Australia has locked in another month’s worth of fuel, as consumers and motorists brace for higher prices at the bowser and supermarket checkouts.
Energy Minister Chris Bowen said the nation originally had supply until mid-April, but that had now been secured into May.
‘All the orders are locked in, contracted,’ he told ABC’s Radio National on Monday.
‘Once it’s contracted, the fuel belongs to the Australian company that’s bought it, so that is legally locked in. That’s encouraging.’
Bowen said 3.7 billion litres of different types of fuel were on their way to Australia this month.
The government says Australia will continue to receive its normal fuel supply despite the war, after securing guarantees from Japan, South Korea and Singapore.
Assistant Foreign Affairs and Trade Minister Matt Thistlethwaite told Sky News on Sunday that he’d sought and received pledges from his international counterparts that shipments of fuel to Australia would continue.
‘I met last week with the Japanese minister and requested that supply continue,’ he said. ‘They’ve given us an assurance that normal supply will continue.
Australia’s fuel supplies will continue to flow from major fuel exporting nations in Asia after the Albanese government secured new pledges from Japan, Singapore and South Korea
Energy Minister Chris Bowen said fuel supplies had now been secured into May
‘I’ve done a similar thing with the South Koreans, and they’ve given us assurances and Singapore as well.’
Australia imports about 90 per cent of its refined fuel, much of which is sourced from Asian refineries.
Disruptions through the Strait of Hormuz have strangled crude flows to Asian refineries responsible for 80 per cent of Australia’s liquid fuel.
Bowen said Asia’s mega-refineries are diversifying crude supply, calling it ‘very important for Australia because most of our refined product comes from Asian refiners’.
‘That is something that Australians can take some confidence in,’ he added.
Petrol imports are dominated by Singapore, which supplies about 54.7 per cent (5,974.7 megalitres), followed by South Korea at 22.5 per cent and India at 11.5 per cent, with Malaysia contributing a further 10 per cent.
Smaller volumes come from countries such as Japan, Brunei and several European nations.
Diesel supply is also concentrated among a handful of key partners, led by South Korea at 28.8 per cent (8,716 megalitres), followed by Singapore at 15.4 per cent and Malaysia at 14.4 per cent.
More than 55 ships carrying oil and refined fuel are due to arrive in Australia by the end of the month – the arrows are ships enroute to Australia, squares are still at port
Australia’s fuel excise has been halved for three months, taking 26.3 cents a litre off the price
Australia now has fuel reserves equivalent to 39 days’ worth of petrol, 29 days’ worth of diesel and 30 days’ worth of jet fuel, with over 50 fuel shipments due to arrive over the next month.
Thistlethwaite said Australia’s move to broaden its fuel sources means more tankers are arriving from the United States.
‘We’re covering all the bases to make sure that we diversify our supply and get as much through as we possibly can,’ he said.
While news of the Asia-Australia fuel commitments come as a welcome sign for those filling up at the bowser, a leading energy analyst has warned the Albanese government must implement long-term plans to mitigate future shocks.
MST Financial energy analyst Saul Kavonic said Australia has ‘ceded our fuel security to foreign powers’.
‘This is a wake up call for Australia to become more self-sufficient in fuel again. The next disruption to maritime trade could occur closer to home in the Pacific, leaving Australia without any fuel, and our economy would grind to a halt within weeks,’ Mr Kavonic told Sky News.
‘Australia must act to avert the economic and national security risks posed by our fuel import dependence.’
However others like the NRMA’s Peter Khoury said the government’s decision to lower the flashpoint for diesel opened the door to more from the United States.
MST Financial energy analyst Saul Kavonic said the fuel crisis was a ‘wake up call’ for Australia and called on the government to implement long-term plans to mitigate future shocks
‘We’ve diversified our imports, which is great given what’s happened in the Middle East,’ he said.
Lurion De Mello, a senior lecturer at Macquarie University’s Transforming Energy Markets Research Centre, also estimated that Australia would receive an extra 10 to 15 fuel shipments in April above normal levels.
‘There has been an extraordinary uptick in numbers – usually, you would not get so many tankers,’ they told the Sydney Morning Herald.
Viva Energy’s Scott Wyatt said its Geelong refinery and import infrastructure, which account for about 30 per cent of supply, are locked in until June – with teams sourcing additional cargoes from supply sources in the US and South America.
‘We have got a good flow of fuel heading into May and a good flow of crude oil heading into June for our refinery at Geelong.’
Meanwhile, relief from crippling fuel costs has begun to flow after the federal government temporarily halved taxes on petrol and diesel, while states also agreed to pass on an expected GST windfall due to higher takings on sales.
But the combined savings, worth more than 30c per litre, have not offset the full impact of expensive global oil due to the trickle of ships carrying supplies coming through the Strait of Hormuz, which has been effectively blockaded by Iran.
Australia’s fuel reserves have 39 days’ worth of petrol, 29 days’ worth of diesel and 30 days’ worth of jet fuel
University of Sydney associate economics professor David Ubilava said it would take a while for supply chains to be restored to their pre-war states even after the US-Israeli conflict with Iran ended.
‘The market disruption and the war has dragged on long enough that its effects will be felt for months to come,’ he told AAP.
‘Not only will the price of fuel go up, but so will transportation costs and, as a result of fuel surcharges, deliveries, groceries and restaurants will become more expensive as those costs are passed onto the consumer.’
US President Donald Trump has flagged strikes on Iran could end within weeks, recently saying core objectives were nearing completion.
In an expletive-laden social media post, Trump threatened Iran to open the ‘F***in’ Strait’ or the regime will be ‘living in Hell’.
The Albanese government has accepted the impacts of the war will continue, even if it comes to a swift end.
Professor Ubilava said the longer-term inflationary impact of the war could also mean higher interest rates as the Reserve Bank tried to reduce household spending.
While the volatile situation made forecasting difficult, he said, it was hard to see the crude oil price – currently close to $US110 ($A159) per barrel – returning to pre-war levels of about $US70 ($A101).
The Daily Mail has contacted the Department of Foreign Affairs and Trade for further comment.
