WEBVTT - Explaining the petrol problem and whether gas is next 0:00:04.160 --> 0:00:07.000 You've noticed the hike in prices at the petrol pump, 0:00:07.000 --> 0:00:10.360 but how high might prices go? And are we at 0:00:10.360 --> 0:00:13.920 risk of running out of petrol? I'm Samantha Selinger Morris, 0:00:13.920 --> 0:00:16.720 and you're listening to Morning Edition from The Age and 0:00:16.720 --> 0:00:20.919 The Sydney Morning Herald. Today, energy reporter Nick Toscano on 0:00:20.920 --> 0:00:24.360 what plans our government and fuel companies have to manage 0:00:24.360 --> 0:00:27.680 this crisis, and how long it might take for prices 0:00:27.680 --> 0:00:32.360 to return to normal. It's March the 24th. Hey, Nick. 0:00:32.360 --> 0:00:33.640 Welcome back to the pod. 0:00:33.680 --> 0:00:35.440 Hey, Sam. Thanks for having me back. 0:00:35.640 --> 0:00:38.160 Oh, I'm so happy to have you back because I'm 0:00:38.159 --> 0:00:41.120 sure many listeners are like myself and they're quite confused 0:00:41.120 --> 0:00:43.880 by this. So before we get into everything that's been happening, 0:00:44.200 --> 0:00:46.360 can you just tell us where we actually get our 0:00:46.360 --> 0:00:47.879 fuel from in Australia? 0:00:48.200 --> 0:00:50.760 Sure. Well, I guess that's a question with an answer 0:00:50.760 --> 0:00:54.160 that's changed quite a bit over the past couple of decades. Australia. 0:00:54.520 --> 0:00:57.080 We once had a considerable fleet of our own domestic 0:00:57.080 --> 0:01:00.680 oil refineries. So these are the sort of sprawling industrial 0:01:00.680 --> 0:01:04.640 complexes of pipes, machines and giant chimney stacks that turn 0:01:04.680 --> 0:01:07.440 crude oil into the fuels that we actually use every day, 0:01:07.480 --> 0:01:10.600 like petrol, diesel and aviation fuel. At the turn of 0:01:10.600 --> 0:01:14.520 the century, we had eight oil refineries spread across the country. 0:01:14.520 --> 0:01:17.880 That produced not all, but a good chunk of our 0:01:17.920 --> 0:01:22.440 liquid fuel needs. Today, we're left with just two. That's 0:01:22.440 --> 0:01:24.920 the Geelong oil refinery in Victoria, which is run by 0:01:24.959 --> 0:01:28.040 Viva Energy and the Lytton oil refinery in Brisbane, which 0:01:28.040 --> 0:01:32.160 is operated by Ampol. So I guess what's happened is 0:01:32.160 --> 0:01:34.559 that refined fuels in this day and age are so 0:01:34.560 --> 0:01:37.360 widely available from so many different parts of the world 0:01:37.360 --> 0:01:40.600 that can be easily shipped to buyers anywhere as far 0:01:40.600 --> 0:01:45.040 afield as Australia. And it's easier, simpler, and in most cases, 0:01:45.040 --> 0:01:48.760 cheaper to import fuels into shipping terminals here instead of 0:01:49.280 --> 0:01:52.520 going through the effort to produce them ourselves. So while 0:01:52.520 --> 0:01:55.480 there's been a desire to, um, a strategic desire from 0:01:55.480 --> 0:01:59.000 the industry and from governments to retain some of our 0:01:59.000 --> 0:02:03.800 capacity to be able to produce our own fuel, Australia 0:02:03.800 --> 0:02:07.920 has the problem of having a relatively small market, and 0:02:07.960 --> 0:02:12.840 that means we have relatively smaller and higher cost oil refineries, 0:02:12.840 --> 0:02:14.920 which have found themselves in the past little while just 0:02:14.919 --> 0:02:20.000 increasingly less and less able to compete with cheaper imports 0:02:20.000 --> 0:02:23.400 coming from the mega refineries of South East