WEBVTT - “Prices could double”: how the fuel crisis will hit your hip pocket 0:00:01.160 --> 0:00:08.440 I'm Nicole Johnston and you're listening to seven AM. The 0:00:08.480 --> 0:00:12.320 war in the Middle East has sent Australia's fuel prices soaring, 0:00:13.000 --> 0:00:15.640 and people are worried that if the battle between the US, 0:00:15.920 --> 0:00:20.080 Israel and Iran continues for another month, Australia may have 0:00:20.120 --> 0:00:21.080 to begin rationing. 0:00:21.160 --> 0:00:21.520 Fuel. 0:00:22.640 --> 0:00:26.920 Drivers are pannied by stockpili and some petrol stations are 0:00:27.000 --> 0:00:31.840 running dry. Meanwhile, global oil supplies are under threat as 0:00:31.840 --> 0:00:35.920 Iran attacks tankers in the Strait of hor moves today. 0:00:36.159 --> 0:00:40.040 Tim Buckley, the Director of Climate Energy Finance, on how 0:00:40.120 --> 0:00:42.760 high the price of fuel could go and what does 0:00:42.760 --> 0:00:44.240 it mean for the cost of living. 0:00:49.640 --> 0:00:52.000 It's Tuesday, March seventeen. 0:00:56.640 --> 0:00:59.560 With Australian fuel prices crepping up to almost four dollars 0:00:59.600 --> 0:01:01.400 a later in some parts of the country. 0:01:01.600 --> 0:01:02.800 Panic is setting in. 0:01:03.000 --> 0:01:05.080 Just how high will the cost of fuel go? 0:01:05.280 --> 0:01:08.360 We are hearing about panic buying. We are hearing about long. 0:01:08.200 --> 0:01:12.959 Queue shortfalls across regional Australia, driven by a spike in demand. 0:01:12.680 --> 0:01:13.600 Since the war began. 0:01:13.720 --> 0:01:16.919 The young lettered daily average bumped up by fifty cents 0:01:16.920 --> 0:01:20.160 a liter, the average for diesel even higher. 0:01:20.319 --> 0:01:20.559 Tim. 0:01:20.600 --> 0:01:24.360 We've been hearing all these stories. People are stockpiling fuel, 0:01:24.720 --> 0:01:29.360 panic buying, rationing, and in some regions they're even running 0:01:29.400 --> 0:01:30.400 out of fuel. 0:01:30.560 --> 0:01:31.680 Stations are going dry. 0:01:32.240 --> 0:01:35.240 The Energy Minister Chris bow and he's been urging Australians 0:01:35.280 --> 0:01:36.880 to try and stay calm our. 0:01:36.880 --> 0:01:40.000 Fuel supply is continuing to come in. Australian should know that. 0:01:40.000 --> 0:01:41.920 That's what we've been saying when we say fuel supply 0:01:42.040 --> 0:01:44.280 is secure. That's what we say, that's what we mean. 0:01:44.440 --> 0:01:45.039 That's the fact. 0:01:45.200 --> 0:01:47.760 But could you describe for us what's really happening across 0:01:47.840 --> 0:01:51.760 the country with these fuel prices and how worried should 0:01:51.800 --> 0:01:52.280 we all be? 0:01:52.840 --> 0:01:56.160 We should be worried. There is a major war that 0:01:56.320 --> 0:02:00.559 America is invoked in the Middle East, and twenty percent 0:02:00.640 --> 0:02:05.400 of the world's oil and LNG supplies come through the 0:02:05.440 --> 0:02:09.160 Straits in the Middle East. And how long that war 0:02:09.320 --> 0:02:14.800 is going to last is anyone's guests. Australia has upwards 0:02:14.800 --> 0:02:19.320 of thirty days of reserves and supply globally is still occurring. 0:02:19.560 --> 0:02:23.080 But the longer the war goes on, the bigger the disruption, 0:02:23.280 --> 0:02:27.520 the more threat to Australia's fuel security. So at the 0:02:27.639 --> 0:02:31.760 end of the day, we are ninety percent reliant on 0:02:32.040 --> 0:02:36.720 imported oil and diesel. So we are critically exposed and 0:02:37.000 --> 0:02:39.440 if all of our supplies, all of our imports would 0:02:39.480 --> 0:02:42.640 cut off, we would run out entirely within a month 0:02:43.160 --> 0:02:45.760 if we don't move to an emergency footing. 