Amidst the escalating petrol prices crippling Australian drivers, the government is urging a shift towards ethanol-blended fuels as a potential relief measure. This move comes as officials deliberate over enhancing ethanol production to alleviate financial pressure on consumers.

Recent data from the fuel monitoring platform, Motormouth, revealed a concerning trend on Wednesday, with diesel prices exceeding $3 per liter across all major cities, Darwin being the only exception. This sharp increase has ignited widespread concern among motorists nationwide.

Fuel shortages further compound the issue, as more than 500 petrol stations grapple with stockouts of at least one fuel type. In response, the national cabinet is scheduled to reconvene next week to chart a course of action aimed at stabilizing the situation.

In a bid to address these challenges, the government has implemented several alterations to fuel standards, including adjustments to diesel specifications and a temporary hike in sulphur content. Additionally, emergency fuel reserves have been released to the market. Despite these efforts, there remains mounting pressure for more comprehensive solutions to bolster supply.

Energy Minister Chris Bowen has acknowledged that one of the strategies under consideration involves increasing the ethanol content in fuel supplies. This proposal is seen as a viable step towards not only easing consumer costs but also enhancing fuel availability across the nation.

“There’s suggestions around ethanol, which we’re looking at, but I’m not in a position to announce them, or indeed say that they might happen, because you’ve got to work these things through carefully,” he told reporters in Canberra on Wednesday.

“Could it play some potential role? Many things could.”

Australia currently offers E10 fuels, but could look at E15 or E20, levels on offer in countries like the United States.

What is ethanol inside E10 fuel?

Ethanol is a grain alcohol that can be used as a petroleum replacement.

It’s made from the byproduct of the production of sugar cane, wheat or sorghum feedstock grain.

E10 is a biofuel that contains a 10 per cent mixture of ethanol and is generally cheaper to produce. This is reflected in its price at the bowser.

The latest NRMA fuel price report revealed average E10 at 227.6 cents per litre, Premium 95 at 245.5 and Premium 98 at 254.3 cents per litre.

How can it affect your car?

Ethanol has a high octane rating, giving it the ability to resist engine knock and allowing it to burn better than gasoline.

Bioenergy Australia CEO Shahana McKenzie told SBS News the high-octane burning is why it’s used for a lot of supercar racing.

The highest of these is E85 — a specialty biofuel offered in a limited number of stations for compatible cars — which McKenzie says allows you to “accelerate very quickly”.

Ethanol is considered hygroscopic, meaning it absorbs water and causes corrosion, often leading to damage in older engines or cars.

It also runs through the fuel tank and can loosen any scale or buildup that is already in there.

NRMA spokesperson Peter Khoury busted assertions that it would drastically reduce your mileage, referring to tests on three vehicles a few years ago.

“We found one was pretty much the same, there was a slight decrease compared to the petrol in another and a slight increase in one,” he told SBS News.

“It was all very much within the margin of error, it’s not like people were losing hundreds of kilometres on a tank.”

He said motorists should check their fuel caps but concludes “most cars in Australia can use E10, and if they can, we would encourage people to use it.”

Could we boost production?

McKenzie said Australia’s two ethanol refineries are not operating at their capacity, allowing the industry to support scaling up.

She estimates that if the government were to mandate more ethanol to enter the market, close to half a billion litres of additional annual capacity could be added to the Australian market.

While ethanol is highly flammable, the concentration levels in our fuels are lower than in other countries.

Both McKenzie and Khory point overseas to Brazil and the United States, where E15 or E20 is more readily available.

“You can’t get fuel in America without ethanol blended in it, and in a number of states, and the number of states is growing, you can’t get ethanol in it with less than 15 per cent,” Khoury said.

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In the remote Kimberley region of Western Australia, residents aren’t facing a fuel shortage, but they are grappling with soaring prices that are making it unaffordable for many.

The coastal town of Djarindjin, situated 170 kilometers north of Broome, reports that while fuel supplies remain steady, the price of diesel has surged to 284 cents per liter following a recent 20-cent increase. In nearby areas, prices have already exceeded the $3 mark.

As fuel costs escalate nationwide, some of Australia’s most isolated communities are feeling the pinch in distinct ways. The dual challenges of rising prices and growing concerns over supply are creating a unique set of difficulties for these regions.

For Nathan McIver, Chief Executive Officer of the Djarindjin Aboriginal Corporation (DAC), the real pressure is in how those costs ripple outward.

“The flow-on effect with diesel going up; it goes into freight. You’ve got 30 per cent fuel levy on top of that,” he said.

Across remote Western Australia, food travels thousands of kilometres from Perth, Adelaide and the east coast. Each increase in fuel compounds along that journey, with freight companies passing rising costs directly onto consumers.