Asia in particular, 0:02:23.440 --> 0:02:25.200 that can pump out fuels for a fraction of the 0:02:25.200 --> 0:02:27.960 cost and have really pressured the profit margins of the 0:02:27.960 --> 0:02:30.640 plants that we have left. Then rewind a couple of 0:02:30.639 --> 0:02:33.560 years ago, the onset of the Covid 19 pandemic, as 0:02:33.560 --> 0:02:37.519 we saw, you know, basically brought travel and petrol and 0:02:37.520 --> 0:02:41.400 diesel use to an absolute standstill everywhere. And that was 0:02:41.440 --> 0:02:44.200 sort of the final crushing blow for, um, for a 0:02:44.200 --> 0:02:47.040 couple of the last refineries that we did have in 0:02:47.080 --> 0:02:50.280 Perth and another one in Melbourne's western suburbs. So that 0:02:50.280 --> 0:02:52.639 forced the closures of two more, leaving us with just 0:02:52.639 --> 0:02:56.840 two remaining. And that's left us reliant on imported fuels 0:02:56.840 --> 0:03:00.760 from places including, but not limited to Malaysia, Singapore, Korea, 0:03:00.800 --> 0:03:04.320 China for our fuel needs and we get smaller amounts 0:03:04.320 --> 0:03:07.160 from from the Middle East and from America. So as 0:03:07.160 --> 0:03:11.120 things stand today, imported products account for about 90% of 0:03:11.120 --> 0:03:12.760 our total liquid fuel needs. 0:03:12.960 --> 0:03:15.440 And, you know, this has gone beyond the headlines now 0:03:15.440 --> 0:03:18.040 because we are seeing the impact on prices at the 0:03:18.040 --> 0:03:20.880 petrol pump right across the country. So can you just 0:03:20.880 --> 0:03:24.160 explain to us how this war is driving prices? 0:03:24.360 --> 0:03:26.560 Well, since the outbreak of the war a couple of 0:03:26.560 --> 0:03:30.400 weeks ago now, the price of petrol has shot up dramatically. It's, uh, 0:03:30.400 --> 0:03:33.040 it's gone up 30% in the space of a couple 0:03:33.080 --> 0:03:35.400 of weeks. It's actually reached an all time high. We've 0:03:35.400 --> 0:03:39.240 never seen prices national average prices this high. We're at 0:03:39.240 --> 0:03:42.960 $2.19 a litre for unleaded, which is a record. So 0:03:42.960 --> 0:03:45.040 primarily the high cost of petrol comes down to one 0:03:45.040 --> 0:03:47.840 thing most of all. And that's the fact that the 0:03:47.840 --> 0:03:50.040 price of oil, the cost of a barrel of oil 0:03:50.040 --> 0:03:53.160 has surged faster and higher than we've seen for years 0:03:53.160 --> 0:03:55.800 and years. The cost of a barrel of oil before 0:03:55.800 --> 0:03:57.640 the war, at the start of the year, was about 0:03:57.640 --> 0:04:01.960 70 USD a barrel, and that's blown past the $100 mark. 0:04:02.120 --> 0:04:06.360 It's even briefly touched $120 a barrel. Crude oil is 0:04:06.440 --> 0:04:09.760 is the natural resource that is refined into petrol, diesel 0:04:09.760 --> 0:04:12.320 and jet fuel and therefore makes up the biggest and 0:04:12.320 --> 0:04:15.600 most important and I guess most volatile input costs to 0:04:15.640 --> 0:04:17.920 the fuel that we use. The reason this has happened, Sam, 0:04:17.920 --> 0:04:20.640 is that countries in the Middle East and around the 0:04:20.640 --> 0:04:23.200 Persian Gulf, where much of the fighting is taking place, 0:04:23.200 --> 0:04:27.480 so we're thinking Iran, Saudi Arabia, the United Arab Emirates, Bahrain, 0:04:27.480 --> 0:04:30.480 they account for a massive chunk of the world's overall 0:04:30.480 --> 0:04:33.880 supply of oil, and a good portion of that supply 0:04:33.880 --> 0:04:37.080 is