I'm Nicole Johnston and you're listening to seven AM. The war in the Middle East has sent Australia's fuel prices soaring, and people are worried that if the battle between the US, Israel and Iran continues for another month, Australia may have to begin rationing.
Fuel.
Drivers are pannied by stockpili and some petrol stations are running dry. Meanwhile, global oil supplies are under threat as Iran attacks tankers in the Strait of hor moves today. Tim Buckley, the Director of Climate Energy Finance, on how high the price of fuel could go and what does it mean for the cost of living.
It's Tuesday, March seventeen.
With Australian fuel prices crepping up to almost four dollars a later in some parts of the country.
Panic is setting in.
Just how high will the cost of fuel go?
We are hearing about panic buying. We are hearing about long.
Queue shortfalls across regional Australia, driven by a spike in demand.
Since the war began.
The young lettered daily average bumped up by fifty cents a liter, the average for diesel even higher.
Tim.
We've been hearing all these stories. People are stockpiling fuel, panic buying, rationing, and in some regions they're even running out of fuel.
Stations are going dry.
The Energy Minister Chris bow and he's been urging Australians to try and stay calm our.
Fuel supply is continuing to come in. Australian should know that. That's what we've been saying when we say fuel supply is secure. That's what we say, that's what we mean. That's the fact.
But could you describe for us what's really happening across the country with these fuel prices and how worried should we all be?
We should be worried. There is a major war that America is invoked in the Middle East, and twenty percent of the world's oil and LNG supplies come through the Straits in the Middle East. And how long that war is going to last is anyone's guests. Australia has upwards of thirty days of reserves and supply globally is still occurring. But the longer the war goes on, the bigger the disruption, the more threat to Australia's fuel security. So at the end of the day, we are ninety percent reliant on
imported oil and diesel. So we are critically exposed and if all of our supplies, all of our imports would cut off, we would run out entirely within a month if we don't move to an emergency footing.
Today, after careful consideration, we are adjusting the minimum stock obligation for diesel and fuel to enable companies to better handle and better manage their supply chain.
Last week the government announced the lease of that extra one hundred million leaders of oil a month into the system. Where does that come from and is it really going to make any difference?
Well, the good news is so Energy Minister Bowen has released some of our stockpiles, and that stockpile, thanks to the federal Albanese government, is actually held in Australia. It's worth noting that previous Energy Minister Angus Taylor actually built stockpiles in America which would have served Australia absolutely zero value in terms of an emergency like today. But as the Energy Minister Bowen has highlighted last week, we have upwards of thirty days of reserves across the refineries in
Australia and that will be progressively released. The stockpiles will be reduced in order to make sure that the temporary surge in demand as people do fill everything up, is covered and that we continue as relatively as normal as possible in the middle of a war in the Middle East.
And could you tell us a bit about what other countries are trying to do to reduce demand.
Well, it was interesting the philip Beans last week introduced four day working weeks. Other Asian countries are talking about requesting workers work from home. There has been suggestions that all non essential government travel should be curtailed. So there are measures that can be done, but at the moment, supply is not threatened to that extent. But who knows how long this war is going to go for, so
we probably should be contemplating that. I'm sure the federal Energy Minister is talking with his state counterparts and contemplating exactly those sort of things. We should be cutting down to essential transport only.
And tim We're getting all of these reports petrol prices up twenty to thirty percent since the war started, diesel thirty forty percent. How much worse can this get if it drags on? And along with just drivers, what are the other industries in Australia that are going to be really hard hit because, of course we rely on fuel for everything.
Correct and prior to this war, we were importing upwards of fifty billion dollars a year of diesel and oil. Today, because the price has just gone up by fifty percent, we're importing upwards of seventy five billion dollars a year of oil. Ultimately, we've seen the oil price internationally rise by fifty percent to around one hundred US dollars a barrel, but there were indications in Asia over the weekend the
spot price at one hundred and forty dollars. Though it is quite feasible that the oil price we are paying the diesel price we are paying will go up materially and will stay elevated while there is a war in the Middle East that's almost inevitable. Other industries are definitely going to be affected. At the end of the day. Oil and diesel, unfortunately, are critical for our transport, our
freight transport. Unfortunately, we don't have a lot of railway transport, so all of our groceries and all of our agricultural products are moved mostly by road, and so the freight industry is going to be impacted. Our mining industry runs almost one hundred percent on imported diesel, both for the equipment and then remote power.
The tim at the petrol pump. How high do you think the price could go if this keeps going on the way it is.
It's anyone's guest, but certainly if prices could double from where they were only a month ago, and that then has serious systemic implications because as we just discussed, that goes into grocery prices, that goes into agricultural prices, and so that will then feed into general and fation. And the Treasurer last week talked about inflation, which hit a recent higher three point eight percent. You're a year could
get up to five percent. And as soon as inflation goes up, intrastrates will go up, So the cost of living, the cost of mortgages, the cost of rent, all of that could easily be dramatically affected. So I'm not trying to be overly alarmist, but at the end of the day, there will be a serious hit to the Australian economy. They'll be a serious hit to the cost of living for everyday Australians. And all of this from a US president who thought he could win a war against a
major foreign power in the space of a week. He did not brief Australia, He did not brief anyone, He didn't prepare, he didn't stop park. So we are very exposed and I think to me, that's the critical lesson we should take. Never let a disaster go to waste. We need to learn from it. We need to actually adopt new technologies and ensure that we put Australia on a path to a permanent reduction to our addiction to important fossil fuels.
