Transcription
Australians are facing record high prices at the bowser as the Middle East war disrupts the global supply of both fuel and gas. Rural and regional areas are bearing the brunt of the national supply shortage, which has been compounded, of course, by panic buying.
Well, today, the International Energy Agency has offered fuel-saving recommendations amid this global supply issue, and they're urging Australians to work from home, to drive slower, take fewer flights as part of measures to reduce the demand for oil.
Well, joining us now is Tony Wood, energy program director at the Graten Institute. Thank you so much for taking the time to speak with us this morning, Tony.
Good morning. Lovely to be here.
Well, uh, Tony, it's pretty dire, isn't it, when the International Energy Agency says that the world is facing one of the biggest oil crisis in its history, and it's also warned that it could take about 6 months or longer to fully restore uh, oil and gas flows from the Gulf. Does that mean the pain at the petrol boughs are going to be extended for the rest of the year here in Australia?
Well, it certainly feels like that. Um, this is a moving event as as it's unfolded over the last several weeks. I think Fazier, and I think it's very difficult to see where this is going to go, actually going to go next. Um, the optimism that the government had um was obviously worthwhile trying, but so far, that hasn't proved to be the right, the outcome that we're seeing. And as a result of the damage that was done only a couple of days ago, both by both Israel and Iran to the big gas infrastructure, that's even worse than having the straight horm block because now it's going to take quite some while to fix that. Now, that doesn't affect Australia quite so much in terms of fuel supply, but I think there's no doubt that this is going to continue for a while, and all the things that have to be done. I think the government's doing that. Does however mean the sort of things the IEA has recommended um are the things we should be doing. Um, we did it, we, you and I didn't do it 50 years ago, but it's the sort of things we need to do um as we did way back then when there was another Middle East crisis.
Okay, so you know, we are seeing petrol stations there running dry here in in Australia, particularly in the rural regional areas. We're seeing the price of diesel above $3 a litre. Now, what is going on with Australia's supply?
Australia is a long way from the rest of the world when it comes down to these sorts of things, and we're on the end of quite a long supply chains. And of course, people in rural and regional Australia are at the end of long supply chains in our country. And so by the time things move through that, you can see how things getting disrupted really does have an impact, particularly if you're at the end of all those two long supply chains. We import most of our petrol, diesel, and aviation fuel. um, the people who import that fuel pay the international price, and the international price went up quite significantly, and inevitably, those prices flow through to the bowser. We actually haven't, up until now, physically been running out of petrol in our total system, but because of, as you said, people rushing out and buying, not surprisingly, I mean, I don't really criticize for people for reacting the way they did, but not surprisingly, rushing out and saying, well, I better fill up now, just fill up my my car, but my maybe a couple of jerry cans of fuel. You can see why you quickly can drain the supply chain of fuel, even if more fuel is coming into the country at one end.
That's surprising. I mean, is there a need for panic buying? Should we all be going out there and filling our jerry cans and our cars and anything else we could put petrol in?
Well, you know, some people have made a comparison with buying toilet paper in the during CO. Right now, I don't know. I'm not going to ask you how many rolls of toilet paper you bought, but what you can't, what you can do with toilet paper is drag it home and and fill your bedroom with the with a whole bedroom full of toilet paper if you want, right? You can't do that with petrol. You can't do that with diesel. Now, some organizations, farmers who have on-site diesel storage for their machinery, some trucking companies who have on-site storage for their big trucks, they they do have a lot of storage. If they if they react to the possibility that prices are going to go up next week, then you fill up. Now, what that does, of course, if everybody does the same thing, suddenly a lot of the system is sudden is actually filling up all this storage in the supply chain.
And we're not actually driving anymore. We're not actually using anymore. So that can create what looks like a, what is at the end of the system, a real shortage, but actually is not an overall system shortage. And so filling up the system is what the government's doing. Up until now, all fuel has been coming into the country from overseas. But clearly, now, the way this is going, there is a risk. There's a risk that they may, that may become problematic, and we've heard rumors that some of our suppliers overseas may start to reduce their supply to Australia. So that means it could be at worse, and that's why the government is beginning to react now in ways that are more extreme than they were.
Tony, you mentioned there, you know, Australia really is dependent on the import of foreign fuel. You know, of course, this leaving us vulnerable, as you mentioned there. There's a possibility we might become um, we might actually see this crisis really play out throughout the petrol pumps in this oil crisis. But what lessons can Australia then take from this going forward?
I guess there's three or four. Um, I speak to you on Saturday morning in my moral superiority with my electric car. That's one thing that people can do, right? I mean, there's ch other countries, including China, have moved very heavily towards reducing their dependence on imported fuel. That's one thing we can do in the short term. Of course, that's not going to be possible. So there's things we can do in terms of looking seriously at whether or not the amount of fuel we have stored on shore is enough. Was about 35 days. That seems quite a bit. It's been, that's higher than it's been for at least 15 years, and the government has deliberately increased that amount of onshore storage of fuel. Now, right now, that's looking as though maybe it wasn't enough. It's easy to say, do I need more insurance when my house is burning down? It's a bit late to do that. So, we have to think about whether or not we should increase the onore storage. We actually produce a lot of our own crude oil, a lot of crude oil in Australia, but most of that's exported because even though we do have two refineries left that turn that fuel oil, that crude oil into petrol and diesel and aviation fuel, there's only two of them left, and they even themselves cannot use Australian crude oil to make the sort of petrol and diesel we need. And so they import most of their crude oil anyway. So there's a question of whether or not we should be raised as to whether or not there really is a case for Australia having more refineries. That would have to be something you think about carefully as to whether or not that would actually solve the problem. So there's several levers the government can play in the medium to longer term.
M. These, this sort of situation clearly rises, gives rise to those questions being, as it did, I'm told, back in the 1970s, when people really did do exactly what you described before, driving less, um, also looking to buy, they improve the fuel efficiency of our cars, all those sorts of things. That's what happened last time. I think we will make big changes as a result of this, but of course, they don't fix the day-to-day problem.
All right, Tony, it's always great having you on Weekend Breakfast. Thank you so much for chatting with us today. Tony Wood, energy program director at the Graten Institute.