Petrol price set for another spike as motorists go into panic-buying mode
The government has sought to reassure motorists that there is sufficient petrol supply amid reports of panic buying and regional service stations running out after another rise in global oil prices left Australians bracing for a nearly 30c per liter bump at the petrol station.
On Monday, crude oil prices rose above $100 a barrel as conflict in the Middle East raged and the Strait of Hormuz off Iran remained effectively closed to the one-fifth of the world’s oil that normally passes through it. The price of Brent Crude oil increased from $70 last week to $107.
It felt like some Regional petrol stations in NSW and Queensland report sold out Fuel price panic has increased in the days after the start of the war, going beyond the widespread queues seen last week, following an unprecedented collapse in supply availability.
Energy and Climate Change Minister Chris Bowen said the shortage was a result of rising demand, particularly for diesel, and Australia had good supplies of gasoline, jet fuel and scarcity to get through the crisis.
“Every previously ordered demand contract for diesel, petrol or anything else is being fulfilled,” Bowen said before giving a keynote speech at Sydney Climate Action Week. “When you see a big increase in demand, inevitably they have a hard time keeping up. It’s not a supply issue, but we’re seeing a big increase in demand.”
In 2023, the Australian government implemented a minimum stock requirement requiring fuel importers and refiners to maintain baseline levels of petrol, kerosene and diesel. Bowen said he would request it if necessary, but said it would be an additional supply rather than necessary now if the international situation worsens.
Bowen said Australia had good stocks of petrol, jet fuel and diesel, including 3 billion liters of diesel and 1.5 billion liters of petrol.
“There’s absolutely no reason to panic; to panic, to panic buy, to panic on anything,” Bowen said.
“Because unlike before, when our petrol and diesel reserves were held by Angus Taylor in Texas, they are now held in Geelong and Brisbane for easy access.
“We are entering this international crisis better prepared than we have been in similar crises. [compared with] “As a country, we are now much more prepared than before on the road to the 2022 energy crisis caused by the invasion of Ukraine.”
AMP chief economist Shane Oliver said for every $1 increase in the price of crude oil, Australian motorists could expect to see an increase of about a cent in the bowser. Oliver pointed out that the West Texas spot price rose from $67 the day before the war to $80 on Friday morning and $91 on Friday evening. It reached $108 on Monday morning.
“That’s a huge increase. We should see an increase of 28 cents per liter since Thursday. Some of that has already been taken into account (bowser prices), but there’s still a lot to carry over. You can still see a pretty sharp increase from here,” Oliver said, noting that the cyclical nature of oil prices in cities such as Sydney and Melbourne makes it difficult to measure precise day-to-day movements.
Oliver said the costs associated with the high oil price could ripple through the economy as the specter of a protracted conflict looms. He said the increase in oil costs observed so far would contribute about 0.8 percent to inflation, and other factors such as the high cost of transporting goods across the country, high airfares and other rising costs could weigh on the Central Bank’s considerations when reviewing interest rates.
“Households who get a 40 cents per liter price hike on gas will be slightly worse off, that’s about $14 a week or $730 a year, that’s a pretty big burden, equivalent to a pre-tax wage increase of about $1,000,” Oliver said.
NRMA’s Peter Khoury said $100 a barrel “is a number that no one wants to see, but I think it’s inevitable.”
Khoury said that while the current price is still within reach of the high of $133 per barrel seen as a result of Russia’s invasion of Ukraine in 2022, “the trends coming out of the Middle East are not great.”
He reiterated the message, pushed by politicians and the consumer watchdog last week, that retail price service stations cost Bowser significantly higher than wholesale prices. He said there was a difference of about 40 cents per liter compared to the Sydney and Melbourne averages.
Despite this, Khoury said prices could still rise as a result of the recent rise in crude oil.
“Please stop fueling the panic. This is not Covid and we do not sell toilet paper,” Khoury said at a press conference on Monday.
“We are currently seeing reduced supply at some service stations and that is because Australians are purchasing fuel at a much higher rate than they normally would,” Khoury said. “We are also hearing disturbing reports of people trying to stockpile fuel at home, which is not only economically pointless but also extremely dangerous. Please do not fill canisters and put them in your garage as this is unsafe.”
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Elias Visontay is the National Consumer Affairs Reporter for The Sydney Morning Herald and The Age.Connect via email.
Caitlin Fitzsimmons is the environment and climate correspondent for The Sydney Morning Herald. He was previously a social affairs reporter and Money editor.Connect via email.