Coming up, how to prepare for the world's next big oil crisis?
Tim if we could take a look at the bigger picture.
Now we know that all of this is happening because Irans effectively close the Strait of Hall moves that narrow straight where twenty percent of the world's oil and gas supplies passed through. Could you take us through why this is one of the most important choke points in the world and what is actually happening there right now.
So the strength of Humus is a bottleneck. It controls the sea lanes primarily of Iran, Iraq, the ua Q Eight, Qatar and Saudi Arabia, and more than almost twenty percent of the world's oil and elingng liquid natural gas is exported through that choke point. Now Ultimately twenty percent is a huge reduction. The ability of the world to reduce oil demand by twenty percent is minimal. There are some
alleviating factors. Ironically, Iran's oil refineries are still producing it full capacity, and Iran is not attacking its own oil tankers. So Iran, one of the biggest oil producers in the world, is still exporting through that strap despite the bottleneck. There are also two overland pipelines. There's one across Saudi Arabia, which is about five million barrels of oil equivalent per day compared to say, the twenty million barrels of oil
per day going through the straits. So five million can go across Saudi Arabia and be exported through a port that's not affected. But that's an unsustainable situation where we are addicted to imported oil and that oil is going to cost us significant amount more, whether it's the fifty percent we're already seeing or potentially one hundred or two hundred percent compared to where it was a month ago.
An early morning strike on Iran's carg Island has added further uncertainty to the movement of oil from the Gulf. Over the weekend, we had the US target carg Island, where Iran exports most of it's oil from. Now, it only hit the military installations, but what impact would that have if the US decided to go after their energy infrastructure there.
Well, the impact for the rest of the world, for including America, is extreme. And so if America decides to attack Iranian oil production, the ability not only would that immediately push the oil price up dramatically, but it would then for a long period of time, reduce Iran's exports
of oil. So even if the war then stopped a week later, the ability of the Iranian industry to actually get back on its feet and start exporting, in other words, so that oil prices go back down to where they were a month ago, would be pushing it out for six, twelve, eighteen months. So America's got to be very, very careful.
But then at the end of the day, America's got President Trump in control, and he was bragging over the weekend that America is self sufficient and a net exporder of oil and gas, and that America is sitting there profiteering from the war. The Financial Times over the weekend highlighted that x On and Chevron, the US oil industry will make an extra sixty billion dollars of gross profit if oil prices stay where they are today for the rest.
Of this year.
I would argue it's war profiteering while we all wear the cost, as does the civilians in Iran. And at the end of the day, the more there is instability in the Middle East, the higher fossil fuel prices go.
Well, first of an honest appraisal of exactly what is coming into the nation and what needs to be used and if it requires rationing in the cities. We're not saying you can't have fuel, but you have to limit it and say, look, there's fifty liters a week.
Finally, tim some politicians are talking about fuel rationing and clearly this crisis is showing no signs of easing. So what is it that the government should do now to make sure that we're not exposed like this for the next big shock.
I would love to see the Australian government at the moment they provide an eleven billion dollar a year subsidy to import a diesel in Australia. A subsidy, which undermines our energy security, it undermines our energy independence, and it undermines our climate ambitions. The idea that we're subsidizing our
addiction to important fossil fuels, to me, is ridiculous. We should be deploying the solutions accelerate the deployment of electric vehicles in our road transport, both freight and consumer transport, and in our mining sector. BHB and RIO have been quoted last year is saying the technology doesn't exist, and I'll call rubbish on that. In China, in the month of December, fifty four percent of all heavy duty trucks in China where electric vehicles the technology has changed, they
are available. This month, Rio and its partners in Guinea in Sindemu are deploying four hundred hybrid electric vehicle trucks BHP. In Es Dondeta in Chile, the biggest copper mine in the world, rolled out one hundred percent renewable energy power for their grid back in twenty twenty two. So what's different. Why the BHP do it in Chile? Why is Rio doing it in Guinea but they're not doing it in Australia. The answer is an eleven billion dollar subsidy a year
to keep our addiction to imported diesel. We need to actually adopt new technologies and ensure that we put Australia on a path to a permanent reduction to our addiction to imported fossil fuels. We should have done it five years ago. So measures that were hypothetically possible five years ago are entirely commercially viable today. We need to actually respond to this crisis and permanently reduce our addiction to
imported oil. And I think Treasurer Charmers really needs to use this crisis and hold b HP and RIO to account and get a team Australia approach going. It's not going to change things overnight, but it means that next time we have a war and oil prices go through the roof, and it will be next time and a time after that will be far, far less exposed.
Tim, thanks so much for joining us.
Thank you very much.
Also in the news, the.
Federal government says it will not send an Australian warship to the Middle East. US President Donald Trump has been trying to rally countries including China, France, Japan and the UK to send ships to the Strait of Hall moves
in an effort to protect oil tankers. So far, no one has answered his call, and the Australian Communications and Media Authority has slapped new conditions on the radio network behind Kyle and Jackie O. The move comes in response to repeated breaches by the pair, who recently split after an on air fight. The regulator now has greater powers to punish ARN, which owns Kiss FM, including the power to suspend or cancel their broadcasting license. I'm Nicole Johnston.
This is seven AM. Thanks for listening.
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