now disrupted. The biggest cause there is that Iran 0:04:37.080 --> 0:04:40.120 has done something that energy markets and governments around the 0:04:40.120 --> 0:04:41.760 world have long feared it would do if it ever 0:04:41.760 --> 0:04:45.520 came under attack. And that's forcing the effective shutdown of 0:04:45.680 --> 0:04:48.680 a shipping corridor, which you're no doubt familiar with now 0:04:48.680 --> 0:04:52.960 called the Strait of Hormuz, which is off Iran's southern coast. Typically, 0:04:53.360 --> 0:04:57.320 in ordinary times, that shipping channel accounts for about one 0:04:57.320 --> 0:05:01.160 fifth of all the world's oil and natural gas supplies, 0:05:01.680 --> 0:05:05.679 and that's basically come to a complete standstill, a complete halt. Now, 0:05:05.720 --> 0:05:08.720 Iran has been threatening to attack any foreign oil tankers 0:05:08.720 --> 0:05:12.000 that attempt to pass the strait. And that's basically left 0:05:12.000 --> 0:05:16.080 all this oil and refined fuel from those Persian Gulf 0:05:16.080 --> 0:05:19.440 countries with essentially no way to exit, with essentially no 0:05:19.440 --> 0:05:22.560 way to get their oil out into the ocean and 0:05:22.560 --> 0:05:25.360 take it to customers who want it. The world has 0:05:25.360 --> 0:05:28.440 been trying to reduce its reliance on oil and other 0:05:28.440 --> 0:05:30.760 fossil fuels for a long time now by pushing harder 0:05:30.760 --> 0:05:34.000 to add more renewables and drive electric vehicle uptake. But 0:05:34.000 --> 0:05:36.880 oil is still hugely important. The world consumes in excess 0:05:36.880 --> 0:05:41.720 of 100 million barrels of oil every day. And the 0:05:41.720 --> 0:05:43.880 stuff that's stuck in the Persian Gulf now, that's about 0:05:43.880 --> 0:05:46.920 20 million barrels. So it's it's literally 20% of our 0:05:46.920 --> 0:05:47.800 overall supply. 0:05:48.279 --> 0:05:51.160 Wow. And of course, we've seen reports of people panic 0:05:51.160 --> 0:05:54.400 buying and petrol stations being out of petrol. So how 0:05:54.400 --> 0:05:57.320 bad is the problem? Like, are we actually at risk 0:05:57.320 --> 0:05:58.640 of running out of petrol? 0:05:59.040 --> 0:06:01.600 No we're not. At least not yet. Sam, there are 0:06:01.600 --> 0:06:05.520 localised problems that we're seeing emerge across the country, in 0:06:05.520 --> 0:06:09.320 regional areas, in metropolitan areas as well. People are getting worried. 0:06:09.360 --> 0:06:11.799 You know, they're reading that reading the headlines. They're seeing 0:06:11.800 --> 0:06:14.560 prices rise. There's been what the industry is calling a 0:06:14.600 --> 0:06:19.320 rush on demand rather than any structural supply deficit. Yet 0:06:19.360 --> 0:06:22.080 people are filling up jerry cans with fuel to stock 0:06:22.080 --> 0:06:25.919 at their homes. People are filling up their cars unnecessarily. 0:06:26.279 --> 0:06:29.200 And what that's done is it's caused supply disruptions. These 0:06:29.200 --> 0:06:33.680 are localized disruptions. The fuel industry says they're typically resolved swiftly. 0:06:33.880 --> 0:06:36.720 But it goes to show, I guess, the volatility of 0:06:36.720 --> 0:06:39.000 the market right now that people are making a dash 0:06:39.000 --> 0:06:41.719 for the petrol station. People are often finding the bowsers 0:06:41.720 --> 0:06:44.960 having run dry at the moment. Sam, there's no risk 0:06:44.960 --> 0:06:47.440 of a shortage. The fuel industry and the federal government 0:06:47.480 --> 0:06:50.560 say we have more than enough supplies to cover demand. So, 0:06:50.800 --> 0:06:53.200 you know, a lot of these problems are being driven 0:06:53.200 --> 0:06:58.320 by consumers panic buying. There are still ships arriving to Australia. 