The construction sector is on high alert, anticipating a scenario reminiscent of the COVID-19 period when supply chain issues led to soaring costs, as fuel prices surge once again.

Recent military actions in the Middle East, including U.S. and Israeli strikes on Iran and subsequent retaliations, have sparked fears of fuel shortages at fuel stations and their ripple effects on industries heavily dependent on fuel.

Denita Wawn, CEO of Master Builders Australia, expressed growing concern within the construction industry over escalating expenses.

“We’re inundated with notifications from our building suppliers about heightened transport costs due to fuel surcharge increases,” she shared with SBS News.

Wawn emphasized the industry’s heavy reliance on diesel, crucial for civil construction projects and the numerous utility vehicles traversing cities and rural areas daily to reach various building sites.

Although developers became more cautious with their predictions post-COVID-19, Wawn noted that the long approval times, spanning six to 24 months before a project begins, meant these unforeseen costs were not anticipated in their budgets.

Wawn is urging the government to step in early and consider a fuel carve-out for the building and construction industry.

“It is critical that essential services like building and construction continue,” she said.

“And if that means that fuel rationing has to occur for the betterment of the country as a whole, so be it. Building and construction has to be included.”

Prime Minister Anthony Albanese has not suggested fuel rationing or carve-outs for particular industries to date, instead urging calm.

On Thursday, Albanese reassured Australians that fuel deliveries have not yet been disrupted and established a fuel taskforce to coordinate state and Commonwealth distribution efforts around the country.

“Our fuel supply is currently secure. However, I want us to be overprepared,” he said.

Energy Minister Chris Bowen revealed that 519 million litres of petrol and diesel have been released from the country’s emergency reserves and directed to regional Australia.

He reiterated government calls for people not to panic-buy fuel, explaining it puts strain on the supply chain, which is already adapting to changing international circumstances.

“If demand is double, the supply chain will struggle,” Bowen told ABC RN on Friday morning.

Government’s new homes target at risk

Wawn stressed that transport and material cost increases and disruptions to the building supply chain will hinder efforts to meet the National Housing Accord target of 1.2 million homes before the end of the decade.

“Higher costs for builders will harm productivity and affordability at a time when we need a dramatic increase in housing supply,” Wawn said.

“Since the start of the Accord, a 75,000-home backlog has already accumulated. Unless the federal government pulls the correct policy levers, recent events are likely to worsen the home building situation even further.”

Earlier this week, the Urban Development Institute of Australia released its annual State of the Land report, examining residential development activity across Australia.

It forecasts a shortfall of 380,000 new dwellings by 2030, and a production drop of 11 per cent in 2026 alone, due to rising costs, labour shortages and volatility in the construction industry.

Opposition housing spokesperson Andrew Bragg says the industry has been “bogged down” by high labour and material costs for years.

“Construction costs and labour shortages were already biting before any conflict in the Middle East disrupted global supply chains,” he told SBS News.

“This has only been made worse by the current oil crisis.”

He pointed to 3,596 building industry insolvencies in 2025, according to the Australian Securities and Investments Commission, as demonstrating the “fragility” of the sector.

“Builders and developers are being forced to operate in a system that is increasingly costly and difficult,” he said.

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