Petrol by the barrel prices look set to top records set four years ago during Russia’s invasion of Ukraine, with some Australian fuel wholesalers – such as United Petroleum – already rationing fuel, which is halting supply to regional fuel distributors.
Crude oil prices surged more than 30 percent on Monday, 9th March, due to the continuing conflict in the Middle East, after already exceeding US$100 per barrel for the first time since 2022.
Speaking on Monday, NRMA’s Peter Khoury said there is “every chance” records will be set at some point this week, warning prices were “about as close as we’re prepared to go in terms of how far north this could go”.
At present, Australia reportedly has about 36 days’ worth of stored petrol, 29 days of jet fuel and 32 days of diesel, with Khoury suggesting reserves would only be accessed if tankers stopped arriving in Australia.
“Those reserves aren’t for you and I,” he told Sky News. “They’re for the military, transport and emergency services.”
“We’ve never had to touch those reserves and we hope we never have to. One can only dread how bad things would have to get for us to get to that situation.”
As reported by PASA in October, data from the Department of Climate Change, Energy, the Environment and Water (DCCEEW) revealed Australia’s fuel reserves were running “dangerously low”.
At the time, experts warned that if diesel supplies were interrupted, trucks and trains would stop moving goods around the country, leading to empty supermarket shelves, higher prices and problems maintaining essential services such as hospital pharmacies.
Adding to this issue, Australia was found to fall well below international fuel-security benchmarks for oil, with reserves roughly half the minimum required under its obligation with the International Energy Agency treaty.
Australia has failed to meet its 90-day target since 2012, making it the only nation of 32 to fail this standard, sitting far behind New Zealand, which, in July, held the second-lowest oil supplies at 91 days.
Australia signed the global treaty in 1974, which requires it to maintain sufficient fuel to cover a global emergency.
Former Independent Senator Rex Patrick highlighted the severity of the issue at the time, predicting what could happen if the Strait of Hormuz was disrupted.
“If there’s a conflict, and it doesn’t have to be a conflict with Australia, but something that disrupts our fuel supplies coming from the Strait of Hormuz or Singapore, we’re in real trouble,” he said.
“Most of our country relies on diesel fuel, that’s what keeps all the trucks rolling, the trains rolling, that keeps all the supplies coming to us.
“Supermarkets are typically stocked with 10 days of dry food, about seven days of frozen food, and hospitals normally have just three days of medicines at hand.”
However, last week the Federal Government denied that there is an immediate issue, with Chris Bowen saying refiners have assured him that Australia has enough supply to last until May.
“There is no need to rush to the service station and fill up,” Bowen said.
“I do understand people’s concerns, but it’s important that people know we do have a good stock of petrol in reserve.
“There will be challenges in this difficult environment in the Middle East. The Strait of Hormuz is a very important supply chain for the world. So there are real challenges, but there is no need for panic-buying; we just make the situation worse.”
Across Australia, farmers are reportedly stockpiling diesel, with mounting concerns that grocery prices could rise significantly in the coming weeks and months if they are unable to access fuel to operate machinery.
Unlike motorists, farmers are reliant on fuel deliveries to operate their large machinery, but some Australian fuel wholesalers have already begun rationing fuel amid reports of shortages.
Talking to the ABC, fuel distributor Danny Kreutzer, who delivers diesel to farms and transport companies, said his supply had gone from up to 450,000 litres a day to about 45,000.
“A lot of companies are keeping it for retail sites and we need some of it for farmers as well,” he said.
“Foodstocks, if they can’t get their produce to market, cattle fed, transported to abattoirs, there’s going to be a problem.
“So we need the government to look after everyone in the fuel industry and make sure we are able to load our trucks at the terminal.
“We don’t expect to get all of what we normally get, but we just want some.”
This situation was reflected by Transwest Fuels, which services more than 2000 farmers and agricultural customers across NSW and Queensland.
The company told NewsWire that Toowoomba, Newcastle and Tamworth are all affected by the fuel shortages.
“We currently have zero petrol supply at Newcastle or Brisbane,” said a spokesperson. “This means that once our servos run out of petrol, that’s it. No more.”
In a statement, United Petroleum – one of Australia’s largest independent fuel wholesalers and retailers, which operates around 500 sites nationally – said it was also impacted by serious shortages of fuel and would be suspending normal operations.
“United Petroleum is taking the prudent step of suspending all customer allocations across all locations effective immediately while we fully assess our supply position and incoming cargo schedules,” it said in a statement.
Elsewhere, Australians have been urged not to travel to Europe for five months, with an aviation expert warning that the conflict in the Middle East could disrupt flights until September.
Professor Ron Bartsch, Chairman of Avlaw Consulting and former Head of Safety and Regulation at Qantas, said the situation could drag on for months.
“Out of all the peripheral countries that have been affected by this, Australian travellers have probably been more affected because, particularly in the last two decades, Australia has used the Middle East as its primary way of reaching Europe,” he said.
“What’s going to happen now is that obviously Qantas and Virgin’s sharing arrangements will try to deviate more towards other alternate routes through Bangkok, Singapore, Hong Kong and the Philippines in order to reach Europe.
“The longer this military operation goes on means airfares will increase accordingly.
“The cost of aviation fuel is going to increase, and also because the number of flights will be restricted through supply and demand. That’s going to have a knock-on effect to Australian travellers for at least the next four to five months, I’d say.”