0:06:58.320 --> 0:07:01.200 There are still lots of oil and refined fuel arriving 0:07:01.200 --> 0:07:05.560 on our shores. We have a significant national stockpile of fuel, 0:07:05.800 --> 0:07:08.279 enough to cover more than a month's worth of typical 0:07:08.279 --> 0:07:11.040 demand of diesel and petrol. We still have more than 0:07:11.040 --> 0:07:12.800 a month's worth there, even though we've released some of 0:07:12.840 --> 0:07:16.760 that recently. So things aren't at the pointy end yet, 0:07:16.760 --> 0:07:20.280 even though we're seeing prices rise. I guess the sense 0:07:20.280 --> 0:07:22.080 coming out of the fuel industry and the people that 0:07:22.080 --> 0:07:24.560 I've spoken to over the past week, is that things 0:07:24.560 --> 0:07:27.120 are okay now, but a lot will depend on what 0:07:27.120 --> 0:07:29.760 happens next and how long this goes for. And if 0:07:29.800 --> 0:07:33.400 we're still having this conversation in a month's time. It'll 0:07:33.440 --> 0:07:34.640 be a different conversation. 0:07:39.480 --> 0:07:40.440 After the break. 0:07:40.720 --> 0:07:42.920 I think what will happen first is if there's no 0:07:42.920 --> 0:07:46.240 resolution to this conflict, and suppliers continue to come under 0:07:46.240 --> 0:07:48.760 pressure and be choked into the Asian regions, you will 0:07:48.760 --> 0:07:51.400 see prices rise even potentially rise even further than they're 0:07:51.400 --> 0:07:54.800 trading at now. Beyond that, there could well be a 0:07:54.800 --> 0:07:56.600 shortage of product coming into Australia. 0:08:04.120 --> 0:08:06.760 And so how is it that ships fuel are still 0:08:06.800 --> 0:08:08.880 making their way to Australia. Is it because these are 0:08:08.880 --> 0:08:11.160 ships that had already sort of stocked up on the 0:08:11.160 --> 0:08:13.400 fuel from the Persian Gulf, and they'd already sort of 0:08:13.440 --> 0:08:16.120 been made their way before the Straits of Hormuz essentially 0:08:16.120 --> 0:08:16.880 was closed. 0:08:17.160 --> 0:08:20.000 Well, again, Australia gets most of its fuel, not from 0:08:20.000 --> 0:08:23.040 the Middle East. We source most of our fuel and 0:08:23.040 --> 0:08:26.760 some of our oil from the Asian region in particular. 0:08:26.800 --> 0:08:29.640 There are bigger sources of supply. The problem that we're 0:08:29.640 --> 0:08:34.160 seeing emerge now, the problem that's coming into view is 0:08:34.160 --> 0:08:37.160 that the Asian region sources much of its crude oil 0:08:37.200 --> 0:08:40.200 to process into fuels at its mega refineries from the 0:08:40.200 --> 0:08:44.079 Middle East. And there's been a notable drop off of 0:08:44.080 --> 0:08:48.959 oil tankers arriving in Asia. That's going to eventually disrupt 0:08:48.960 --> 0:08:52.319 the traditional flow of oil and fuels that we source from. 0:08:52.920 --> 0:08:55.240 At the same time, that problem is being made worse 0:08:55.240 --> 0:08:57.840 by the fact that China, a huge customer and a 0:08:57.840 --> 0:09:02.240 huge supplier of refined fuels, have basically cut off their exports. 