Speaker 1: I'm Nicole Johnston and you're listening to seven AM. The
Speaker 1: war in the Middle East has sent Australia's fuel prices soaring,
Speaker 1: and people are worried that if the battle between the US,
Speaker 1: Israel and Iran continues for another month, Australia may have
Speaker 1: to begin rationing.
Speaker 2: Fuel.
Speaker 1: Drivers are pannied by stockpili and some petrol stations are
Speaker 1: running dry. Meanwhile, global oil supplies are under threat as
Speaker 1: Iran attacks tankers in the Strait of hor moves today.
Speaker 1: Tim Buckley, the Director of Climate Energy Finance, on how
Speaker 1: high the price of fuel could go and what does
Speaker 1: it mean for the cost of living.
Speaker 2: It's Tuesday, March seventeen.
Speaker 1: With Australian fuel prices crepping up to almost four dollars
Speaker 1: a later in some parts of the country.
Speaker 3: Panic is setting in.
Speaker 2: Just how high will the cost of fuel go?
Speaker 3: We are hearing about panic buying. We are hearing about long.
Speaker 1: Queue shortfalls across regional Australia, driven by a spike in demand.
Speaker 3: Since the war began.
Speaker 2: The young lettered daily average bumped up by fifty cents
Speaker 2: a liter, the average for diesel even higher.
Speaker 3: Tim.
Speaker 1: We've been hearing all these stories. People are stockpiling fuel,
Speaker 1: panic buying, rationing, and in some regions they're even running
Speaker 1: out of fuel.
Speaker 2: Stations are going dry.
Speaker 1: The Energy Minister Chris bow and he's been urging Australians
Speaker 1: to try and stay calm our.
Speaker 4: Fuel supply is continuing to come in. Australian should know that.
Speaker 4: That's what we've been saying when we say fuel supply
Speaker 4: is secure. That's what we say, that's what we mean.
Speaker 4: That's the fact.
Speaker 1: But could you describe for us what's really happening across
Speaker 1: the country with these fuel prices and how worried should
Speaker 1: we all be?
Speaker 3: We should be worried. There is a major war that
Speaker 3: America is invoked in the Middle East, and twenty percent
Speaker 3: of the world's oil and LNG supplies come through the
Speaker 3: Straits in the Middle East. And how long that war
Speaker 3: is going to last is anyone's guests. Australia has upwards
Speaker 3: of thirty days of reserves and supply globally is still occurring.
Speaker 3: But the longer the war goes on, the bigger the disruption,
Speaker 3: the more threat to Australia's fuel security. So at the
Speaker 3: end of the day, we are ninety percent reliant on
Speaker 3: imported oil and diesel. So we are critically exposed and
Speaker 3: if all of our supplies, all of our imports would
Speaker 3: cut off, we would run out entirely within a month
Speaker 3: if we don't move to an emergency footing.
Speaker 4: Today, after careful consideration, we are adjusting the minimum stock
Speaker 4: obligation for diesel and fuel to enable companies to better
Speaker 4: handle and better manage their supply chain.
Speaker 1: Last week the government announced the lease of that extra
Speaker 1: one hundred million leaders of oil a month into the system.
Speaker 1: Where does that come from and is it really going
Speaker 1: to make any difference?
Speaker 3: Well, the good news is so Energy Minister Bowen has
Speaker 3: released some of our stockpiles, and that stockpile, thanks to
Speaker 3: the federal Albanese government, is actually held in Australia. It's
Speaker 3: worth noting that previous Energy Minister Angus Taylor actually built
Speaker 3: stockpiles in America which would have served Australia absolutely zero
Speaker 3: value in terms of an emergency like today. But as
Speaker 3: the Energy Minister Bowen has highlighted last week, we have
Speaker 3: upwards of thirty days of reserves across the refineries in
Speaker 3: Australia and that will be progressively released. The stockpiles will
Speaker 3: be reduced in order to make sure that the temporary
Speaker 3: surge in demand as people do fill everything up, is
Speaker 3: covered and that we continue as relatively as normal as
Speaker 3: possible in the middle of a war in the Middle East.
