Sydney, 19 January (Argus) — Widespread flooding in Australia's northeast state of Queensland has caused ethanol shortages, prompting refineries to switch from ethanol blended product to premium gasoline. The shortages are estimated to last at least two months.
The extent of the flood damage in central and southern Queensland is unknown, said federal government fuel regulator the Australian Competition and Consumer Commission (ACCC). But the floods have ruined sugar crops used in ethanol production in the central coastal regions of the state and at key processing plants. Ethanol is mainly sold in Queensland as a blended fuel with gasoline, with the 10pc ethanol content fuel known as E10.
The extent of the Queensland floods at one stage prompted the state government this month to declare that three-quarters of the state was a disaster zone.
BP, which operates the 88,000 b/d Bulwer Island refinery in Brisbane, said its Queensland ethanol supplier, the Chinese own Sucrogen, has advised that that adverse weather meant it is unable to supply ethanol to BP from mid-January for 150 days. “As there are no alternative supplies of locally produced ethanol currently available, BP has from 17 January began phasing out E10 in Queensland and replacing it with conventional regular unleaded 91,” BP said.
“To ensure continuity of product for our customers we will, in the next few days, begin converting all E10 pumps in Queensland to regular unleaded 91,” the firm said. BP said the timing and scale of any reintroduction of E10 sales in the state will depend largely on the return of reliable ethanol supplies.
"Fuel retailers must be particularly vigilant in the coming weeks and take all reasonable steps to ensure that consumers are not misled," ACCC commissioner Joe Dimasi said. "The ACCC encourages retailers to be clear in their signage and labelling at their service stations, including on price boards and at the pump, regarding the availability, or lack of, ethanol-blended petrol.
The ACCC indicated in a report last month that Australia may face ethanol supply shortages in the next few years. This was because of a combination of factors including increased consumer demand, government mandates and increased investment uncertainty.
Queensland is the second-largest largest consuming state of gasoline-blended ethanol behind New South Wales. The Queensland state government suspended on 28 October last year the implementation of a 5pc mandate for ethanol blended fuel that was due to start on 31 December, citing tax changes unveiled in the federal budget in May. Canberra planned to extend the phase-in of excise taxes on domestically produced and imported ethanol, which would see the current A$0.38/l ($0.37/l) differential closed to zero by 2020 instead of 2015. Domestic and imported ethanol would be subject to a 12.5¢/l federal excise tax.
Ethanol accounts for about 2.5pc of the state's total fuel supply and about 30pc of Australia's average ethanol-blended fuel consumption of 3,700 b/d for the 12 months to 31 October.
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