0:09:02.240 --> 0:09:05.400 They typically account for 15% of the Asian market. They've 0:09:05.400 --> 0:09:07.199 put a halt on all that. That's going to hit 0:09:07.200 --> 0:09:08.480 home eventually, too. 0:09:08.850 --> 0:09:11.089 And so what are the contingency plans then? Like what 0:09:11.090 --> 0:09:13.570 is the government and fuel companies? What have they said 0:09:13.570 --> 0:09:14.690 that they're going to do about it? 0:09:14.929 --> 0:09:17.329 Well, the first and most important thing I think, that 0:09:17.330 --> 0:09:19.250 the federal government has done is they've tapped into the 0:09:19.250 --> 0:09:23.209 strategic reserve, the strategic stockpile of fuel to provide something 0:09:23.250 --> 0:09:27.210 of a buffer. Australia is in breach of its requirement 0:09:27.370 --> 0:09:30.250 as a member of the International Energy Agency to hold 0:09:30.250 --> 0:09:33.449 90 days worth of refined fuel products, but we still 0:09:33.450 --> 0:09:35.970 have more than a month's worth of supply. I think 0:09:35.970 --> 0:09:39.210 it's 3 or 4,000,000,000l at last check of fuels. The 0:09:39.210 --> 0:09:42.809 energy minister, Chris Bowen, has decided to release, I think, 0:09:42.850 --> 0:09:44.970 5 or 6 days worth of petrol and diesel to 0:09:45.010 --> 0:09:47.929 help provide that sort of cushion and help insulate us 0:09:47.929 --> 0:09:51.170 from the from the effect of of any shock. There 0:09:51.170 --> 0:09:53.370 may be another draw down soon, we don't know. The 0:09:53.370 --> 0:09:55.970 other thing is other initiatives that have that have happened 0:09:55.970 --> 0:09:58.850 in the past couple of weeks have been a decision 0:09:58.850 --> 0:10:03.530 to enable Ampol, which is the operator of the Lytton 0:10:03.530 --> 0:10:07.970 oil refinery in Brisbane, to supply the market with fuel 0:10:07.970 --> 0:10:11.610 that would ordinarily be in breach of emissions limits for 0:10:11.610 --> 0:10:14.450 Australian vehicles feel that it would normally export. It's now 0:10:14.490 --> 0:10:17.929 delivering into the local market. Ampol has also delayed a 0:10:17.929 --> 0:10:21.689 planned maintenance closure of the Lytton oil refinery. It was 0:10:21.690 --> 0:10:23.850 going to come offline for a couple of months as 0:10:23.850 --> 0:10:26.450 of June. That's now been pushed back to April to 0:10:26.490 --> 0:10:29.450 enable it to pump out another 300,000,000l of fuel product 0:10:29.450 --> 0:10:30.329 into the economy. 0:10:30.450 --> 0:10:32.810 And so you've mentioned there that sort of month, Mark, 0:10:32.850 --> 0:10:35.090 you know, should we be talking about this in another month? 0:10:35.130 --> 0:10:37.370 Should this war still be going on? And the Straits 0:10:37.370 --> 0:10:40.850 of Hormuz closed for another month? That might be, I guess, 0:10:40.890 --> 0:10:42.890 a sort of tipping point. Is it like, is that 0:10:42.890 --> 0:10:45.570 when things might start to get a bit more serious 0:10:45.570 --> 0:10:47.610 in terms of us looking down the barrel of a 0:10:47.610 --> 0:10:50.130 possible real significant fuel shortage? 0:10:50.770 --> 0:10:54.410 That's the prevailing fear. I think what will happen first 0:10:54.410 --> 0:10:57.210 is if there's no resolution to this conflict, and suppliers 0:10:57.210 --> 0:11:00.210 continue to come under pressure and be choked into the 0:11:00.210 --> 0:11:02.850 Asian regions, you will see prices rise even potentially rise 0:11:02.850 --> 0:11:06.370 even further than they're trading at now. Beyond that, there 0:11:06.370 --> 0:11:09.130 could well be a shortage of product coming into Australia. 