The refinery, when operating at full capacity, has the ability to produce up to 120,000 barrels of oil each day. This output includes a variety of fuels such as petrol, diesel, LPG, and jet fuel.
It plays a crucial role in the region, supplying over half of Victoria’s fuel needs and accounting for 10 percent of Australia’s overall fuel supply.
Industry experts have issued warnings that the recent incident is expected to trigger disruptions in the supply chain and could lead to a surge in fuel prices both in Victoria and on a broader scale.
“Having the refinery out of commission at this time is definitely concerning,” one expert noted.
They added, “Under usual circumstances, resolving such issues typically requires time. However, given the current situation, it’s possible that the impacts could be felt immediately.”
The impact will be felt initially in Victoria, where Viva Energy supplies most of its fuel.
Fuel prices and shortages may also worsen as national output shrinks at the refinery, Hartigan said.
“If you think about what happened with the Strait of Hormuz, that is 20 per cent [of global oil supply], and you can see that effect around the world,” Hartigan said.
“Even in a small part, when you’ve got restricted supply, it means it could have an effect.”
Hartigan said the fire will likely “dull the benefits” of the federal government’s efforts to ease supply and price pain, including the temporary excise reduction.
Swinburne’s Professor of Transport Technology and Sustainability Hussein Dia said any positive progress made by the Victorian state government may be reversed, including the impacts of offering free public transport for the month of April.
“It’s not just a shock to supply, but it is a loss of flexibility, and that’s what’s going to put upward pressure on prices, despite what the government has been doing,” Dia said.
“This was unexpected, and the government has been trying to shield consumers by the cutting of the fuel excise, and in Victoria, we have the free public transport.”
Dia said fuel prices in Victoria will likely grow, but said it might not be a “dramatic” spike at the pump tomorrow.
“The system was already under pressure and now it’s operating with less buffer, and that will likely show up in prices over time,” he added.
The flow-on effect of the Geelong fire could also touch the supermarket supply chain if Victorian farmers lose even more access to diesel.
“There’s less access to food because if trucks can’t get diesel, then they can’t deliver food,” Hartigan said.
“There’s the worry that there’s an impact on pricing… and that there is less supply of diesel now because that refinery is [partially] offline.”
Energy Minister Chris Bowen earlier said the blaze will worsen Australia’s national fuel supply as the refinery slashes its production, describing it as “not a positive development”.
“There will be an impact on production,” Bowen told Today.
“At this point, production of jet fuel and diesel is continuing at the refinery at reduced levels for safety reasons as a precaution. At this point, the impact is mainly on petrol production.”
Australia’s only other operating oil refinery, the Ampol Lytton Refinery in Brisbane, may need to fill in the gaps left by Viva Energy’s reduced output.
The Brisbane refinery also provides about 10 per cent of Australia’s fuel.
The remainder is imported from overseas, including the Middle East and Singapore.
“It will be a delicate balance between trying to get it to work a bit longer but not trying to work it too hard,” Hartigan added.
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