The Reserve Bank’s decision to raise the cash rate to 4.35 per cent off the back of Iran war-related price shocks lays bare the self-inflicted costs of our national indifference to fuel sovereignty.
The Reserve Bank’s decision on Tuesday to raise the cash rate to 4.35 per cent off the back of the Iran war-related price shocks lays bare the self-inflicted costs of Australia being a fuel importer.
While elevated levels of inflation have become normalised by the high debt, big spending Albanese government, the RBA’s most recent decision attributes the cash rate rise to “developments in the Middle East”.
These are not only adding to inflation but “likely to have second-round effects on prices for goods and services more broadly”.
The consumer price index, released monthly by the Australian Bureau of Statistics, revealed last week that annual inflation in March 2026 was 4.6 per cent, up from 3.7 per cent the previous month.
The alarming increase was off the back of an increase in the transport price category, with automotive fuel prices surging nearly 33 per cent from February to March alone.
That the dramatic rise in transport CPI has been caused by the conflict in Iran is not in doubt.
What is also not in doubt is how Australia decided to voluntarily make itself vulnerable to these shocks in the first place.
While the Prime Minister did not cause the war, successive governments have exposed Australia to those shocks by accepting that Australia should become dependent on those global supply chains, despite our abundant capacity to be self-reliant .
We only have two oil refineries left in Australia and have become overwhelmingly reliant on imported fuel.
In 2002 we imported only 11 per cent of our refined petroleum, we now import 90 per cent of it, and we are one the largest importer of diesel in the world.
Not only are we not self sufficient in refining our own fuel, we only have a month of reserve fuel, meaning that our fuel safety net is essentially non-existent.
The Prime Minister has made deals with neighbouring countries to provide with an immediate short-term supply of fuel, however this is not a sustainable solution.
Decades of poor decision-making has led us to a place of vulnerability, however, the government’s policy of net zero emissions is exacerbating this crisis by committing the government to forcing our most emission intensive industries to shut down – the same industries that would make self-reliance possible.
The safeguard mechanism is the federal government’s marquee net zero policy that mandates large projects and facilities to reduce their emissions or purchase carbon credits to continue to operate – a form of carbon tax on Australian industry.
IPA research found that the total carbon tax placed on these projects and facilities will be between $7.1 billion and $11.7 billion by 2029-2030.
For Australia’s last two refineries, the safeguard mechanism will impose a combined $165.5 million carbon tax.
The obvious consequence of prioritising emission reductions throughout the economy is that we will become dependent on importing from countries who have different priorities.
This is short-sighted considering we are a nation that relies on our truckies to transport goods to our regions, and from our regions to our capital cities, and therefore the rise in cost to transport those goods impacts the price of everything that is transported, especially food.
We as a nation need a plan that prioritises our sovereign capability and improves our fuel security.
The opposition recently announced a plan to double our reserve fuel from 30 to 60 days, and earlier this year dropped their commitment to the policy of net zero and want to repeal the safeguard mechanism.
This announcement was followed a week later by the Albanese government announcing a $10 billion plan to ensure at least 50 days of fuel supply and storage of diesel and aviation fuel and establish a permanent fuel security reserve in Australia.
This represents a positive shift in policy direction from both major parties, especially given they both own the historical blame for our fuel woes.
We must use the lessons of the current fuel crisis to ensure Australia can survive as an independent and self-reliant nation, because the status quo of the last 25 years has not worked, and we are now paying the price.