0:11:09.170 --> 0:11:11.370 And the other thing the fuel industry is doing in 0:11:11.370 --> 0:11:13.290 response to all this is they're working around the clock 0:11:13.290 --> 0:11:16.010 to try and lock in additional sources of supply from 0:11:16.050 --> 0:11:19.530 countries where we wouldn't normally source a huge amount of 0:11:19.530 --> 0:11:23.530 of our refined product from, including the EU and including 0:11:23.530 --> 0:11:25.890 North America to try and make up to try and 0:11:25.929 --> 0:11:28.650 offset the declines that we're seeing into Asia. 0:11:29.010 --> 0:11:30.730 Okay. Well, let's look at the other side of the coin, 0:11:30.730 --> 0:11:33.330 which is the question that if the war ends tomorrow, 0:11:33.370 --> 0:11:35.650 how long would it take for prices to drop and 0:11:35.650 --> 0:11:37.090 the supply to go back to normal? 0:11:37.410 --> 0:11:39.850 That's a good question. There would be an impact seen 0:11:39.850 --> 0:11:44.370 almost immediately. Prices would begin to ease. Obviously petrol prices 0:11:44.370 --> 0:11:47.569 take longer to to fall than they do to rise 0:11:47.570 --> 0:11:50.490 in these sorts of scenarios. But the fact of the 0:11:50.490 --> 0:11:54.130 matter is the world has no shortage of oil and 0:11:54.130 --> 0:11:56.810 of refined fuels. What's happened here is that there is 0:11:56.809 --> 0:11:59.410 this this huge disruption, this at this choke point that's 0:11:59.410 --> 0:12:02.130 causing this big bottleneck. Before the outbreak of the war, 0:12:02.410 --> 0:12:04.929 the oil price was at 70 USD a barrel in 0:12:04.929 --> 0:12:09.090 a context of a weak global economy, rising inflation, which 0:12:09.090 --> 0:12:12.610 led to subdued demand. so the world had more oil, 0:12:12.809 --> 0:12:16.810 more oil and fuel than it needs. Nothing structurally changed 0:12:16.809 --> 0:12:19.329 over the past two weeks that would change that environment. 0:12:19.330 --> 0:12:22.890 It would return to an environment of oversupply, but there 0:12:22.890 --> 0:12:25.690 would be some impacts that would take longer to recede. 0:12:25.809 --> 0:12:28.729 Not only is there the Strait of Hormuz being blockaded, 0:12:28.730 --> 0:12:31.490 but there's also now been, especially over the past week, 0:12:31.850 --> 0:12:36.569 serious damage inflicted on oil and natural gas infrastructure in 0:12:36.570 --> 0:12:40.810 the region. There's actual, you know, actual refineries, actual production 0:12:41.090 --> 0:12:43.290 fields that have been that have been blown up or 0:12:43.290 --> 0:12:45.530 that have been that have been struck by drones or 0:12:45.890 --> 0:12:48.929 what have you. To return to your question, it may 0:12:48.970 --> 0:12:51.650 take a lot longer than just the reopening of the 0:12:51.650 --> 0:12:54.610 Strait of Hormuz. For all of that price pain to proceed, 0:12:54.650 --> 0:12:56.930 given the world may take longer for supplies to catch 0:12:56.929 --> 0:12:57.490 up again. 0:12:57.809 --> 0:13:00.090 What you've just mentioned there, of course, the gas production 0:13:00.090 --> 0:13:02.130 sites that have been hit in strikes. And that brings 0:13:02.130 --> 0:13:03.890 me to what I wanted to ask you about, which 0:13:03.890 --> 0:13:07.010 is that will other sources of energy be affected in 0:13:07.010 --> 0:13:09.890 Australia with regards to what's, of course, going on in 0:13:09.890 --> 0:13:10.930 and around Iran? 0:13:11.330 --> 0:13:13.209 The other big commodity that's been affected by all this 0:13:13.210 --> 0:13:15.530 is natural gas, which is a fuel that's used in 0:13:15.530 --> 0:13:18.730 Australia and around