0:02:46.240 --> 0:02:50.119 Today, after careful consideration, we are adjusting the minimum stock 0:02:50.200 --> 0:02:55.280 obligation for diesel and fuel to enable companies to better 0:02:55.320 --> 0:02:57.440 handle and better manage their supply chain. 0:02:57.639 --> 0:03:01.000 Last week the government announced the lease of that extra 0:03:01.120 --> 0:03:04.880 one hundred million leaders of oil a month into the system. 0:03:05.760 --> 0:03:07.720 Where does that come from and is it really going 0:03:07.760 --> 0:03:08.680 to make any difference? 0:03:09.040 --> 0:03:12.560 Well, the good news is so Energy Minister Bowen has 0:03:12.680 --> 0:03:18.320 released some of our stockpiles, and that stockpile, thanks to 0:03:18.480 --> 0:03:22.799 the federal Albanese government, is actually held in Australia. It's 0:03:22.840 --> 0:03:27.440 worth noting that previous Energy Minister Angus Taylor actually built 0:03:27.480 --> 0:03:31.480 stockpiles in America which would have served Australia absolutely zero 0:03:31.680 --> 0:03:36.040 value in terms of an emergency like today. But as 0:03:36.120 --> 0:03:40.400 the Energy Minister Bowen has highlighted last week, we have 0:03:40.560 --> 0:03:44.760 upwards of thirty days of reserves across the refineries in 0:03:44.800 --> 0:03:49.520 Australia and that will be progressively released. The stockpiles will 0:03:49.560 --> 0:03:53.200 be reduced in order to make sure that the temporary 0:03:53.240 --> 0:03:57.000 surge in demand as people do fill everything up, is 0:03:57.160 --> 0:04:01.839 covered and that we continue as relatively as normal as 0:04:01.920 --> 0:04:04.360 possible in the middle of a war in the Middle East. 0:04:04.600 --> 0:04:06.240 And could you tell us a bit about what other 0:04:06.320 --> 0:04:10.320 countries are trying to do to reduce demand. 0:04:10.520 --> 0:04:13.320 Well, it was interesting the philip Beans last week introduced 0:04:13.320 --> 0:04:17.000 four day working weeks. Other Asian countries are talking about 0:04:17.320 --> 0:04:22.120 requesting workers work from home. There has been suggestions that 0:04:22.600 --> 0:04:28.360 all non essential government travel should be curtailed. So there 0:04:28.400 --> 0:04:31.720 are measures that can be done, but at the moment, 0:04:31.800 --> 0:04:35.720 supply is not threatened to that extent. But who knows 0:04:35.720 --> 0:04:37.640 how long this war is going to go for, so 0:04:38.320 --> 0:04:41.600 we probably should be contemplating that. I'm sure the federal 0:04:41.720 --> 0:04:45.520 Energy Minister is talking with his state counterparts and contemplating 0:04:45.839 --> 0:04:48.800 exactly those sort of things. We should be cutting down 0:04:48.880 --> 0:04:51.320 to essential transport only. 0:04:51.480 --> 0:04:54.520 And tim We're getting all of these reports petrol prices 0:04:54.600 --> 0:04:57.960 up twenty to thirty percent since the war started, diesel 0:04:58.120 --> 0:05:02.680 thirty forty percent. How much worse can this get if 0:05:02.760 --> 0:05:06.360 it drags on? And along with just drivers, what are 0:05:06.360 --> 0:05:08.599 the other industries in Australia that are going to be 0:05:08.800 --> 0:05:12.919 really hard hit because, of course we rely on fuel 0:05:13.200 --> 0:05:13.839 for everything. 