The Council of Small Business Organisations Australia (COSBOA) says rising fuel costs and supply uncertainty are piling pressure onto businesses already juggling higher costs across the board.

And now, talk of fuel shortages and even rationing is adding another layer of anxiety.

Fuel hikes to hit margins

COSBOA CEO Skye Cappuccio says even small increases can quickly snowball. “For businesses operating on tight margins, even small increases in fuel costs can have a direct impact on cashflow and day-to-day operations,” she says.

Unlike some costs, fuel isn’t optional. For tradies, delivery drivers, farmers and regional retailers, it’s a daily expense. When prices rise, it flows straight into transport, logistics and delivery costs and then oftentimes, on to customers.

Supply jitters but no rationing … yet

There’s been plenty of chatter about fuel shortages and whether rationing could be next and the federal government is trying to calm things down. The government says it is not actively considering fuel rationing, despite growing concern about supply pressures.

“No, we wouldn’t do that,” Energy Minister Chris Bowen told Sky News.

“I’ve pointed to this plan in the past and said, ‘Look, there are preparations in place for the very worst case. You’d have to declare a National Fuel Emergency, which has never been declared before. I’ve already said I don’t envisage doing that.”

Environment Minister Murray Watt also pushed back on reports of strict limits  like a $40 cap at the bowser, telling ABC those ideas came from an old emergency plan and are not on the table right now.

Still, the fact those plans exist at all is enough to rattle confidence. Experts have warned that if global supply disruptions worsen particularly due to ongoing conflict in the Middle East rationing could become a possibility down the track.

Regional businesses impacted

While metro businesses aren’t immune to the fuel shortages, those outside the cities seem to be bearing the brunt. Longer distances, fewer alternatives and heavier reliance on transport mean regional businesses are often hit harder and faster.

Since supply chains stretch across the country, the impact ripples through everything from freight costs to shelf prices.

Fuel isn’t the only headache right now. Small businesses are already dealing with rising energy bills, insurance premiums, wages and compliance costs. Stack fuel on top, and things start to feel pretty shaky.

“When these pressures combine, it reduces the ability of businesses to absorb shocks, delays investment and places further strain on viability,” Cappuccio says.

Small businesses need assistance

COSBOA is calling for practical flexibility while things remain volatile. That includes banks and the ATO taking a more measured approach to repayments, and larger businesses being open to renegotiating contracts where costs have shifted.

There are also calls for clearer, real-time information about fuel supply so businesses can plan ahead, not just react.

The government has already taken steps to shore up supply, including releasing fuel reserves and adjusting standards to keep fuel flowing, but as long as the war is ongoing, uncertainty remains.

If global conditions worsen, COSBOA says targeted, short-term support may be needed alongside longer-term policies that reduce the cost of doing business and support investment in more efficient vehicles and tech.

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