Iran has vowed to choke global shipping. That could push petrol to $2.50 a litre
Australian petrol prices could hit $2.50 a litre while electricity and gas prices spike if Iran closes its shipping channels to the world, blocking the conduit for Middle Eastern energy exports representing about 20 per cent of globally traded oil and gas.
Iran's parliament is reported to have agreed to close the Strait of Hormuz, but it is unclear if the nation's military will implement a blockade, which could draw brutal retaliation from the US and its allies.
However, just the threat of global disruption can drive commodity prices higher. When Vladimir Putin invaded of Ukraine in 2022, fears over shortages due to widespread embargoes on Russia's oil and gas exports helped drive price spikes along with the physical shortage of fuel.
Any shift in global markets will affect local energy prices because Australia imports the vast majority of its petroleum. Despite Australia being a major gas exporter, local gas prices are set by the international market because buyers here compete with the rest of the world.
Loading
Schneider Electric senior director Lisa Zembrodt, who advises some of Australia's biggest corporate energy users, said disruption to shipping through the Strait of Hormuz would affect 20 per cent of the world's petroleum liquids consumption and 20 per cent of liquified natural gas. She said more than 80 per cent of these exports go to Asian markets, which drives prices in Australia.
'When the price of oil rises, we see this at the pump. When the international price of gas rises, the price of gas as a fuel for heating may rise, despite that we produce twice as much as we consume domestically. The cost of gas-fired generation can also rise, causing electricity prices to rise at times when gas is setting the price in the market – for example recently during the cold snap in Victoria.'
And while only around 10 per cent of Australia's electricity is generated by gas, it is the most expensive compared to the dominant fuel sources of coal and renewable energy, which means it sets a benchmark price that drives all the others up if its price spikes.
The 2022 electricity crisis culminated in price spikes so high that the regulator imposed the first-ever suspension of the market, and bills have remained elevated ever since.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Age
11 minutes ago
- The Age
Trump demand on Australian defence spending would leave $200b crater in budget
Washington: Meeting the Trump administration's demand for Australia to boost defence spending to 3.5 per cent of GDP would cost the federal budget a whopping $210 billion extra over a decade, according to analysis of Parliamentary Budget Office figures by this masthead. The Trump administration ratcheted up pressure on Australia and other Indo-Pacific allies on Friday, again calling for an increase defence spending to 3.5 per cent of GDP after being emboldened by an agreement from its NATO partners. The mounting pressure from Washington on Canberra to spend more on defence comes as the Albanese government grapples with the ballooning cost of the National Disability Insurance Scheme, and calls from the states for more money to be spent on health. White House press secretary Karoline Leavitt told this masthead: 'If our allies in Europe and our NATO allies can do it, I think our allies and our friends in the Indo-Pacific region can do it as well.' She said she would leave discussions of specific countries to the president. The administration has already asked Australia to lift defence spending to 3.5 per cent from a projected 2.33 per cent by 2033, something the government says it is assessing. But the NATO decision to move to 5 per cent makes it more difficult for Australia and other partners, such as Japan, to refuse. Modelling prepared by the independent Parliamentary Budget Office for the opposition on its policy to move to 3 per cent of GDP suggested the overall cost would be approximately $156 billion, and add $24 billion in interest costs. Moving to 3.5 per cent by 2035-36 would cost an estimated $182.5 billion, with an extra $27 billion in interest payments – a total of $207.5 billion. At present, Australia spends just over 2 per cent, or about $56 billion per year, on defence but the acquisition of nuclear submarines and frigates, for example, $56 billion per year and is expected to rise to $100 billion over the next eight years. 'The developments at NATO suggest that the president and his team will be very keen that allies in the Indo-Pacific region follow a similar pattern in a commitment to increase defence expenditure,' said Arthur Sinodinos, a former Australian ambassador to the US, who is now at The Asia Group and co-chair of the AUKUS Forum, a group for AUKUS-related businesses.
Sky News AU
an hour ago
- Sky News AU
Home Affairs Minister Tony Burke says legal bar too high for preventative detention of NZYQ offenders
Home Affairs Minister Tony Burke has indicated the Albanese government will effectively abandon efforts to use preventative detention measures against the NZYQ cohort of former immigration detainees. Mr Burke told Sky News Sunday Agenda that the government's repeated attempts to apply preventative detention on offending criminals had been stymied by legal hurdles. Despite dedicating significant resources, no cases have met the threshold necessary to justify locking up released detainees under the current laws. 'The reality is the legal thresholds that we are stuck with… are more difficult to be able to reach than I want them to be,' Mr Burke said. He suggested the government would instead pursue deportation and third-country resettlement for individuals on visas who have broken Australian laws. The government has attempted to resettle three members of the NZYQ cohort in Nauru, though their cases remain in the High Court. 'Those negotiations with third countries continue, but we had the first three visas be offered and those cases are going through the High Court,' Mr Burke said. 'As they go through the High Court, we've been winning the cases, which I've been really happy about, which is giving me more confidence.' The NZYQ cohort included 12 murderers or attempted murderers, 66 sex offenders, 97 people convicted of assault and 15 domestic violence perpetrators. At least 28 former immigration detainees have been charged with federal offences since the reissuing of bridging visas in 2024. 'If your visa is cancelled, you should be leaving the country. That is why visas are cancelled,' Mr Burke said. Pressed on whether the NZYQ cohort would ever be placed into preventative detention, Mr Burke said 'no one' had come close to reaching the legal threshold. "I'm not giving up, I'm going to keep (trying), but I'll tell you to be honest, I would much prefer the individuals out of the country altogether," he said. This statement follows a series of highly publicised violent crimes involving individuals from the NZYQ cohort. Shadow defence minister Angus Taylor told Sky News Sunday Agenda that Mr Burke needed to 'make sure' that offenders were kept off the streets. 'We've always been supportive of Labor doing what's necessary to keep these people off of the streets,' he said. 'And we'll do the same again, but, you know, the job for Tony Burke is to make sure that he is able to do that. 'The key here is to keep people off the street in these circumstances and it's always been too hard for this Labor government to achieve that but it has to be an imperative.' Among recent incidents was an alleged brutal assault by a 43-year-old former detainee on a bridging visa. 'This is another massive community safety failure by the Albanese government,' shadow home affairs minister Andrew Hastie recently said of the incident. 'This shocking attack is exactly the kind of scenario we sought to prevent when the parliament rushed through preventative detention powers for the NZYQ cohort. 'The government has not made a single application to keep these dangerous criminals off our streets.'
