Australia relies on Asia for fuels. But three large shipments of petrol and diesel are on their way to our shores from the US, in a move one expert is calling “highly unusual”.
The US appears to be “coming to our rescue” in Australia’s fuel crisis, with three massive shipments of petrol and diesel on their way to our shores from stateside.
There were 26 fuel cargoes due to arrive in the country next month, down from 97 cargoes in March after the Iran war threw the global oil supply into chaos, according to data from London Stock Exchange Group on Wednesday.
The final three cargoes scheduled to reach Australian shores, on April 14, 18 and 22, were all large diesel and petrol shipments from the US, which Macquarie University senior lecturer Lurion De Mello described as “highly unusual”.
The ships are already under way in the Pacific and carrying more than 343,000 barrels of petrol, and almost 600,000 barrels of diesel. The two diesel shipments are bound for Newcastle and Melbourne, while the petrol is headed for Sydney.
Australia generally imports fuels from Asian countries like South Korea and Singapore, whose refineries rely heavily on crude oil that’s been bottled up in the Strait of Hormuz.
“Looks like America coming to our rescue,” Mr De Mello told news.com.au.
“I don’t remember in two to three years any fuels coming from America. We’ve had crude, but not fuels.”
The data also appeared to show that Australia had been cut off from Chinese fuels, after China banned exports in response to the global oil shock.
Ships carrying diesel and jet fuel arrived from China this month, but no such shipments were scheduled for April.
Jet fuel showed as scarce next month, with only one South Korean shipment scheduled.
South Korea would also be the primary source of petrol next month, with four shipments averaging 255,000 barrels per load.
For diesel, South Korea also dominated the schedule with five shipments averaging 400,000 barrels – a figure skewed upward by one massive cargo carrying over 600,000 barrels.
Mr De Mello believed the data was more reliable than the federal government’s figures, which measure fuel reserves in terms of days of cover. As of March 17, Australia had 30 days of diesel, 38 days of petrol and 30 days of jet fuel, according to those figures.
“The government is not transparent,” Mr De Mello said.
“At a federal level, I think Australians need to know how much fuel we actually have, rather than this arbitrary 30 days, 40 days.”
News.com.au understands importers have resorted to American fuels to fill a gap left by Asia, and no deal was struck between the US and Australian governments.
“I think it’s a good thing, it shows we have diversity of supply,” Mr De Mello said.
“The US has tonnes of refineries, they’ll be able to crank it out.”
Energy Minister Chris Bowen revealed over the weekend that six fuel shipments to Australia had been cancelled or deferred, but said in question time on Wednesday that “all of them have now been replaced with alternative spot market orders from different locations”.
Mr Bowen was contacted for comment.
Japan suggests it would help Aus in fuel crisis
News of a fuel boost from the US comes after Japan said it is possible it would help if Australia became impacted by severe fuel shortages.
But Kazuhiro Suzuki, Japan’s ambassador to Australia, said he would want to get an understanding of the seriousness of the issue before making any commitments.
“We really need to see the market situation in Australia first and then we need to deepen our communication between the two countries,” he said at the Minerals Council of Australia conference on Wednesday.
“Maybe we could collaborate and then do something together. That’s the only answer that I can give to you now.”
Macrobusiness Chief Economist Leith van Onselen said Australia should start holding back LNG exports in order to secure fuel supply from Asia.
“Most of East Coast Australia’s LNG exports go to China. These should be withheld unless China agrees to supply us with aviation fuel,” Mr van Onselen told news.com.au.
“The same goes with South Korea. Australia is a major LNG supplier to South Korea but also sources 26 per cent of all refined fuel imports from Korea.
“If these nations refuse to supply Australia with liquid fuels, we should refuse to supply them with LNG. Quid pro quo.”
Service stations run dry across Australia
Industry Minister Tim Ayres said on Tuesday that 8 per cent of service stations nationwide are without one or more grades of fuel.
That means as many as 560 stations across Australia are missing either diesel, petrol or both.
Addressing question time on Tuesday, Energy Minister Chris Bowen gave a state-by-state breakdown of fuel shortages that were worsening by the day.
In New South Wales, numbers reported to FuelCheck on Wednesday showed 32 service stations were without all fuel types, all in regional areas.
More than 300 service stations were without one fuel type they normally have, spread equally across regional and metro areas.
The oil shock isn’t just affecting motorists. Sectors like construction are being hit with heavy fuel surcharges, with the price of some materials increasing by as much as 36 per cent.
The Australian economy is deeply reliant on diesel-powered trucks, and there’s concern supermarket shelves could go bare if the crisis persists.
Even bin collections could stop due to diesel costs, as the Waste Management and Resource Recovery Association of Australia (WMRR) warns disruptions could begin in coming weeks because the sector has not been included in the government’s “priority fuel user” list.
Overseas travel is also impacted, with Jetstar on Tuesday cutting more than 55 trans-Tasman flights, including routes from Auckland and Sydney and from Sydney to Queenstown, citing a rise in the cost of jet fuel.
The federal government has copped heavy criticism over the fuel crisis, with a particular focus on the country’s very low reserves and reliance on imports from Asia for most of its refined fuels.
There have been calls for Australia to begin exploration and drilling in its massive oil basins in order to insulate it from global oil shocks in future.
The nation’s domestic oil production, and its refining infrastructure, have both been in decline since the early 2000s.
The government was also urged to cut the fuel excise – which adds about 52 cents per litre to the price of petrol – but Treasurer Jim Chalmers said on Tuesday the government was not considering a pause on the levy.