In Brief
- The head of the world's leading energy agency says he's "not terribly worried" about fuel stocks in Australia.
- But he has advice for Australia when it comes to renewable energy, uranium and imposing a gas export tax.
The head of the world's leading energy agency says he's not yet worried about fuel stocks in Australia, but warns no country will be immune from the Middle East war's impacts on its oil and gas supply.
Fatih Birol, the chief of the International Energy Agency (IEA), said the current energy crises is worse than shocks in the 1970s and the impact of Russia's full-scale invasion of Ukraine combined, as he offered a warning for Australia on potential tax shifts.
He said Asia is at the forefront of the energy crisis, with a lack of fuel an increasing problem.
"I see that there is a growing problem in Asia, immediate problem in Asian countries, and this issue, especially in the context of products, diesel and jet fuel, we will feel it more and more in Europe and beyond."
Australia only has two working oil refineries and is heavily reliant on fuel imports, bringing much of it in from South Korea and Singapore, which in turn rely on oil from the Middle East.
He told the National Press Club in Canberra on Monday the global economy was facing a major threat, amid the effective closure of the Strait of Hormuz after the US-Israeli strikes on Iran.
"The global economy is facing a major, major threat today, and I very much hope that this issue will be resolved as soon as possible."
He said the situation was worse than the two oil crises of the 1970s combined, as well as the crisis caused by the Russian invasion of Ukraine.
"At that time, in each [oil] crisis, the world has lost about 5 million barrels per day, both of them together 10 million barrels per day. And after that we all know that there were major economic problems around the world. And today we lost 11 million barrels – so more than two major oil shocks put together," he said.
"Plus after Russia’s invasion of Ukraine, the gas markets – especially in Europe – we lost about 75 billion consumer metres. And as of now, as a result of this crisis, we lost about 140BCM, almost twice.
"The situation is, if we want to put in a context, this crisis as it stands now [is] two oil crises and one gas crash put all together."
In 1973, OPEC's Arab members imposed an oil embargo on nations supporting Israel during the Yom Kippur War, quadrupling prices from $3 to $12 per barrel and triggering global shortages and recession.
In 1979, the Iranian Revolution slashed oil production, doubling prices to around $40 per barrel amid panic buying and shortages, which were later exacerbated by the Iran-Iraq War.
The federal government says Australia's supply is about 30 days for diesel, 27 days for jet fuel, and about 36 days for petrol. Australia is the only member of the IEA that does not hold the mandatory 90-day fuel reserve requirement, something the country has failed to meet since 2012.
"I think the 38 days is a solid number and I know that more ships will be sailing through and bringing more diesel and other products to the markets," Birol said.
"So I am not yet terribly worried."
Prime Minister Anthony Albanese said he spoke to his Singaporean counterpart and they agreed to "support the flow of essential goods" between the two countries, while accelerating trade negotiations for essential supplies.
Energy Minister Chris Bowen has said he's aware of six oil shipments to Australia that have been cancelled, however, Bowen and several experts have said there isn't a threat of a nationwide fuel shortage.
IEA member nations last week agreed to release a record 400 million barrels of oil from strategic stockpiles to address the spike in global prices.
Birol said the agency would make a decision on releasing further oil following consultations with member countries.
"I think the challenge we are facing is a global challenge. I think no country will be immune to the effects of this crisis if it continues to go in this direction. So there is a need for global efforts around the world."
Last week the IEA released a series of recommendations it said would ease the burden of the global oil price spike, including working from home and driving at slower speeds.
Australia hasn't officially signed up to any mandates, amid opposition warnings it could amount to "COVID-style" restrictions.
Birol said immediately after its recommendations were released that the agency heard from several European governments and elsewhere about adopting them.
But he said it's up to Australia whether it wants to adopt the energy saving measures, adding that he would later meet Prime Minister Anthony Albanese to discuss the advice.
"Every society has its own habits, its own culture. Governments have their priorities, but we put them on the table so that they have a guidance," Birol said.
Asked about alternative energy sources like nuclear, he said he did not think Australia needed to become a nuclear power and the nation should be proud of its solar-spurred renewable energy industry.
"But make the most out of the uranium reserves," Birol advised.
He added that the crisis would speed up the shift towards renewable energy sources.
But Birol had warnings for Australia about any push towards a gas export tax to help manage high domestic energy costs — which a new poll from the Australia Institute suggested is most popular among One Nation and Greens voters.
"For the countries like Australia, which has a reputation for predictability for investments, I would be very careful to implement sudden abrupt changes to the tax regimes," Birol said.
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