Drivers wince as diesel threatens to hit $4 a litre - ABC News & Headlines – Australian Broadcasting Corporation
Drivers, farmers and the transport industry can't help but notice the price of diesel at the moment.
It's been rising again as the war in Iran shows no sign of stopping and now Donald Trump is considering cutting off US exports of diesel.
But could it really hit four dollars a litre?
Kristy Sexton-McGrath: Australians are being warned to prepare for higher diesel prices, maybe up to $4 a litre if the United States decides to ban diesel exports. The Trump administration is looking for ways to bring down fuel prices at home as the war in Iran drags on. If that happens, as well as surging prices, fuel rationing could also be on the cards. It's an unsettling prospect for drivers already watching the costs soar at the fuel pump.
Driver: Well I think it's just terrible. On top of everything else that's going up, the interest rates are going up and groceries have gone up.
Driver: We try to make as many opportunities or changes as we can, ride a bike, do those type of things, but it's hard to stretch the budget if it goes further.
Driver: Well I paid $3 a litre today. If it goes up any higher, probably stop using the diesel altogether.
Kristy Sexton-McGrath: Drivers at the Bowser in Far North Queensland are already paying about $3 a litre for diesel in some places and around $2.40 for petrol. But high fuel prices are nothing new for Australian drivers. The consumer watchdog the ACCC says the average price of diesel has jumped by about 90 cents a litre, almost 50% since the war in Iran began earlier this year. Back in April, the federal government stepped in, cutting the fuel excise by 32 cents a litre to give motorists some relief. That tax discount was wound back in July, then disappeared altogether in August. And now US President Donald Trump threatens to make the cost of living challenge here even worse. The export ban being considered would run for 90 days. While Australia doesn't buy its diesel directly from the US, energy analyst Saul Kavonic from MST Marquee says any disruption to global supplies will still hurt here.
Saul Kavonic, MST Marquee energy analyst: So Australia is actually the largest importer of diesel in the world. That's not per capita, that's in absolute sense. We account for only 1% of the world's fuel demand, but 10% of the world's seaborne diesel imports. And that's because we have very large resources and agricultural economy. And so that makes us particularly vulnerable now.
Kristy Sexton-McGrath: He's warning a severe US export restriction could force Australia to consider fuel rationing.
Saul Kavonic, MST Marquee energy analyst: If the US does go down this path, and particularly if they do it in a very severe way, I think we'll be looking at that in a matter of weeks, particularly if we don't see a de-escalation in the Middle East. In the more severe scenarios we're talking about, diesel can be 50% higher than those levels very, very easily.
Kristy Sexton-McGrath: Okay, so topping $4.
Saul Kavonic, MST Marquee energy analyst: Yes.
Kristy Sexton-McGrath: Energy Minister Chris Bowen is meeting with leaders in India and Saudi Arabia as the government tries to shore up Australia's fuel security. The Grattan Institute's Alison Reeve says Australia can source fuel from elsewhere if the US restricts exports. And she's not so sure that rationing is on the cards in the short term.
Alison Reeve, Energy and Climate Change Program Director at the Grattan Institute: The government does have a sort of a four-step fuel plan, and rationing is the very last resort. I don't think we're moving into a rationing situation. I think we're just moving into a situation where high prices are going to be sustained for a period of time.
Kristy Sexton-McGrath: The federal government says Australia's fuel security remains solid, with more than 30 days of diesel supplies on hand and fuel shipments continuing to arrive.