0:05:14.080 --> 0:05:18.640 Correct and prior to this war, we were importing upwards 0:05:18.640 --> 0:05:23.320 of fifty billion dollars a year of diesel and oil. Today, 0:05:23.760 --> 0:05:26.080 because the price has just gone up by fifty percent, 0:05:26.120 --> 0:05:29.000 we're importing upwards of seventy five billion dollars a year 0:05:29.040 --> 0:05:34.279 of oil. Ultimately, we've seen the oil price internationally rise 0:05:34.400 --> 0:05:37.960 by fifty percent to around one hundred US dollars a barrel, 0:05:38.279 --> 0:05:42.240 but there were indications in Asia over the weekend the 0:05:42.279 --> 0:05:45.240 spot price at one hundred and forty dollars. Though it 0:05:45.320 --> 0:05:48.440 is quite feasible that the oil price we are paying 0:05:48.480 --> 0:05:51.720 the diesel price we are paying will go up materially 0:05:51.880 --> 0:05:55.000 and will stay elevated while there is a war in 0:05:55.040 --> 0:05:59.680 the Middle East that's almost inevitable. Other industries are definitely 0:05:59.720 --> 0:06:01.720 going to be affected. At the end of the day. 0:06:02.040 --> 0:06:07.480 Oil and diesel, unfortunately, are critical for our transport, our 0:06:07.520 --> 0:06:11.040 freight transport. Unfortunately, we don't have a lot of railway transport, 0:06:11.160 --> 0:06:14.360 so all of our groceries and all of our agricultural 0:06:14.400 --> 0:06:18.279 products are moved mostly by road, and so the freight 0:06:18.360 --> 0:06:22.240 industry is going to be impacted. Our mining industry runs 0:06:22.279 --> 0:06:26.039 almost one hundred percent on imported diesel, both for the 0:06:26.320 --> 0:06:29.200 equipment and then remote power. 0:06:29.240 --> 0:06:33.159 The tim at the petrol pump. How high do you 0:06:33.200 --> 0:06:36.120 think the price could go if this keeps going on 0:06:36.160 --> 0:06:36.760 the way it is. 0:06:37.080 --> 0:06:41.400 It's anyone's guest, but certainly if prices could double from 0:06:41.440 --> 0:06:44.000 where they were only a month ago, and that then 0:06:44.160 --> 0:06:48.800 has serious systemic implications because as we just discussed, that 0:06:48.839 --> 0:06:53.080 goes into grocery prices, that goes into agricultural prices, and 0:06:53.480 --> 0:06:56.719 so that will then feed into general and fation. And 0:06:57.240 --> 0:07:01.800 the Treasurer last week talked about inflation, which hit a 0:07:01.920 --> 0:07:05.159 recent higher three point eight percent. You're a year could 0:07:05.160 --> 0:07:08.599 get up to five percent. And as soon as inflation 0:07:08.800 --> 0:07:12.119 goes up, intrastrates will go up, So the cost of living, 0:07:12.240 --> 0:07:15.160 the cost of mortgages, the cost of rent, all of 0:07:15.160 --> 0:07:19.840 that could easily be dramatically affected. So I'm not trying 0:07:19.880 --> 0:07:22.600 to be overly alarmist, but at the end of the day, 0:07:22.640 --> 0:07:26.080 there will be a serious hit to the Australian economy. 0:07:26.320 --> 0:07:29.560 They'll be a serious hit to the cost of living 0:07:29.640 --> 0:07:33.760 for everyday Australians. And all of this from a US 0:07:33.920 --> 0:07:37.120 president who thought he could win a war against a 0:07:37.200 --> 0:07:40.280 major foreign power in the space of a week. He 0:07:40.400 --> 0:07:43.040 did not brief Australia, He did not brief anyone, He 0:07:43.040 --> 0:07:46.560 didn't prepare, he didn't stop park. So we are very 0:07:47.120 --> 0:07:50.200 exposed and I think to me, that's the critical lesson 0:07:50.280 --> 0:07:54.280 we should take. Never let a disaster go to waste. 