Empty fuel warning light in car dashboard (Getty Images Plus)

With pressure on fuel supplies, prices are volatile, supply conditions are tightening and challenges are building across transport, agriculture, and industry (Getty Images Plus)

Australia is running on empty – in more ways than one

Australia holds just 38 days of petrol reserves and still treats geographic distance as a substitute for genuine resilience.

Stephanie Campbell

26 March 20264 min read

Australia’s biggest advantage – distance – has become a source of complacency.

Six years after Australia’s first Covid-19 lockdown, the pandemic’s most important strategic lesson remains unabsorbed. The pandemic was a sovereignty stress test. It exposed how dependent Australia had become on systems it does not control, and how easily that dependence can be weaponised.

Those vulnerabilities appeared quickly. Medical supplies became scarce as demand surged while production remained concentrated offshore. Shipping disruptions exposed fragile logistics networks. Shortages of basic medicines underscored Australia’s dependence on foreign pharmaceutical manufacturing.

The implications became clearer when relations with China deteriorated. After Australia called for an investigation into the origins of the pandemic – a position later echoed across several Western governments – Beijing imposed restrictions across exports, including barley, wine, beef, coal and lobster through tariffs, regulatory pressure and informal exclusion.

China did not escalate militarily. It did not need to. It demonstrated how economic dependence converts into political pressure without crossing the threshold of conflict.

A disruption does not arrive as a statistic. It arrives as a decision problem.

Strategic competition is a process of observation. States adjust to what others tolerate. The pandemic disruptions and trade restrictions revealed how sensitive Australia’s system is to coercion.

The exposure was unmistakable. Australia responded at a scale that matched the disruption, not the underlying vulnerability. Reviews were commissioned, fuel measures introduced and industrial policy revived, yet exposure changed little. Its implications were quickly set aside.

Survival was mistaken for resilience. Because dependency did not produce a lasting crisis, it was treated as acceptable. Critical economic exposure remained largely unchanged, including continued reliance on foreign revenue streams such as international education. Defence planning emphasised deterrence, but economic policy did little to reinforce it, leaving resilience underdeveloped.

The 2023 Defence Strategic Review warned that Australia’s long-assumed strategic warning time had eroded, yet the economic foundations required to sustain national endurance remain only partially developed.

Australia’s challenge with China is not primarily military. It is structural. Modern coercion rarely begins with force. It operates through interdependence; slowly, legally, and below the threshold of war. Beijing treats economic interdependence as leverage, whereas Australia has largely treated it as commerce.

Australia enjoys one of the widest strategic margins in the modern world – geographic distance, abundant resources, stable institutions and insulation from great-power conflict. Yet this advantage has been treated as a substitute for resilience rather than a means of building it. Australia could have acted more urgently after the pandemic to diversify supply chains and build sovereign industrial capacity capable of absorbing disruption. Instead, this advantage has functioned largely as a cushion, with comfort diluting discipline.

White fuel storage tanks blue sky (Andrew Merry/Getty Images)

Australia has failed for more than a decade to meet the International Energy Agency's 90-day requirement for net oil imports (Andrew Merry/Getty Images)

Energy security now provides a live demonstration. Recent cancellations of fuel shipments from Asia underline how quickly these constraints can emerge under pressure. As conflict in the Middle East disrupts flows through the Strait of Hormuz, Australia has begun releasing fuel from emergency reserves to stabilise supply.

Australia holds roughly 38 days of petrol reserves. It has also failed for more than a decade to meet the International Energy Agency's 90-day requirement for net oil imports.

A disruption does not arrive as a statistic. It arrives as a decision problem. With diesel and jet fuel reserves also measured in weeks, policymakers would be forced to choose which sectors absorb the shock: whether to prioritise military readiness, freight and agriculture, or civilian consumption. No configuration protects all three simultaneously.

The experience again underscores that Australia’s exposure concentrates in three forms.

Supply-chain disruption, where critical imports – fuel, industrial inputs, shipping – can be interrupted without escalation, degrading endurance before a crisis and constraining operations once one begins.
Selective trade exclusion, involving tariffs, regulatory delays or informal bans that impose targeted economic pain, translates into domestic political pressure without direct confrontation.
Investment pressure, where embedded capital aligns incentives, making resistance economically costly long before coercion becomes explicit.

None of these pressures require invasion. All constrain sovereign decision-making.

The system is not collapsing. It is under strain. With pressure on fuel supplies, prices are volatile, supply conditions are tightening and challenges are building across transport, agriculture, and industry. This is structural vulnerability, a narrowing margin for error.

Dependency carries alliance consequences. US strategy in the Indo-Pacific assumes partners can absorb early pressure before American forces fully mobilise. Allies that fail to convert advantage into resilience do not merely weaken themselves, they transfer risk to Washington at the point of crisis.

Australia’s most immediate strategic risks are not invasion but interruption, exclusion and constraint imposed before conflict begins.

For policymakers, the lesson is straightforward: strategic competition now operates through economic structure as much as military force. Building resilience in advance is costly, but discovering vulnerability under pressure is costlier still: paid not in forecasts, but in constrained choices. Margin buys time. That time is being spent, and it cannot be recovered.

Covid was the preview. The next test is unlikely to arrive with warning. Only consequences.

About the author

Stephanie Campbell

Stephanie Campbell is a Melbourne-based strategist and lawyer writing on geopolitics, deterrence and strategic competition.

Topics

Australia Defence & security