“By the time you get your food into your town or into your little community, the cost of goods is much higher than what it would have been anywhere else in Australia,” McIver said.

The result for some communities is that basic pantry staples have become prohibitively expensive. Locals have reported that in some of WA’s inland desert areas, a 1kg container of instant coffee has skyrocketed beyond $100.

In Djarindjin, those pressures are partially absorbed by the community itself. The local supermarket — owned and operated by DAC as a social enterprise — is not designed to make a profit, but instead prioritises affordability for residents.

“Our supermarket; we already subsidise for the community,” McIver said. “Fresh produce is sold at comparable prices to … a town like Broome.”

But that buffer is limited. “We will do what we can to subsidise the fuel for our community until such time we can’t do it anymore,” he said.

In communities powered by diesel generators, those costs extend well beyond groceries. Rising fuel prices drive up electricity costs, leaving households to make difficult trade-offs.

“You end up having communities and people in the community making a decision between whether they have power in 40-degree heat or whether they have food,” McIver said.

“You don’t have power, you don’t have water because you need power for the water to work … and if you don’t have food, you’ve got no sustenance — everything’s connected.”

Allowance lag

Central Land Council (CLC) — the statutory authority representing Aboriginal rights and interests in the southern half of the Northern Territory — has warned that rising fuel costs are intensifying pressures that remote communities were already struggling to absorb.

In a statement released Monday, it said higher fuel prices are driving up the cost of essentials and “deepening cost of living pressures out bush”, with some communities already paying up to twice as much as those in cities.

Executive director of policy, Josie Douglas, told SBS News diesel prices have reached as high as $4 a litre in parts of the Northern Territory.

“This uncertainty and the increase at the fuel bowser will mean that rising fuel costs will wipe out some of the schemes against by pushing up the price of food and other essentials,” she said.

Those increases are eroding the impact of existing government support, she said, including the low-cost essentials subsidy scheme for remote stores.

“Without a meaningful increase in Centrelink income, there is no buffer against this inevitable surge in the cost of living,” Douglas said.

CLC is calling for an urgent increase to the Remote Area Allowance — a supplementary payment to assist income support recipients with the higher costs of living in remote areas of Australia. It has not been raised in more than 25 years and is not indexed to inflation.

In a statement to SBS News, a Department of Social Services spokesperson said: “The Australian Government understands the additional cost‑of‑living pressures faced by Australians living in remote and very remote locations. This includes challenges related to food security and increasing fuel prices.”

It added that: “The government continues to consider ways to support households in these regions.”

“Recipients of Remote Area Allowance have benefited from increases to their primary income support payment or other supplementary payments, the latest of which started on Friday.

“For example, since the government was elected, the typical rate of JobSeeker Payment for a single person without dependent children has increased by $166 a fortnight. It is an increase of 25.5 per cent in almost four years, providing over $4,300 in additional support each year.”

On the ground, McIver said pressures are most acutely felt in communities with limited economic activity, where many residents are already living on the poverty line.

“There’s a lot of remote communities in Australia that don’t have any economic development … a lot of welfare dependent communities,” he said.

“With the prices that are so high, you’ve got people already sitting on the poverty line that can’t afford those normal grocery items.”

Fixed supply chains

Beyond the mainland, fuel pricing is shaped by infrequent bulk deliveries rather than daily market movement.

On Christmas Island and the Cocos (Keeling) Islands, Australia’s Indian Ocean territories, fuel is shipped annually, creating a system where prices remain largely fixed between deliveries. The result is not volatility, but consistently high costs driven by freight, storage and global fuel prices at the time of shipment.

Fuel Watch Indian Ocean Territories data, published on 13 March shows petrol at $2.96 a litre and diesel at $3.02 a litre on the Cocos (Keeling) Islands. Similarly, petrol is $3.02 a litre and diesel $2.96 a litre on nearby Christmas Island — unchanged since 16 January.

That system is now under additional strain, however.

Zentner Shipping — the only regular freight service to the islands — introduced an emergency surcharge in March in response to global fuel price hikes linked to the Iran war. The impact is yet to be seen.

On Norfolk Island, in the South Pacific Ocean, fuel is similarly imported in bulk through contracted suppliers, with deliveries planned months in advance. Acting general manager of the regional council Nick Mostardo said fuel is sourced via international routes.

“It comes out of Singapore via Fiji for our fuel and again it’s delivered … by tanker,” he said.

“It pulls up to an area of the island where we have our bulk fuel storage tanks and it pumps from the tanker, into the tanks, and from there, it is managed by an on-island company.”

While supply remains stable, Mostardo said the concern is the broader economic impact.

“What does concern me though is obviously the flow on effect of consumers when it comes to what they’re paying at the pump, particularly if the impacts of the conflict are felt long term” he said.

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