0:07:54.320 --> 0:07:56.640 We need to learn from it. We need to actually 0:07:56.880 --> 0:08:01.400 adopt new technologies and ensure that we put Australia on 0:08:01.440 --> 0:08:05.080 a path to a permanent reduction to our addiction to 0:08:05.320 --> 0:08:06.640 important fossil fuels. 0:08:08.280 --> 0:08:11.080 Coming up, how to prepare for the world's next big 0:08:11.080 --> 0:08:11.960 oil crisis? 0:08:20.920 --> 0:08:22.960 Tim if we could take a look at the bigger picture. 0:08:23.480 --> 0:08:25.760 Now we know that all of this is happening because 0:08:25.800 --> 0:08:29.360 Irans effectively close the Strait of Hall moves that narrow 0:08:29.960 --> 0:08:32.360 straight where twenty percent of the world's oil and gas 0:08:32.440 --> 0:08:36.440 supplies passed through. Could you take us through why this 0:08:36.640 --> 0:08:39.880 is one of the most important choke points in the 0:08:39.920 --> 0:08:42.920 world and what is actually happening there right now. 0:08:43.120 --> 0:08:47.680 So the strength of Humus is a bottleneck. It controls 0:08:47.720 --> 0:08:53.440 the sea lanes primarily of Iran, Iraq, the ua Q Eight, 0:08:53.920 --> 0:08:58.680 Qatar and Saudi Arabia, and more than almost twenty percent 0:08:58.800 --> 0:09:02.920 of the world's oil and elingng liquid natural gas is 0:09:03.000 --> 0:09:07.720 exported through that choke point. Now Ultimately twenty percent is 0:09:07.760 --> 0:09:10.920 a huge reduction. The ability of the world to reduce 0:09:11.000 --> 0:09:16.160 oil demand by twenty percent is minimal. There are some 0:09:16.320 --> 0:09:21.520 alleviating factors. Ironically, Iran's oil refineries are still producing it 0:09:21.640 --> 0:09:25.320 full capacity, and Iran is not attacking its own oil tankers. 0:09:25.520 --> 0:09:28.079 So Iran, one of the biggest oil producers in the world, 0:09:28.160 --> 0:09:32.400 is still exporting through that strap despite the bottleneck. There 0:09:32.400 --> 0:09:37.320 are also two overland pipelines. There's one across Saudi Arabia, 0:09:37.320 --> 0:09:40.360 which is about five million barrels of oil equivalent per 0:09:40.520 --> 0:09:44.120 day compared to say, the twenty million barrels of oil 0:09:44.160 --> 0:09:47.520 per day going through the straits. So five million can 0:09:47.559 --> 0:09:51.400 go across Saudi Arabia and be exported through a port 0:09:51.480 --> 0:09:55.680 that's not affected. But that's an unsustainable situation where we 0:09:56.360 --> 0:09:59.319 are addicted to imported oil and that oil is going 0:09:59.360 --> 0:10:02.640 to cost us significant amount more, whether it's the fifty 0:10:02.679 --> 0:10:05.680 percent we're already seeing or potentially one hundred or two 0:10:05.760 --> 0:10:08.040 hundred percent compared to where it was a month ago. 0:10:11.000 --> 0:10:14.199 An early morning strike on Iran's carg Island has added 0:10:14.280 --> 0:10:17.200 further uncertainty to the movement of oil from the Gulf. 0:10:17.280 --> 0:10:21.000 Over the weekend, we had the US target carg Island, 0:10:21.559 --> 0:10:25.200 where Iran exports most of it's oil from. Now, it 0:10:25.280 --> 0:10:29.240 only hit the military installations, but what impact would that 0:10:29.440 --> 0:10:33.360 have if the US decided to go after their energy 0:10:33.400 --> 0:10:34.360 infrastructure there. 