Speaker 1: And could you tell us a bit about what other
Speaker 1: countries are trying to do to reduce demand.
Speaker 3: Well, it was interesting the philip Beans last week introduced
Speaker 3: four day working weeks. Other Asian countries are talking about
Speaker 3: requesting workers work from home. There has been suggestions that
Speaker 3: all non essential government travel should be curtailed. So there
Speaker 3: are measures that can be done, but at the moment,
Speaker 3: supply is not threatened to that extent. But who knows
Speaker 3: how long this war is going to go for, so
Speaker 3: we probably should be contemplating that. I'm sure the federal
Speaker 3: Energy Minister is talking with his state counterparts and contemplating
Speaker 3: exactly those sort of things. We should be cutting down
Speaker 3: to essential transport only.
Speaker 1: And tim We're getting all of these reports petrol prices
Speaker 1: up twenty to thirty percent since the war started, diesel
Speaker 1: thirty forty percent. How much worse can this get if
Speaker 1: it drags on? And along with just drivers, what are
Speaker 1: the other industries in Australia that are going to be
Speaker 1: really hard hit because, of course we rely on fuel
Speaker 1: for everything.
Speaker 3: Correct and prior to this war, we were importing upwards
Speaker 3: of fifty billion dollars a year of diesel and oil. Today,
Speaker 3: because the price has just gone up by fifty percent,
Speaker 3: we're importing upwards of seventy five billion dollars a year
Speaker 3: of oil. Ultimately, we've seen the oil price internationally rise
Speaker 3: by fifty percent to around one hundred US dollars a barrel,
Speaker 3: but there were indications in Asia over the weekend the
Speaker 3: spot price at one hundred and forty dollars. Though it
Speaker 3: is quite feasible that the oil price we are paying
Speaker 3: the diesel price we are paying will go up materially
Speaker 3: and will stay elevated while there is a war in
Speaker 3: the Middle East that's almost inevitable. Other industries are definitely
Speaker 3: going to be affected. At the end of the day.
Speaker 3: Oil and diesel, unfortunately, are critical for our transport, our
Speaker 3: freight transport. Unfortunately, we don't have a lot of railway transport,
Speaker 3: so all of our groceries and all of our agricultural
Speaker 3: products are moved mostly by road, and so the freight
Speaker 3: industry is going to be impacted. Our mining industry runs
Speaker 3: almost one hundred percent on imported diesel, both for the
Speaker 3: equipment and then remote power.
Speaker 1: The tim at the petrol pump. How high do you
Speaker 1: think the price could go if this keeps going on
Speaker 1: the way it is.
Speaker 3: It's anyone's guest, but certainly if prices could double from
Speaker 3: where they were only a month ago, and that then
Speaker 3: has serious systemic implications because as we just discussed, that
Speaker 3: goes into grocery prices, that goes into agricultural prices, and
Speaker 3: so that will then feed into general and fation. And
Speaker 3: the Treasurer last week talked about inflation, which hit a
Speaker 3: recent higher three point eight percent. You're a year could
Speaker 3: get up to five percent. And as soon as inflation
Speaker 3: goes up, intrastrates will go up, So the cost of living,
Speaker 3: the cost of mortgages, the cost of rent, all of
Speaker 3: that could easily be dramatically affected. So I'm not trying
Speaker 3: to be overly alarmist, but at the end of the day,
Speaker 3: there will be a serious hit to the Australian economy.
Speaker 3: They'll be a serious hit to the cost of living
Speaker 3: for everyday Australians. And all of this from a US
Speaker 3: president who thought he could win a war against a
Speaker 3: major foreign power in the space of a week. He
Speaker 3: did not brief Australia, He did not brief anyone, He
Speaker 3: didn't prepare, he didn't stop park. So we are very
Speaker 3: exposed and I think to me, that's the critical lesson
Speaker 3: we should take. Never let a disaster go to waste.