Perth Now
an hour ago
- Perth Now
Australian agencies count cost of US foreign aid axing
In the Papua New Guinea highlands, tribal violence is an unfortunate way of life and, increasingly, death. In February 2024, bystanders were among 49 people killed in a gun battle between clans in Wabag, the capital of the Enga province. That clash was the destructive climax of a spate of fierce inter-tribal battles in Enga, where hundreds have been killed and thousands displaced, fearing for their lives. The reasons behind the violence are complex, including land ownership, with displacement of tribes causing cascading issues around custodianship of country. The arrival of industry, including forestry and mining, can upset traditional community authority structures, and challenge chiefly systems. The single greatest impact behind the swollen death tolls is perhaps the arrival of modern weaponry which replaces traditional weapons with lethal firearms. The UN estimates there are 112 inter-group conflicts in Papua New Guinea, and recent massacres extend beyond Enga. In 2019, more than 20 died in Hela province after an initial attack, which killed six, led to a retaliation including the murder of pregnant women and children. It was in Hela and Morobe provinces that agency Conciliation Resources began a peace-building project, drawing from years of expertise and a scoping assessment of the likelihood of success. "It was to enhance the skills and capacities of the people working on these conflict challenges," Ciaran O'Toole, Melbourne-based regional director, tells AAP. "Working to enable specific communities, in particular those affected by violence, to design and develop their own peace-building work (and) provide ... small grants for them to conduct dialogue or provide livelihood for some of the young men engaged in violence. "It was very targeted on what we would call the drivers of the violence." That was, until a stop-work letter arrived early this year. "It was quite blunt. It was very quick. There wasn't any lead time to wind down. It was just 'stop work'," Mr O'Toole said. The peace-building project was one of thousands axed by the US President Donald Trump's executive order to pause and re-evaluate foreign aid in January. Alongside peace-building programs, multi-billion dollar health initiatives to treat HIV and malaria, food provision, and climate-mitigation projects funded by USAID were ended. Months later, it is estimated that roughly 90 per cent of USAID's $A53 billion annual spend has been cancelled, representing roughly a third of all foreign aid. Australian development agencies are among those counting the cost. In a survey of members, peak body Australian Council for International Development (ACFID) has revealed at least $A400 million worth of projects have been defunded by the United States. ACFID believes that is a lowball figure, given many NGOs are yet to see the full picture of cuts, and others were not able to complete the survey during the upheaval. "This means communities losing access to healthcare, girls losing access to education and families losing access to food programs," ACFID chief executive Matthew Maury said. The hardest-hit region for Australian agencies is the Pacific, with the loss of $A113 million worth of support, predominantly climate change resilience and disaster preparedness, health and gender projects. Other axed projects include education and nutrition projects in Timor-Leste, drought recovery in Fiji, climate-resilient food systems in Nauru, and sexual and reproductive health services right across the Pacific. Given the challenges and sensitivity that comes with securing funding from donor governments, not every agency is keen to speak on the record about their loss. Caritas Australia programs director Dan Skehan said Caritas partners in Fiji and Samoa were also hit by USAID cuts. "They were receiving USAID funding specifically for WASH, which is water, sanitation and hygiene work ... delivering water to much needed communities, be that schools, communities or in some instances health facilities," he tells AAP. In this instance, Caritas Australia - part of the world's second largest humanitarian grouping, second only to the Red Cross - was able to redirect support to these programs at a reduced scale. "(Where) something like vital water to community hasn't been delivered, we've made decisions to at least finalise the project activities," he said. The aid sector has also been plunged into chaos, and in many cases, retrenchment by the USAID cuts. Caritas has shed hundreds of jobs in places like Bangladesh, and a smaller number in the Pacific. "This is an enormous funding cut ... there's been an enormous amount of disruption in the sector," Mr Skehan said. "There would be large number of staff who have been serving communities of very skilled workers who no longer, unfortunately, have a job. "What's most important, and we've always got to hold at the centre, is it's the communities and the vulnerable people that we serve that are most impacted." It's not just the US which is cutting development assistance. In April, the UK cut foreign aid by 40 per cent - a move which shocked many given it came from a centre-left Labour government - while last month, New Zealand axed $A91m in climate-related assistance. Mr O'Toole said the huge US retreat on aid had "given permission to other governments to cut back on their aid budgets as well". "We're all feeling the hurt across all of this change and I think all aid organisations are feeling this pain," he said. The sector hopes Australia, which has made incremental increases under Anthony Albanese, will step up to fill the gap. There are some positive signs from Canberra, including a flexibility afforded to agencies to move funds earmarked for one purpose onto others in light of cuts. Mr Maury hopes future budgets will see aid rise not just in real terms but as a percentage of the budget. "Australia has a proud history of supporting development, particularly in the Pacific," Mr Maury said. "Yet as global needs rise, our aid budget has fallen to just 0.65 per cent of the Federal Budget ... restoring aid to one per cent would reaffirm our commitment and secure Australia's place at the forefront of development."