0:10:35.160 --> 0:10:38.360 Well, the impact for the rest of the world, for 0:10:38.559 --> 0:10:42.920 including America, is extreme. And so if America decides to 0:10:43.000 --> 0:10:47.640 attack Iranian oil production, the ability not only would that 0:10:47.800 --> 0:10:51.600 immediately push the oil price up dramatically, but it would 0:10:51.640 --> 0:10:56.960 then for a long period of time, reduce Iran's exports 0:10:56.960 --> 0:10:58.960 of oil. So even if the war then stopped a 0:10:59.000 --> 0:11:02.760 week later, the ability of the Iranian industry to actually 0:11:02.800 --> 0:11:05.760 get back on its feet and start exporting, in other words, 0:11:05.800 --> 0:11:08.520 so that oil prices go back down to where they 0:11:08.559 --> 0:11:13.160 were a month ago, would be pushing it out for six, twelve, 0:11:13.240 --> 0:11:16.560 eighteen months. So America's got to be very, very careful. 0:11:16.880 --> 0:11:18.960 But then at the end of the day, America's got 0:11:19.000 --> 0:11:22.280 President Trump in control, and he was bragging over the 0:11:22.320 --> 0:11:26.040 weekend that America is self sufficient and a net exporder 0:11:26.360 --> 0:11:29.480 of oil and gas, and that America is sitting there 0:11:29.559 --> 0:11:33.760 profiteering from the war. The Financial Times over the weekend 0:11:33.840 --> 0:11:37.160 highlighted that x On and Chevron, the US oil industry 0:11:37.440 --> 0:11:41.440 will make an extra sixty billion dollars of gross profit 0:11:42.200 --> 0:11:45.360 if oil prices stay where they are today for the rest. 0:11:45.160 --> 0:11:45.800 Of this year. 0:11:47.360 --> 0:11:50.800 I would argue it's war profiteering while we all wear 0:11:50.840 --> 0:11:54.600 the cost, as does the civilians in Iran. And at 0:11:54.640 --> 0:11:57.679 the end of the day, the more there is instability 0:11:57.720 --> 0:12:00.319 in the Middle East, the higher fossil fuel prices go. 0:12:01.480 --> 0:12:04.480 Well, first of an honest appraisal of exactly what is 0:12:04.520 --> 0:12:06.320 coming into the nation and what needs to be used 0:12:06.320 --> 0:12:09.760 and if it requires rationing in the cities. We're not 0:12:09.800 --> 0:12:11.959 saying you can't have fuel, but you have to limit 0:12:11.960 --> 0:12:13.960 it and say, look, there's fifty liters a week. 0:12:14.120 --> 0:12:18.400 Finally, tim some politicians are talking about fuel rationing and 0:12:18.480 --> 0:12:22.000 clearly this crisis is showing no signs of easing. So 0:12:22.120 --> 0:12:24.720 what is it that the government should do now to 0:12:24.840 --> 0:12:28.160 make sure that we're not exposed like this for the 0:12:28.200 --> 0:12:28.920 next big shock. 0:12:29.400 --> 0:12:32.760 I would love to see the Australian government at the 0:12:32.840 --> 0:12:38.680 moment they provide an eleven billion dollar a year subsidy 0:12:38.840 --> 0:12:43.319 to import a diesel in Australia. A subsidy, which undermines 0:12:43.360 --> 0:12:47.880 our energy security, it undermines our energy independence, and it 0:12:48.000 --> 0:12:52.440 undermines our climate ambitions. The idea that we're subsidizing our 0:12:52.520 --> 0:12:55.920 addiction to important fossil fuels, to me, is ridiculous. We 0:12:56.120 --> 0:13:01.000 should be deploying the solutions accelerate the deployment of electric 0:13:01.160 --> 0:13:05.840 vehicles in our road transport, both freight and consumer transport, 0:13:06.120 --> 0:13:09.120 and in our mining