Speaker 3: We need to learn from it. We need to actually
Speaker 3: adopt new technologies and ensure that we put Australia on
Speaker 3: a path to a permanent reduction to our addiction to
Speaker 3: important fossil fuels.
Speaker 1: Coming up, how to prepare for the world's next big
Speaker 1: oil crisis?
Speaker 2: Tim if we could take a look at the bigger picture.
Speaker 1: Now we know that all of this is happening because
Speaker 1: Irans effectively close the Strait of Hall moves that narrow
Speaker 1: straight where twenty percent of the world's oil and gas
Speaker 1: supplies passed through. Could you take us through why this
Speaker 1: is one of the most important choke points in the
Speaker 1: world and what is actually happening there right now.
Speaker 3: So the strength of Humus is a bottleneck. It controls
Speaker 3: the sea lanes primarily of Iran, Iraq, the ua Q Eight,
Speaker 3: Qatar and Saudi Arabia, and more than almost twenty percent
Speaker 3: of the world's oil and elingng liquid natural gas is
Speaker 3: exported through that choke point. Now Ultimately twenty percent is
Speaker 3: a huge reduction. The ability of the world to reduce
Speaker 3: oil demand by twenty percent is minimal. There are some
Speaker 3: alleviating factors. Ironically, Iran's oil refineries are still producing it
Speaker 3: full capacity, and Iran is not attacking its own oil tankers.
Speaker 3: So Iran, one of the biggest oil producers in the world,
Speaker 3: is still exporting through that strap despite the bottleneck. There
Speaker 3: are also two overland pipelines. There's one across Saudi Arabia,
Speaker 3: which is about five million barrels of oil equivalent per
Speaker 3: day compared to say, the twenty million barrels of oil
Speaker 3: per day going through the straits. So five million can
Speaker 3: go across Saudi Arabia and be exported through a port
Speaker 3: that's not affected. But that's an unsustainable situation where we
Speaker 3: are addicted to imported oil and that oil is going
Speaker 3: to cost us significant amount more, whether it's the fifty
Speaker 3: percent we're already seeing or potentially one hundred or two
Speaker 3: hundred percent compared to where it was a month ago.
Speaker 1: An early morning strike on Iran's carg Island has added
Speaker 1: further uncertainty to the movement of oil from the Gulf.
Speaker 1: Over the weekend, we had the US target carg Island,
Speaker 1: where Iran exports most of it's oil from. Now, it
Speaker 1: only hit the military installations, but what impact would that
Speaker 1: have if the US decided to go after their energy
Speaker 1: infrastructure there.
Speaker 3: Well, the impact for the rest of the world, for
Speaker 3: including America, is extreme. And so if America decides to
Speaker 3: attack Iranian oil production, the ability not only would that
Speaker 3: immediately push the oil price up dramatically, but it would
Speaker 3: then for a long period of time, reduce Iran's exports
Speaker 3: of oil. So even if the war then stopped a
Speaker 3: week later, the ability of the Iranian industry to actually
Speaker 3: get back on its feet and start exporting, in other words,
Speaker 3: so that oil prices go back down to where they
Speaker 3: were a month ago, would be pushing it out for six, twelve,
Speaker 3: eighteen months. So America's got to be very, very careful.
Speaker 3: But then at the end of the day, America's got
Speaker 3: President Trump in control, and he was bragging over the
Speaker 3: weekend that America is self sufficient and a net exporder
Speaker 3: of oil and gas, and that America is sitting there
Speaker 3: profiteering from the war. The Financial Times over the weekend
Speaker 3: highlighted that x On and Chevron, the US oil industry
Speaker 3: will make an extra sixty billion dollars of gross profit
Speaker 3: if oil prices stay where they are today for the rest.
Speaker 5: Of this year.
Speaker 3: I would argue it's war profiteering while we all wear
Speaker 3: the cost, as does the civilians in Iran. And at
Speaker 3: the end of the day, the more there is instability
Speaker 3: in the Middle East, the higher fossil fuel prices go.
