Australia Fuel Crunch Expands to Hundreds of Gas Stations

f2[(ns1grk38v3tobo8}b186_media_dl_1.png Australian Department of Climate

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(Bloomberg) — Hundreds of service stations across Australia have reported fuel shortfalls, as the war in the Middle East disrupts global supplies. 

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At least 600 retail sites across the country have run out of at least one type of fuel, Energy Minister Chris Bowen told parliament on Tuesday. The shortages were mainly concentrated in the two most populous states, New South Wales and Victoria, where it affected about 10% of total outlets.

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The near-closure of the Strait of Hormuz since the US and Israel first attacked Iran at the end of last month has cut off about a fifth of the world’s oil, tightening fuel supplies and sending prices soaring. With limited domestic refining capacity, Australia imports more than two-thirds of its gasoline, diesel and jet fuel. Its biggest supplier, South Korea, has already said it will cap some exports.

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Demand for fuel has doubled since the beginning of the war in Iran, said Rowan Lee, the chief executive officer of the Australasian Convenience and Petroleum Marketers Association, an industry body. 

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“The longer this goes on, the riskier it becomes,” he said. However, when retailers “have a shortage of stock, it’s usually only temporary and they’ll be replenished within 24 to 48 hours.” 

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Australia’s spike in demand can be attributed to panic buying and people getting ahead of price rises, but is not indicative of a supply issue, Bowen said in an interview with Sky News on Wednesday.

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On Tuesday, the government said it would lower diesel standards for the next six months to bolster domestic supplies, widening the range of prospective suppliers to include the US, Canada and Europe. Australia had 38 days of gasoline and 30 days of diesel left in reserves last week, after tapping stockpiles to meet surging demand. 

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Prices of gasoline and diesel have both jumped, according to Australian Institute of Petroleum data, adding to economic pressures. Australia’s central bank last week raised its key interest rate for a second straight meeting amid efforts to tackle stubborn inflation.

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On Wednesday, Australia introduced legislation that will allow its antitrust watchdog to double penalties for false or misleading conduct and cartel behavior to a maximum of A$100 million ($70 million) per offense.

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The government had already increased penalties to a maximum of A$50 million — five times higher than what they were — amid reports that prices at the pump had outpaced gains in international benchmarks during the initial period of the Iran conflict.

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—With assistance from Ben Westcott.

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(Updates with comments in fifth paragraph.)

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