Australia has seen the sharpest rise in fuel prices in the developed world since the start of the Iran war.
Prices for unleaded 95 petrol rose 31.8 per cent between February 23 and March 16, figures collated by GlobalPetrolPrices show, putting Australia behind only Nigeria (39.5 per cent) and Laos (32.9 per cent).
Diesel prices rose even more sharply at 40.1 per cent, behind Laos (72.4 per cent), Nigeria (62.5 per cent), Vietnam (45.9 per cent) and the Philippines (45.1 per cent).
According to the latest Australian Institute of Petroleum (AIP) data for the week ended March 15, the national average price was 219.5 cents per litre for petrol and 245.6 cents per litre for diesel.
The Strait of Hormuz, a critical energy chokepoint which normally accounts for around 20 per cent of global oil shipments, has remained largely closed since the US and Israel attacked Iran on February 28.
The price of crude oil is now well over $US100 a barrel, sending shockwaves through the global economy as prices for refined fuels skyrocket.
With Australians facing record-high prices at the bowser and dozens of service stations across the country reporting fuel shortages, there are warnings of far worse pain to come.
At the moment, the problems are being blamed on a surge in demand, with Prime Minister Anthony Albanese assuring the public this week that all fuel shipments for March had arrived from Asia on schedule.
But with Australia’s fuel stockpiles precariously low — 37 days of gasoline, 30 days of diesel and 29 days of jet fuel as of March 10 — the country could face major problems by mid to late April if shipments from Asia are disrupted.
Vivek Dhar, head of commodities at CommBank, said on Wednesday diesel supply was by far the biggest concern for Australia.
Diesel, used extensively in trucking, mining and farming, is the lifeblood of any economy.
“If you look at all the major crises in the world, the Suez Canal, the oil embargo in 1973, even the Iranian Revolution in 1979, this is by far the biggest disruption we’ve seen [in oil markets],” Mr Dhar said.
“The product everyone is worried about is diesel, and for good reason.”
Mr Dhar warned Australia could be more exposed than other advanced economies like Japan, South Korea, Taiwan and the US due to its relatively low stockpiles of diesel.
“The concern is that we roughly have 30 days of stockpiles,” he said.
“Initially we went to thinking this would last weeks, to now thinking this will last months.”
Australia imports around 90 per cent of its refined fuels, leaving it at the mercy of South Korea, Singapore, Malaysia, Japan and China — the countries hardest hit by the Strait’s closure.
MacroBusiness chief economist Leith van Onselen warned Australia’s economy would grind to a halt and supermarket shelves would be left empty if the country runs out of diesel next month.
He said Australia’s fuel storage levels were the lowest in the developed world — so low that they breached the International Energy Agency’s (IEA) requirement that members must hold 90 days of net oil imports.
“We’ve completely dropped the ball on fuel storage,” Mr van Onselen told news.com.au on Thursday.
“Australia is dangerously exposed to running out of diesel, which literally powers the economy across mining, freight, agriculture, essential services and backup power generation. If we run out of diesel, the economy stops and supermarket shelves go bare.”
His comments came after AMP chief economist Shane Oliver warned fuel shortages could lead to a “lockdown-type scenario” for Australians.
China has already directed refineries to pause or scale back exports, effectively cutting 32 per cent of Australia’s jet fuel supply, while South Korea has capped petrol and diesel exports.
Transport Minister Catherine King reportedly assured a meeting of airline operators this week that there was no reason to think ships won’t come in the next six weeks.
Overnight, Malaysia — Australia’s third-largest supplier of refined fuels — warned it would “prioritise our own needs” before looking at “whatever demand that we receive from overseas”.
Energy Minister Chris Bowen on Friday morning dismissed the Malaysian Embassy’s threat as “a very broad statement” that “wasn’t any particular announcement that they were taking any particular action”.
Mr Bowen again put the problem down to a surge in demand, saying that it “spiked by 100 per cent” and that “any supply chain for any commodity is going to struggle with that”.
“The number of service stations, or percentage of service stations, that are fully out of fuel is very low as a percentage … across the country,” he told ABC Radio, claiming it was in “single digits”.
“But that doesn’t mean it’s not a real crisis and real challenge for those people who are having trouble getting fuel in rural and regional areas.”
Mr Albanese on Thursday appointed a fuel supply task-force co-ordinator to work with states and territories on distribution.
“I want to assure Australians at this time that Australia is well prepared,” Mr Albanese told reporters in Hobart.
“Our fuel supply is currently secure. However, I want us to be overprepared. I understand there are Australians in some parts of our nation that are really worried as they watch what is unfolding in the Middle East, and that is understandable. But we’re doing all that we can to secure our fuel supply and to get it to the places that need it.”
The PM urged Australians “please do not take more fuel than you need”.
“That is how you can help,” he said.
“It’s the Australian way to think of others, to think of their neighbours, their community and also to think of the national interest.”
Up-to-date figures on Australia’s fuel stocks will be published by the federal government on Friday.
The Minimum Stockholding Obligation (MSO), set by the federal government, requires fuel companies to hold a minimum volume of petrol, diesel and jet fuel.
But the MSO is largely an accounting measure. It doesn’t represent actual, refined fuel stored in tanks and ready to be used by consumers.
It includes “stocks on water in Australia’s exclusive economic zone and some crude oil and unfinished stocks at refineries”, according to the MSO’s methodology.
Mr van Onselen worried Australia’s fuel stocks would quickly dry up as Asian countries began to prioritise domestic demand.
“The nightmare scenario is that resource nationalism overruns the oil market globally,” he said.
— with Harrison Christian