Speaker 5: Well, first of an honest appraisal of exactly what is
Speaker 5: coming into the nation and what needs to be used
Speaker 5: and if it requires rationing in the cities. We're not
Speaker 5: saying you can't have fuel, but you have to limit
Speaker 5: it and say, look, there's fifty liters a week.
Speaker 1: Finally, tim some politicians are talking about fuel rationing and
Speaker 1: clearly this crisis is showing no signs of easing. So
Speaker 1: what is it that the government should do now to
Speaker 1: make sure that we're not exposed like this for the
Speaker 1: next big shock.
Speaker 3: I would love to see the Australian government at the
Speaker 3: moment they provide an eleven billion dollar a year subsidy
Speaker 3: to import a diesel in Australia. A subsidy, which undermines
Speaker 3: our energy security, it undermines our energy independence, and it
Speaker 3: undermines our climate ambitions. The idea that we're subsidizing our
Speaker 3: addiction to important fossil fuels, to me, is ridiculous. We
Speaker 3: should be deploying the solutions accelerate the deployment of electric
Speaker 3: vehicles in our road transport, both freight and consumer transport,
Speaker 3: and in our mining sector. BHB and RIO have been
Speaker 3: quoted last year is saying the technology doesn't exist, and
Speaker 3: I'll call rubbish on that. In China, in the month
Speaker 3: of December, fifty four percent of all heavy duty trucks
Speaker 3: in China where electric vehicles the technology has changed, they
Speaker 3: are available. This month, Rio and its partners in Guinea
Speaker 3: in Sindemu are deploying four hundred hybrid electric vehicle trucks BHP.
Speaker 3: In Es Dondeta in Chile, the biggest copper mine in
Speaker 3: the world, rolled out one hundred percent renewable energy power
Speaker 3: for their grid back in twenty twenty two. So what's different.
Speaker 3: Why the BHP do it in Chile? Why is Rio
Speaker 3: doing it in Guinea but they're not doing it in Australia.
Speaker 3: The answer is an eleven billion dollar subsidy a year
Speaker 3: to keep our addiction to imported diesel. We need to
Speaker 3: actually adopt new technologies and ensure that we put Australia
Speaker 3: on a path to a permanent reduction to our addiction
Speaker 3: to imported fossil fuels. We should have done it five
Speaker 3: years ago. So measures that were hypothetically possible five years
Speaker 3: ago are entirely commercially viable today. We need to actually
Speaker 3: respond to this crisis and permanently reduce our addiction to
Speaker 3: imported oil. And I think Treasurer Charmers really needs to
Speaker 3: use this crisis and hold b HP and RIO to
Speaker 3: account and get a team Australia approach going. It's not
Speaker 3: going to change things overnight, but it means that next
Speaker 3: time we have a war and oil prices go through
Speaker 3: the roof, and it will be next time and a
Speaker 3: time after that will be far, far less exposed.
Speaker 2: Tim, thanks so much for joining us.
Speaker 3: Thank you very much.
Speaker 2: Also in the news, the.
Speaker 1: Federal government says it will not send an Australian warship
Speaker 1: to the Middle East. US President Donald Trump has been
Speaker 1: trying to rally countries including China, France, Japan and the
Speaker 1: UK to send ships to the Strait of Hall moves
Speaker 1: in an effort to protect oil tankers. So far, no
Speaker 1: one has answered his call, and the Australian Communications and
Speaker 1: Media Authority has slapped new conditions on the radio network
Speaker 1: behind Kyle and Jackie O. The move comes in response
Speaker 1: to repeated breaches by the pair, who recently split after
Speaker 1: an on air fight. The regulator now has greater powers
Speaker 1: to punish ARN, which owns Kiss FM, including the power
Speaker 1: to suspend or cancel their broadcasting license. I'm Nicole Johnston.
Speaker 1: This is seven AM. Thanks for listening.
Speaker 3: Un