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Understanding the Liquid Fuel Emergency Act
Our Commercial team discuss this important topic.
Introduction
The Albanese Government recently stated that it was not currently “contemplating” the need to exercise emergency fuel powers under the Liquid Fuel Emergency Act 1984 (Cth) (LFE Act) in response to rapidly rising fuel prices in Australia.
Speaking on Sunday March 22 March 2026, Federal Energy Minister Chris Bowen revealed that less than 10% of oil shipments had been cancelled due to the conflict in the Middle East, and that some of these shipments had already been replaced by other suppliers. The release of strategic reserves, Minister Bowen indicated, only followed to ease demand after a spate of panic buying.
In effect, the Federal Government’s position was that it was too soon to invoke the emergency powers under the LFE Act, which allow the Minister for Energy to control fuel sales.
This response from the government raises two questions – at what point might it exercise its emergency powers, and for whom would fuel use be restricted?
The Liquid Fuel Emergency Act 1984
The LFE Act grants the Australian government a range of powers to address and manage situations involving liquid fuel shortages, particularly during a national liquid fuel emergency. A few key provisions of the LFE Act include:
1.The Declaration of a ‘National Liquid Fuel Emergency’: The Governor-General may declare a national liquid fuel emergency by Proclamation, provided the Minister is satisfied that there is a shortage or likely shortage of liquid fuel of such magnitude that it necessitates government intervention. This declaration can only be made after consultation with relevant State and Territory Energy Ministers or if a national emergency declaration is in force.
2. Once a ‘National Liquid Fuel Emergency’ has been declared, the Minister can:
a) direct fuel industry corporations to maintain or accumulate specified quantities of reserve supplies of liquid fuel at designated locations to address shortages;
b) order the transfer of liquid fuel from one location to another within Australia to ensure adequate distribution;
c) require fuel industry corporations to make specific quantities of liquid fuel available for purchase by specified persons or organisations, potentially including price-setting mechanisms; and
d) regulate or prohibit the supply of refined liquid petroleum products to certain persons or groups, except bulk customers, during the emergency.
3. The Minister can appoint authorised persons to exercise powers under the LFE Act, including inspecting premises, seizing documents or items, and enforcing compliance with the LFE Act’s provisions. These powers may be exercised with consent, a warrant, or in emergency situations without a warrant if there is a risk of evidence being concealed or destroyed.
At what point might the powers be used?
Minister Bowen was quick to point out that the LFE Act has never been invoked. This includes both the 1990-1991 Gulf War and the 2003 Iraq War, as well as during COVID.
It is important to understand in this context that most Australian States and Territories have their own legislation in place to regulate the use of fuel.
For example, under the Emergency Management Act 2005 (WA) (EMA Act), if there is a declared state of emergency in Western Australia, such as might typically follow a major natural disaster, authorised officers are granted extensive powers to manage the emergency. These powers include the ability to “disconnect or shut off any electricity, gas, water or fuel supply” within the emergency area.
The powers granted under the EMA Act could be interpreted to include measures to control or limit fuel distribution during emergencies.
One would expect, therefore, that the LFE Act would only be invoked if the fuel shortage presented as substantive (as opposed to perceived) national risk that could not be mitigated by domestic restrictions or reallocations.
This has happened before, prior to the LFE Act coming into existence. In 1979, the country confronted massive shortages of fuel following the revolution in Iran, which was further hampered by prolonged industrial action at the giant Caltex Kurnell oil refinery in Sydney. The combined effect of these events required a coordinated, national-level response, which included a government decree that consumers could only buy fuel every second day, with rationing based on odd and even car number plates.
Who would be prioritised in the event of a National Liquid Fuel Emergency?
A critical aspect of the response to a National Liquid Fuel Emergency is how fuel is allocated.
Generally speaking, users who contribute to the provision of goods or services which, if reduced in supply or availability, would be likely to seriously damage the health, safety or welfare of the community, have priority access to fuel.
However, section 11 of the LFE Act specifies ‘essential users’ of a particular refined liquid petroleum product as including any person or organisation undertaking the following:
- Activities related to the defence of Australia;
- Activities related to the provision of the product as fuel for ships and aircraft engaged in trade or commerce;
- Activities related to the export of product from Australia; or
- Activities determined by the Minister under subsection 15(3) of the LFE Act, provided the Minister is satisfied that the activity is essential to the health, safety, or welfare of the community.
Take-home for Farmers.
While no-one will argue that the production of agricultural products is vital for Australia, a National Liquid Fuel Emergency will prioritise defence, health, and emergency services.
While historically national-level emergencies are rare, they have happened, and current events show they can happen quickly.
As part of any normal business continuity planning, farming operations should consider the efficiency of current fuel use and management, and the fuel efficiency of current equipment and vehicles deployed by the business. This will not only reduce overall fuel use to the business (saving money) but assist in managing any fuel supply disruption.
How can HHG Legal Group help?
*The information provided in this website serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable legal team for any specific inquiries or advice relevant to your circumstances, as the content may not have been updated subsequently.