the world for cooking, for heating, for 0:13:18.730 --> 0:13:21.610 hot water. It's used to power our electric grids and 0:13:21.610 --> 0:13:25.209 it's used in a range of industrial processes. Qatar is 0:13:25.410 --> 0:13:29.930 the world's second biggest supplier of liquefied natural gas. So 0:13:29.970 --> 0:13:33.610 that's our LNG. That's natural gas that has been super 0:13:33.610 --> 0:13:35.690 cooled down to the point that it becomes a liquid, 0:13:35.690 --> 0:13:37.810 and then it can be put onto ships to be 0:13:37.809 --> 0:13:41.850 sent around the world. Qatar's main LNG production hub was 0:13:41.850 --> 0:13:44.370 hit by a drone strike in the early days of 0:13:44.410 --> 0:13:48.050 this conflict in itself, that knocked out about one fifth 0:13:48.050 --> 0:13:51.530 of the world's LNG supply. Qatar is a major supplier 0:13:51.530 --> 0:13:55.329 to Asia, and Asian economies are very heavily dependent on 0:13:55.330 --> 0:13:58.210 imported LNG for their energy needs. So what's happened? There 0:13:58.210 --> 0:14:00.530 is prices have gone through the roof in Asia. They've 0:14:00.530 --> 0:14:04.450 gone through the roof in Europe. Australia hasn't been affected 0:14:04.450 --> 0:14:07.490 so badly, at least yet. We are a big gas 0:14:07.490 --> 0:14:10.890 exporter ourselves. We produce a lot of gas for the 0:14:10.890 --> 0:14:14.130 domestic and for the international markets. So far, our prices 0:14:14.130 --> 0:14:17.650 have remained steady, even though there is often a link 0:14:17.650 --> 0:14:20.170 between the price that we pay here and the prices 0:14:20.170 --> 0:14:25.050 that our exporters are earning from selling cargoes into international markets. 0:14:25.330 --> 0:14:27.410 At the moment it's been pretty steady. They've stayed around 0:14:27.410 --> 0:14:30.850 the $10 a gigajoule mark this whole time, which is 0:14:31.050 --> 0:14:35.370 historically quite subdued. But again, the longer this drags out 0:14:35.370 --> 0:14:39.410 and the more there is a overall international shortage causing 0:14:39.410 --> 0:14:42.450 a mad scramble for any spare gas supplies. There's a 0:14:42.450 --> 0:14:44.690 fear that that could start being felt here at home 0:14:44.690 --> 0:14:45.170 as well. 0:14:45.730 --> 0:14:47.730 And Nick, just to wrap up, I mean, I really. 0:14:47.730 --> 0:14:50.130 Want to ask you what the lesson is in all 0:14:50.170 --> 0:14:52.170 of this or what it perhaps should be, because we 0:14:52.170 --> 0:14:54.370 know that this is far from being the first oil 0:14:54.370 --> 0:14:57.770 shock that Australians have experienced in their lifetime. There was 0:14:57.770 --> 0:15:03.250 a massive fuel crisis in 1973, in 1979 again. So 0:15:03.810 --> 0:15:05.490 what should we be take from all of this? 0:15:06.010 --> 0:15:08.770 Well, I guess the biggest thing probably, Sam, is the 0:15:08.770 --> 0:15:13.890 risks of relying on globally traded energy supplies that are 0:15:13.890 --> 0:15:16.930 critical to our needs, but that can be essentially held 0:15:16.930 --> 0:15:20.810 for ransom in geopolitical events like this. The closure of 0:15:20.810 --> 0:15:23.130 the Strait of Hormuz has been something that's been long feared, 0:15:23.130 --> 0:15:27.010 but it's never really come to pass until now. I 0:15:27.010 --> 0:15:30.330 guess what's happening now just shows it just underscores the 0:15:30.330 --> 0:15:33.370 significance of the threat of relying on on other countries 0:15:33.370 --> 0:15:41.290 for our energy supplies. Advocates