While Australia scrambled for fuel, millions of litres were being exported

Australia has about three days' worth of readily available fuel supply made from ethanol, sugarcane and other biofuels, but the vast majority is sold overseas.

The newly former Biofuel Producers Alliance says a mandate on fuel importers and refiners could shore up Australia's fuel stocks, buffer against price shocks and support Australian farmers.

The federal government is consulting on whether to create a "volumetric mandate" that would require fuel companies to buy Australian-made fuels.

Australia is exporting tens of millions of litres of biofuels that could instead add at least three days of supply to the nation's petrol and diesel stocks.

Petrol prices have risen again to an average $2.42 per litre as the war in Iran drags on longer than anticipated.

There are fresh concerns about Australia's vulnerable fuel stocks heading into the summer holidays as the United States mulls a ban on diesel exports .

Australia currently holds 41 days of petrol supply and 33 days of diesel, more than when the Iran war began because of emergency measures imposed earlier in the year, but still well below the international requirement to hold 90 days of supply.

With the country's fuel security vulnerabilities exposed, the government is looking at whether to force petroleum companies to buy Australian-made fuels that are being sold overseas to help buffer the country from price and supply shocks.

A new alliance of Australian biofuel producers has formed to encourage the federal government to require the major petroleum importers and refiners to buy Australian biofuels, made from the waste by-products of wheat, sugarcane, cooking oils and other farming "feedstocks".

The Biofuel Producers Alliance, made up of Manildra Group, Wilmar Sugar, and three biodiesel companies, already has about 470 megalitres of ethanol and biodiesel capacity, which amounts to about three days' extra supply.

But in the first six months of the year, when Australia was scrounging for additional fuel, more than 60 megalitres produced in Australia was sent overseas instead, because there is little demand from petroleum importers and refiners to buy Australian biofuels.

"When we were sitting in March and April, and all of this was unfolding, E10 was one of the first fuels to drop out in service stations, and at the same time we shipped out 24 million litres of ethanol to South-East Asia, Korea and other places for them to use with their cars," chief executive of the Biofuel Producers Alliance Matt Hobbs said.

"At a time of a fuel crisis we ignored fuel that we made here and instead sent it to other countries."

Mr Hobbs said if the federal government introduced a "national biofuel blending requirement" from 2027 it could shore up stocks and ease the pain at the bowser by several cents a litre during price shocks.