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Common sense says refineries process oil, not make it, so more Australian refining capacity would be useless in the current oil shortage.\u00a0 But common sense isn\u2019t always right.\u00a0 Here\u2019s how the federal government\u2019s New Australian Refinery Plan will help the nation power through the fuel crisis.<\/p>\n
On Saturday, January 28, 2026, the United States attacked Iran.\u00a0 This has made a lot of people very angry and been widely regarded as a bad move.\u00a0 And not only in Iran.\u00a0 This is because, in response, the Strait of Hormuz was closed.\u00a0 Despite regional pipelines going all out and Iran allowing some tankers through, it has reduced world oil supply by around 10%.\u00a0 While good news for EV sales<\/a>, it\u2019s a disaster for the world economy.<\/p>\n Many regard Donald Trump\u2019s attack on Iran as a terrible blunder, but before we condemn him, I think it\u2019s only fair to consider how much pressure the American President is under.\u00a0 Think about how you\u2019d feel if you were falsely accused of horrible crimes.\u00a0 Now imagine how much worse it would be if you knew you were 100% guilty.<\/p>\n Here in Australia, some have come close to panic over the fear we\u2019ll run out of fuel.\u00a0 Fortunately, that won\u2019t happen.\u00a0 A lot of the concern has revolved around our lack of oil refining capacity.\u00a0 Politicians calling for more on-shore refining capacity have been widely sledged because refineries only process oil; they don\u2019t make it.\u00a0 But this isn\u2019t entirely true, and is why the federal government is launching the New Australian Refinery Plan (NARP)<\/a> to improve access to petroleum products.<\/p>\n There Will Be Fuel, But It Won\u2019t Be Cheap<\/p>\n Lately, many have made themselves miserable by larping online as logistics experts and convincing themselves we\u2019re running out of fuel.\u00a0 But that\u2019s not on the cards.\u00a0 We have a whole heap of cards in this situation, and it\u2019s not on any of them.<\/p>\n The three main reasons why Australia will have no problem maintaining a supply of fuel from overseas are:<\/p>\n World oil supply is down by around 10%. While enough to have severe economic effects, 10% less is nowhere close to running out. Despite the poor average fuel efficiency of Australian passenger vehicles and our heavy reliance on diesel, Australia is in a better position to weather this crisis than any other developed country.\u00a0 And that\u2019s a lead we\u2019ll maintain until the US gets a new President.\u00a0 (An event that will also put Canada in front of us.)\u00a0 But this doesn\u2019t mean fuel prices won\u2019t be sky high, or there will be no temporary disruptions, or no rotten economic consequences.\u00a0 It also doesn\u2019t mean things can\u2019t get worse.<\/p>\n Some are certain the situation is doomed to deteriorate because Trump is not the very stable genius he makes himself out to be.\u00a0 Personally, I\u2019ve known isotopes with 160 neutrons that are more stable than he is.\u00a0 Saying the President is unhinged is an understatement, because the last time his hinges were seen, they were exiting the solar system at high velocity.\u00a0 But if you point out to his supporters that the Emperor has no sanity, they simply say that because hinges require oil, being unhinged is a conservation method.<\/p>\n This shows fuel prices in regional Queensland are sky high. And if I\u2019d gotten there a little earlier, they would have been moon high.<\/p>\n Australia\u2019s New Refinery Plan<\/p>\n Over the past month, the fact that Australia only refines 20% of the fuel we use has been a point of contention.\u00a0 But it\u2019s not strange because our crude oil production is only equal to 30% of our consumption, and the blends we produce don\u2019t match our consumption profile.\u00a0 Also, while there have been disruptions in refinery production resulting from the world\u2019s oil supply falling 10%, we\u2019ve only effectively lost around 3.2% of refining capacity. This means the world can now refine more oil than it has available.\u00a0 \u00a0So even if Australia had additional capacity, it wouldn\u2019t help, as refineries only process oil and don\u2019t create it.<\/p>\n Or at least, that\u2019s what you\u2019d think.\u00a0 There are actually good reasons why the right sort of refining capacity can help Australia tackle the oil shortfall and ensure the supply of petrol that most private vehicles burn, as well as the diesel that agriculture and industry rely on.\u00a0 This is why the government announced the NARP, which will result in a complete reorganisation of Victoria\u2019s Geelong refinery<\/a>.\u00a0 This will increase its output, and the upgrade is expected to be fully online within three months.\u00a0 In time to help meet demand and lower prices when the fuel excise reduction<\/a> that starts today comes to an end.<\/p>\n The improved output will result from a four stage process.<\/p>\n Stage 1:\u00a0 Refinery Gain<\/p>\n If you put 100 litres of crude oil through a refinery, you won\u2019t get 100 litres of petrol, diesel, and potentially other fuels at the end.\u00a0 While it will depend on the refinery and the type of black goop you\u2019ve poured into it, in general, you can expect to get about 106.5 litres out.\u00a0 This increase in volume is called refinery gain and results from longer hydrocarbon molecules being broken into smaller ones.\u00a0 The weight stays the same, but it takes up more space.<\/p>\n If you have a mischievous bent, you may be wondering, \u201cCan the fuel be put through the refinery several more times, causing it to increase in volume with each pass through?\u201d\u00a0 The answer to that is\u2026 yes it can.\u00a0 That\u2019s exactly what the NARP refinery reorganisation is designed to do.\u00a0 However, there are some constraints that apply, and it\u2019s not a matter of simply running it through the same process again.<\/p>\n Stage 2:\u00a0 Green Hydrogen<\/p>\n Australia has a considerable number of hydrogen electrolysers left over from various harebrained hydrogen schemes.\u00a0 South Australia has several.\u00a0 There\u2019s one that was used to add trace amounts of hydrogen to domestic gas at Tonsley<\/a>, and several more left over from an abandoned plan to build a hydrogen power station<\/a>.\u00a0 All of Australia\u2019s disused electrolysers are currently on their way to Geelong, where they will be used to hydrogenate refinery products, increasing both volume and energy content.<\/p>\n The electrolysers have a planned capacity factor of around 50% and will mainly run when renewable generation is high.\u00a0 While the electricity they consume won\u2019t be completely green, it will be greenish.<\/p>\n Stage 3:\u00a0 Low Pressure Atmospheric Treatment<\/p>\n
\nAustralians are in the world\u2019s richest 5%.\u00a0 So long as we\u2019re willing to pay current high prices, we can afford to bid supply away from poorer nations. Basically, 10 people in the Philippines will leave their scooters at home and walk so one Australian can drive an SUV.
\nAustralia is the world\u2019s 3rd largest exporter of energy.\u00a0 We export 6-7 times more than we import.\u00a0 No one is going to intentionally piss off the country that supplies a large chunk of the world\u2019s energy during an energy crisis by withholding petroleum products.\u00a0 Liquid Natural Gas (LNG) prices are currently through the roof, and Australia is the world\u2019s second largest exporter.\u00a0 Because LNG is so expensive, coal prices are up, and Australia is also the second largest exporter of that.\u00a0 Finally, we produce petroleum equal to 30% of our own consumption, and we\u2019re not about to send that to an overseas refiner in return for nothing.<\/p>\n![\"Regional](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/sky-high.jpg\")
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