The warning, made in a state government submission to a Senate inquiry into the nation's fuel security, is that the dwindling output from local refineries will mean that bitumen for road making, a by-product of oil refining, will have to be 100 per cent imported.

That will increase the cost of building roads but likely be recouped through higher rego costs, according to the Queensland government's submission to the Rural and Regional Affairs and Transport Committee.

The committee established the inquiry, Australia's transport energy resilience and sustainability, after complaints from several bodies, including the NRMA and the Australian Automobile Association, that the country was vulnerable to fuel supply shocks.

Australia now imports 91 per cent of its petrol and diesel – up from 60 per cent in 2000. The Bureau of Resources and Energy Economics calculates that Australia has just 12 days of diesel stock.

With the closure of Caltex's Kurnell refinery and Shell's Clyde refinery in Sydney, there is no oil refining any more in NSW.

Shell's Geelong refinery, now owned by Viva Energy, still supplies 871 petrol stations in Victoria but there are doubts about long term refining. Two refineries are due to close in Queensland, including BP's facility in Brisbane.

Just one  huge oil refinery in Singapore supplies half of Australia's unleaded petrol and Fairfax Media revealed in November that al-Qaeda had urged jihadists to attack oil tankers that use the shipping supply routes that transport 70 per cent of the nation's petrol.

In their submissions to the inquiry, the Australian petrol companies said there is little threat to the fuel supply and rebuilding refining capacity to a point where the country was insulated from a significant supply shock would cost $6.8 billion.

Money, they say, that would have to come directly from government, or from consumers in higher petrol prices.

Caltex said: "Australia does not have a fuel security problem. Increasing stocks to 90 days of net imports would make very little difference to fuel security.

"The solution to extreme scenarios is having adequate flows of oil, not stocks.

"There is a high cost (an estimated $6.8 billion) to invest in strategic reserve stocks of fuel to protect against the long run risk of sudden severe disruption to global trade. This cost would need to be met by either increased fuel prices or the diversion of public funds."

In its submission, the NRMA said countries like the United Kingdom and Japan were actively shoring up fuel security but Australia was going in the opposite direction.

"The UK is having a conversation about how to maintain security when the market can no longer deliver. The Australian Government has not yet initiated this conversation with the Australian public," it said.

"We suggest that declining domestic refining capacity is not a 'longer term' issue, but an issue requiring immediate response. By mid next year, Australia will have lost 50 per cent of our refining capacity since 2003 … and all in the absence of any strategic assessment of the importance of a refining capacity to Australia."