sector. BHB and RIO have been 0:13:09.240 --> 0:13:12.080 quoted last year is saying the technology doesn't exist, and 0:13:12.280 --> 0:13:17.360 I'll call rubbish on that. In China, in the month 0:13:17.400 --> 0:13:21.200 of December, fifty four percent of all heavy duty trucks 0:13:21.240 --> 0:13:25.400 in China where electric vehicles the technology has changed, they 0:13:25.400 --> 0:13:29.920 are available. This month, Rio and its partners in Guinea 0:13:29.960 --> 0:13:35.520 in Sindemu are deploying four hundred hybrid electric vehicle trucks BHP. 0:13:35.800 --> 0:13:38.800 In Es Dondeta in Chile, the biggest copper mine in 0:13:38.840 --> 0:13:42.680 the world, rolled out one hundred percent renewable energy power 0:13:43.200 --> 0:13:47.720 for their grid back in twenty twenty two. So what's different. 0:13:47.800 --> 0:13:50.400 Why the BHP do it in Chile? Why is Rio 0:13:50.559 --> 0:13:53.400 doing it in Guinea but they're not doing it in Australia. 0:13:53.640 --> 0:13:57.080 The answer is an eleven billion dollar subsidy a year 0:13:57.440 --> 0:14:00.760 to keep our addiction to imported diesel. We need to 0:14:00.840 --> 0:14:05.960 actually adopt new technologies and ensure that we put Australia 0:14:06.000 --> 0:14:09.560 on a path to a permanent reduction to our addiction 0:14:09.720 --> 0:14:12.840 to imported fossil fuels. We should have done it five 0:14:12.960 --> 0:14:17.160 years ago. So measures that were hypothetically possible five years 0:14:17.200 --> 0:14:21.640 ago are entirely commercially viable today. We need to actually 0:14:21.760 --> 0:14:26.000 respond to this crisis and permanently reduce our addiction to 0:14:26.160 --> 0:14:30.720 imported oil. And I think Treasurer Charmers really needs to 0:14:30.840 --> 0:14:34.120 use this crisis and hold b HP and RIO to 0:14:34.240 --> 0:14:37.480 account and get a team Australia approach going. It's not 0:14:37.520 --> 0:14:40.480 going to change things overnight, but it means that next 0:14:40.520 --> 0:14:43.600 time we have a war and oil prices go through 0:14:43.640 --> 0:14:45.680 the roof, and it will be next time and a 0:14:45.760 --> 0:14:49.080 time after that will be far, far less exposed. 0:14:51.360 --> 0:14:52.920 Tim, thanks so much for joining us. 0:14:53.160 --> 0:14:53.960 Thank you very much. 0:15:06.360 --> 0:15:07.800 Also in the news, the. 0:15:07.760 --> 0:15:10.800 Federal government says it will not send an Australian warship 0:15:10.800 --> 0:15:13.640 to the Middle East. US President Donald Trump has been 0:15:13.720 --> 0:15:17.960 trying to rally countries including China, France, Japan and the 0:15:18.080 --> 0:15:20.880 UK to send ships to the Strait of Hall moves 0:15:21.320 --> 0:15:24.640 in an effort to protect oil tankers. So far, no 0:15:24.680 --> 0:15:28.360 one has answered his call, and the Australian Communications and 0:15:28.440 --> 0:15:32.080 Media Authority has slapped new conditions on the radio network 0:15:32.120 --> 0:15:35.800 behind Kyle and Jackie O. The move comes in response 0:15:35.840 --> 0:15:39.280 to repeated breaches by the pair, who recently split after 0:15:39.320 --> 0:15:42.760 an on air fight. The regulator now has greater powers 0:15:42.760 --> 0:15:47.000 to punish ARN, which owns Kiss FM, including the power 0:15:47.040 --> 0:15:51.560 to suspend or cancel their broadcasting license. I'm Nicole Johnston. 0:15:51.840 --> 0:15:53.960 This is seven AM. Thanks for listening. 0:16:03.320 --> 0:16:03.440 Un