Stop ignoring the obvious: energy efficiency is Australia’s best diesel insurance policy

The Iran conflict has laid bare Australia’s dependence on refined oil product imports. Australia is particularly at risk when it comes to diesel imports.

Diesel makes up more than half of Australia’s oil product use (excluding oil use for petroleum refining). Diesel is a key energy source for major economic sectors, in particular transport, mining, agriculture and construction.

Australia is one of the world’s highest users of diesel on a per dollar GDP basis, with a diesel consumption about three times as high as the US and Japan, and twice as high as Canada.

In addition, Australia is highly dependent on diesel imports. Only 13% of the country’s diesel is sourced from domestic production, with the vast majority imported from Asian refineries.

Australia was reportedly the world’s largest importer of diesel in 2025, representing between 6.5% and 10% of global seaborne trade, vastly more than its share of global population and GDP. 

Diesel trade is particularly affected by the Iran conflict because Gulf countries are key suppliers of diesel and crude oil grades that yield the most diesel. The Asian refineries that supply Australia’s diesel are mostly configured to process Gulf crude oils. As a result, diesel prices have risen more sharply (up to tripling compared with pre-crisis prices) and are more volatile than petrol or crude oil. 

A prolonged conflict would likely force most Asia-Pacific diesel exporters to either slash their exports or even start importing to meet their domestic demand.

China has already banned exports of diesel. Taiwan, Brunei and India have also reportedly materially decreased their exports to Australia. Some countries would be able to tap into their crude oil reserves to compensate for the loss of Gulf supply, but they may be unwilling to do so to support exports in the long run.

Large, untapped opportunities to reduce diesel demand

An unsung hero – energy efficiency – could provide both cost relief and a valuable insurance policy for a potential global diesel squeeze in Australia.

Diesel demand has a low elasticity to price, due to the fact diesel use is often non-discretionary, with a US study even finding that trucking fuel demand is now fully inelastic. However, there are many untapped opportunities to reduce diesel demand by improving fuel efficiency in the transport, mining and agriculture sectors. 

Road transport is the largest user of diesel in Australia (55%), with trucks the largest subcategory, followed by light commercial vehicles and cars. There are many opportunities to deliver fast improvements in fuel efficiency in road transport, particularly through eco-driving, maintenance and logistics. 

Eco-driving involves avoiding unnecessary acceleration and braking, maintaining a steady speed at low revolutions per minute, shifting up gear early and minimising idling. The best truck drivers use 35% less fuel than the worst drivers just through their driving practices.

In 2012, Australian logistics company Linfox reduced its carbon emissions by 14% by implementing a program to coach its drivers in eco-driving competencies, which it embedded in the company’s performance management system. Eco-driving programs have been found to deliver 5-22% of fuel savings. 

Better tyre and engine maintenance can add more than 5% savings. In logistics, route optimisation and load consolidation can improve fleet utilisation and reduce fuel use. 

Opportunities to quickly reduce diesel use in mining, agriculture and rail are often similar to road transport solutions. In the mining sector, improving idle time, payloads, driver behaviour, dispatching, engine health and rolling resistance can deliver up to 40% energy savings, some actions delivering 17%-35% alone.

In agriculture, machinery selection, driver behaviour, tractor set-up and maintenance, and effective planning and record keeping can each reduce diesel consumption by 5%-20%.

Time to ramp up fuel efficiency initiatives

Together, road and rail transport, mining and agriculture represent 88% of Australia’s diesel use, and it would be realistic to achieve 10%-20% savings in a matter of weeks.

The government has already launched a campaign to raise awareness of “simple, practical behaviours to use less fuel”. It should urgently ramp up its efforts – working with training and solutions providers to scale up their activities. 

This could involve: deploying eco-driving training (usually only about four hours) and refreshers to freight businesses; incentivising the implementation of fuel measurement and optimisation solutions, and; working with suppliers to create and disseminate education resources on key solutions.

Europe has already made eco-driving mandatory for professional drivers (in initial qualifications and periodic refreshers), but no such requirement exists in Australia.

Due to long shipping distances, Australia’s location means it may feel the fuel crisis for longer than other countries, but it is also buying the country time to prepare for a possible diesel squeeze. The government should not squander this opportunity.

Amandine Denis-Ryan is the CEO of IEEFA Australia