without replacing one critical dependency with another?
Australia does not need to produce every litre it consumes.
But an advanced island economy should know exactly how much dependence it is willing to carry — and exactly what happens when the ships do not arrive on schedule.
That is the fuel-security debate Australia should have been having all along.
Stand Up Now Australia will continue examining Australia's fuel-security settings, strategic reserves and sovereign capability. If you believe these questions deserve clear answers, share this investigation and ask your federal representative how Australia's current fuel-security plan performs under a prolonged international supply disruption.