of renewable energy and some 0:15:41.290 --> 0:15:44.930 political leaders say that we shouldn't be wasting this opportunity 0:15:44.930 --> 0:15:49.890 to double down on transitioning our energy system to adopt 0:15:49.890 --> 0:15:53.690 more sources of renewable energy, to reduce our reliance on, on, 0:15:53.730 --> 0:15:56.850 on other countries. And yet you can't hold the wind 0:15:56.850 --> 0:16:01.930 and the sun hostage like you can hold fossil fuels hostage. Obviously, 0:16:01.970 --> 0:16:05.250 driving the uptake of electric vehicles speaks to the same issue. 0:16:05.570 --> 0:16:08.010 I guess the other lesson from this is I'm not 0:16:08.010 --> 0:16:10.090 sure what the government will take away from it, but 0:16:10.090 --> 0:16:13.050 there has been this long running debate about how much fuel, 0:16:13.050 --> 0:16:15.970 how much oil products we should be holding in storage. 0:16:16.010 --> 0:16:18.490 It's a tricky one for the government because it costs 0:16:18.490 --> 0:16:20.730 a lot of money. I think the last estimate from 0:16:20.730 --> 0:16:23.210 the federal government was if we were to increase our 0:16:23.210 --> 0:16:27.530 fuel stockpiles from 35 days to to the 90 day 0:16:27.570 --> 0:16:30.450 benchmark set by the International Energy Agency, that would cost 0:16:30.450 --> 0:16:33.370 nearly $20 billion. Is that a cost that taxpayers and 0:16:33.370 --> 0:16:37.210 consumers would be willing to wear? That's obviously a debatable point, 0:16:37.530 --> 0:16:40.330 but I mean, it's like an insurance policy. You only 0:16:40.330 --> 0:16:42.330 need it when you need it. And I imagine there 0:16:42.330 --> 0:16:45.330 will be a significant discussion taking place on the other 0:16:45.330 --> 0:16:49.530 side of this conflict about whether our stockpiles do provide 0:16:49.530 --> 0:16:51.930 enough of a buffer for a country like Australia. That's 0:16:51.970 --> 0:16:53.930 at the very end of a global supply chain. 0:16:58.250 --> 0:16:59.850 Well, Nick, we are so lucky to have you to 0:16:59.890 --> 0:17:02.690 walk us through this. It is quite complicated. So thank 0:17:02.730 --> 0:17:04.170 you so much for your time. 0:17:05.010 --> 0:17:06.129 No worries. Thanks, Sam. 0:17:12.090 --> 0:17:15.730 And in other news today, the long awaited Australia. EU 0:17:15.770 --> 0:17:19.490 free trade deal will be finalized today. Under it, Australian 0:17:19.490 --> 0:17:23.010 red meat exports to Europe are set to rise tenfold. 0:17:23.530 --> 0:17:28.250 Union groups have joined churches, health organizations and community advocates 0:17:28.609 --> 0:17:31.969 to demand that Prime Minister Anthony Albanese move urgently to 0:17:32.010 --> 0:17:37.330 enact gambling reform, citing the $32 billion that Australians lose 0:17:37.330 --> 0:17:41.090 every year, and children and teenagers who turn to AI 0:17:41.130 --> 0:17:45.930 companion chatbots for relationships are being exposed to sexually explicit 0:17:45.930 --> 0:17:50.649 content and are being encouraged to self-harm or suicide, according 0:17:50.690 --> 0:17:56.650 to a new report by the Esafety commissioner. Today's episode 0:17:56.650 --> 0:18:01.210 was produced by Josh towers. Our executive producer is Tammy Mills, 0:18:01.210 --> 0:18:05.370 and our podcasts are overseen by Lisa Muxworthy and Tom McKendrick. 0:18:05.690 --> 0:18:08.570 If you like our show, follow The Morning Edition and 0:18:08.570 --> 0:18:11.890 leave a review for us on Apple or Spotify. Thanks 0:18:11.890 --> 0:18:12.690 for listening.