As recently as mid-April, when one of Australia’s two remaining fuel refineries suddenly erupted in flames, it was not unreasonable to complain that the panic around the domestic impact of the global fuel crisis did not match the day-to-day reality.
Despite the fears of a Mad Max-style oilpocalypse, petrol stations were largely well-stocked, the worst of the price spikes were in the rear-view mirror, and shipments of petrol and diesel were arriving in full and on time.
Fast forward two weeks, though, and that dynamic appears to have flipped on its head.
Prime Minister Anthony Albanese on Wednesday announced a $10 billion plan to dramatically increase the size of Australia’s liquid fuel reserves, part of which will be nationalised to the tune of more than $3 billion.
It is one of the most significant interventions in Australia’s liquid fuel market in recent memory, undertaken in the midst of what the International Energy Agency says is the worst global fuel crisis in modern history.
The government, understandably, has made the package the centrepiece of next week’s federal budget, which it has been forced to dramatically rework in recent months to satisfy demands for greater fuel security and economic resilience.
Yet fronting reporters to unveil the plan in Sydney on Wednesday, Albanese and Energy Minister Chris Bowen barely fielded a single question on the subject.
As the memory of the initial price shocks recedes, the government now appears to have found itself in a situation where it is having to convince voters to care about the seriousness of the situation.
That new complacency is in part thanks to the government’s competent response to the crisis – including subsidised imports, bilateral energy dealmaking with key regional trade partners and an expensive cut to the fuel excise.
Since the explosion at Viva’s oil refinery in Geelong on April 16, breathless coverage of petrol station shortages has largely disappeared, petrol prices have come down to semi-reasonable levels and fuel cargoes have continued to arrive.
The government’s short-term measures have insulated Australia from the worst of the crisis. But with around a fifth of the world’s oil supply still trapped behind the blockade of the Strait of Hormuz, two months after the conflict began, that insulation will only last so long.
Australia’s predominantly Asian fuel suppliers have so far managed to plug the Middle East-sized hole in their crude oil supply by drawing on their own reserves and sourcing cargoes from further afield.
But as The Economist pointed out this week, once those reserves run out, there are only three ways the market can clear: a drastic lowering of demand, a cut to supply, or much higher prices. All are painful. Developed countries, it said, are in “La La Land”.
The second phase of this crisis will be broader and deeper than the first, affecting all parts of the economy, from food and fuel to consumer goods and construction costs, rather than directly confining itself to the petrol pump.
As Reserve Bank governor Michele Bullock said on Tuesday, even if the Strait is reopened tomorrow, Australians will experience a real income loss this year.
“We’re staring down the barrel,” she said. “It is a very, very tough time.”
From the start, a large part of the government’s role in this unprecedented fuel shock has been to carefully manage expectations about what may be coming next – as contingent as that may be on the whims of a handful of men on the other side of the globe.
After successfully managing to calm the electorate, however, it may soon need to enliven it.
Extracted in full from: https://www.afr.com/policy/energy-and-climate/oilpocalypse-now-australia-has-replaced-fuel-panic-with-complacency-20260506-p5zu9l
