HVIA attended the National Coordination Mechanism’s National Fuel Supply Briefing yesterday afternoon at which the National Emergency Management Agency provided an update on the key issues of supply and pricing.
The briefing was delivered by Deputy Coordinator General, Katarina Carroll, and the Deputy Secretary of the Department of Climate Change, Energy, the Environment and Water, Matthew Brine.
This followed the Prime Minister’s announcement that Anthea Harris has been appointed as the new Fuel Supply Taskforce Coordinator following the National Cabinet meeting, a summary of which can be accessed here.
It also came after Wednesday’s weekly industry briefing at which Federal Transport Minister, Catherine King, confirmed the temporary relaxation of fuel quality standards only applies to petrol, not diesel. The official determination is available here.
Supply
In short, fuel supply to Australia remains stable and ships continue to arrive unimpeded. The Department is now reporting the Minimum Stockholding Obligations (MSO), commonly known as fuel stock levels, weekly on Fridays. The latest data is available here.
In terms of crude oil, Australia’s larger supplying nations in Asia, which traditionally rely on Middle Eastern feedstock, are diversifying supplies including from Africa, Latin America and Russia.
Following the International Energy Agency’s call to release 400m barrels last week from the 32 participating nations, 422m barrels were eventually committed. This includes an Australian domestic release of 762 million litres into the market.
On March 16, Climate Change and Energy Minister Chris Bowen finalised the legal instrument to enable this release and it is starting to flow to areas where there are localised shortages, including independent fuel retailers and regional areas. Seven of the 11 domestic suppliers have now provided plans to address these shortfalls, with two more imminent.
In addition, state governments have increased their activity to ensure supply and in some cases, that includes specialist appointments, or enacting their emergency powers to ensure supply.
The briefing also addressed specific commodities affected by the market disruption, such as technical grade urea for fertiliser and plastics/petrochemicals, which the federal Office of Supply Chain Resilience is preparing proactive plans for.
Prices
Whilst there are some areas of localised shortage, the more pressing concern is pricing, with the Terminal Gate Price rising from about $1.50-1.60 to $2.75. This is predicted to increase further.
This obviously affects the trucking industry and with fuel being one of the largest input costs for operators, cash flow remains a huge concern across the board. Collectively, the industry is calling for financial support and a range of other government measures.
Other industries are also affected including agriculture, pharmaceuticals and aquaculture. The community are likely to see significant price increases as this flows through the supply chain.
A number of industry bodies representing truck operators, including the Australian Trucking Association (ATA), have advised members to review costs and bring forward fuel levy adjustments and/or rate reviews to cover spiralling fuel prices.
At the same time, the ACCC has launched an enforcement investigation into allegations of anti-competitive conduct by each of the major fuel suppliers, Ampol Ltd, BP Australia Pty Ltd, Mobil Oil Australia Pty Ltd, and Viva Energy Australia Pty Ltd.
The ACCC says it has received reports concerning diesel availability to independent wholesalers and distributors servicing regional and rural Australia. This investigation will assess the alleged conduct.
“It is not our usual practice to publicly announce investigations, but given the significance of the issue, the ACCC is confirming this enforcement investigation. We recognise the widespread concerns held by consumers, businesses and farmers about fuel pricing and supply issues arising during the Middle Eastern conflict,” ACCC Chair Gina Cass-Gottlieb says.
“It is important that fuel market participants and the community know that we are closely watching market conduct in relation to all fuels and we will not hesitate to act swiftly to enforce Australia’s competition and consumer laws.
“Our investigation is at a preliminary stage, and therefore we are yet to form a view about these matters.”