Oil refiner and retailer Caltex is to shutter its Lytton refinery (pictured) in Queensland in May, bringing forward planned maintenance.
While the company plans to complete the work by August, it warned that it would only re-open the refinery, one of only four remaining in Australia, if ‘margin conditions have sufficiently recovered’.
The global oil industry is suffering low prices, margins and sales following a price war and a drop in demand from airlines and consumers affected by the Covid-19 coronavirus pandemic.
While Caltex’s action, reported in Channel 9 media, is understandable, any permanent reduction in Australia’s oil refining capacity would be a severe blow to the resilience of the Australian economy.
There are already widespread concerns about Australia’s ability to weather external economic shocks, well illustrated by Covid-19, given that 75 per cent of crude oil and 55 per cent of refined petroleum is sourced from overseas.
ABC has calculated that at the end of December, Australia had stocks equivalent to 21 days of automotive gasoline consumption, 19 days of aviation turbine fuel and 16 days of diesel.
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