Australia Braces for Oil Price Surge as Diesel Tops $3 a Litre Nationwide
The federal government is actively preparing for scenarios where global oil prices spike above US$120 a barrel, as diesel prices nationwide have exceeded $3 a litre. Prime Minister Anthony Albanese has scheduled another national cabinet meeting to coordinate petrol supply strategies, amid growing concerns over fuel availability and cost.
Regional Fuel Supply Challenges Highlighted
Energy minister Chris Bowen has acknowledged significant issues in regional Australia, where demand for fuel is exceptionally high. He stated that Australia currently holds the same amount of fuel as it did when the US and Israel launched their war on Iran a month ago, but emphasised the difficulties in distributing it effectively to remote areas.
Bowen revealed that 757 million litres from Australia's strategic fuel reserve have been released, including 545 million litres of diesel and 212 million litres of petrol. This marks an increase from 519 million litres released the previous week. The additional supply is being directed to regional distributors, with one company boosting allocations by up to 150%.
Government Considers Ethanol Mandates and Emergency Measures
Treasurer Jim Chalmers confirmed that expanding ethanol mandates across the country is under consideration, following revelations that the government is analysing ways to increase biofuel supply. While rationing is not imminent, internal documents from 2020 outline potential emergency powers, such as limiting fuel purchases, banning jerry can fill-ups, and discouraging non-essential driving.
Bowen described these documents as outdated, created under the previous Morrison Coalition government, and stressed that declaring a National Fuel Emergency is unlikely. He stated, "Rationing would be the absolute worst case planning purpose. So, it's not on the agenda."
Oil Price Modelling and National Coordination Efforts
Chalmers disclosed that the Treasury department has begun modelling the effects of skyrocketing oil prices, with scenarios including US$100 per barrel for a short period and US$120 per barrel for longer durations. Oil is currently trading around US$89 a barrel. He emphasised the economic impact of ongoing conflicts, noting, "The end of this war can't come soon enough for the economy."
National cabinet will meet next week to enhance coordination between state and federal leaders. States have urged the federal government to take a more active role in managing the fuel crisis, including potential measures like promoting work-from-home arrangements to reduce fuel consumption.
Fuel Price Data and Future Shipments Secured
According to fuel monitoring website Motormouth, the average price of diesel surpassed $3 per litre in every capital city except Darwin on Wednesday. Canberra recorded the highest average at $3.10 per litre, followed by Sydney at $3.07 and Melbourne at $3.04.
Bowen also announced that six cancelled shipments of refined oil have been replaced with future orders, with an additional two shipments secured. These eight shipments are expected to arrive in the coming weeks, bolstering national fuel stocks.
Essential services, such as police, fire, ambulance, defence, public transport, and taxis, would be exempt from any potential rationing measures, as outlined in the 2020 emergency plan. The government continues to explore options like increasing ethanol concentration in fuel supplies to mitigate the crisis.
