Australian households need to be “better informed” about the magnitude of the fuel crisis sparked by the US/Israel war with Iran and what they may be asked to do if the conflict deepens, the International Energy Agency boss says.
IEA executive director Fatih Birol gave a wide-ranging address to the National Press Club in Canberra on Monday after meeting with Energy Minister Chris Bowen and ahead of a face-to-face with Anthony Albanese.
Dr Birol will then travel to Japan as part of an Asia tour – a region, he says, where the Iran war and fuel shocks are an “immediate problem”, unlike Europe.
He said 11 million barrels of oil of day had been lost in the three weeks since US/Israel strikes on Iran started the conflict.
In recent days, the IEA has recommended consumers reduce fuel usage, including by carpooling or working from home, as well as limiting air travel.
Asked if he thought Australians were prepared for what they may be called upon to do, including Covid-style measures, Dr Birol said he “definitely wouldn’t say yes”.
“But, the households need to be better informed about the magnitude of the challenge we are facing,” he said.
“I think they’d be better prepared if they understood what kind of challenge we are facing today, but hopefully before they understand what the problem is, the problem may be hopefully solved in a peaceful manner.
“But, as I said, even the peace is made immediately, it will take some time to come back to the normal days we had before the war is started.”
The Albanese has faced pressure over its handling of the crisis.
On Sunday, Mr Bowen said six of 81 fuel ships expected to deliver to Australia had been cancelled, though he rebuffed any suggestion emergency powers should be enacted.
Dr Birol said it would be up to the government of Australia and any other nation to determine whether to mandate fuel reduction measures or any fuel rationing.
“Governments need to expect to take the measures in order to protect their economies, their citizens, their businesses,” he said.
“The primary responsibility lies with the governments, with the help of industry, of course, with help of citizens.
“If we can all move together like, as you mentioned, during the time of Covid, we can address this issue, but the primary responsibility is the governance being to mobilise all of us together.”
In his opening address, Dr Birol said governments had not properly appreciated the extent of the crisis.
“I am very happy that now there is, I hope, better recognition now, but in Australia it is very well understood,” he said.
Scale of the crisis
A stalwart of the IEA, Dr Birol described the current crisis in stark terms.
“Many of us remember the two consecutive oil crises of the 1970s … at that time, in each crisis, the world lost about five million barrels per day,” he said.
“And, after that we know that there was major economic problems.
“As of today, we lost 11 million barrels per day, so more than two major oil shocks put together.
“Plus, after the Russia’s invasion of Ukraine, the gas markets, especially Europe, we lost about 75 billion cubic meters (bcm). As of now, as a result of this crisis, we have lost about 140bcm.
“In that context, this crisis is at an extent now of two oil crisis and one gas crisis put all together.”
Then there were concerns about the supply of fertilisers, sulphur, helium.
Answering questions from Australian media, Mr Birol said Iran’s effective closure of the Strait of Hormuz, through which about one fifth of the world’s oil transits, was “very severe”.
Earlier this month, the IEA ordered the release of 400 million barrels of oil by its member nations, including Australia, the UK and the United States.
“We have never released so much oil to the markets, and it was not the easiest thing for all our member countries,” he said.
That measure reduced fuel prices, but only temporarily.
The IEA has since urged member countries to encourage citizens to reduce fuel consumption, including carpooling or working from home, and limit air travel.
“We are doing this, to be very frank, to reduce the pain on the economy,” Dr Birol.
“The single most important solution to this problem is opening up the Strait of Hormuz.”
Dr Birol would not rule out further releases, saying he was consulting with the governments in Asia and “on a daily basis in contact with colleagues” in North America and Middle East, as well as major consumer countries such as China.
“We will see. We will look at the markets. If it is necessary, of course, we will do it,” he said.
“But, we will look at the conditions, we will analyse and assess the markets, and discuss with our member countries.”
