Chapter 1: What is the main topic discussed in this episode?
Music and more.
Welcome to Fuelcast. I'm Carrington Clark and this is your source to stay on top of the numbers behind the ongoing energy crisis. It's Wednesday, May the 6th. We're recording mid-morning. Let's have a look at the figures.
Chapter 2: What are the latest fuel price updates and trends?
The price of Brent crude has risen to $110 a barrel since we last checked in. The national average price of unleaded has stayed about level at $1.85 per litre. And the national average price of diesel has dropped to $2.60 per litre. Today, I'm joined by Alan Kohler to dig into the major energy headlines. Good morning, Alan. Good morning, Carrington.
Alan, it's only in the last 20 minutes or so that Donald Trump has announced that so-called Project Freedom, which was supposed to be the reopening of the Strait of Hormuz, is on pause to allow for further negotiations with Iran. So it seems Project Freedom is almost over before it began and seemingly only allowed the passage of, is it two American flagged ships to go through that straight?
What do you make of it all?
Well, I think it's a bit weird, really, I mean, that they need to stop escorting ships through the Strait of Hormuz in order for negotiations with Iran to continue. I mean, fair enough, you'd say, okay, well, they shouldn't be bombing Iran while the negotiations are going on, or at least... They've agreed to that. But yeah, anyway, you're right.
He said, while the blockade, the US blockade will remain in full force and effect, Project Freedom, the movement of ships through the Strait of Hormuz will be paused for a short period of time to see whether or not the agreement can be finalised and signed. So anyway, there you go.
Another odd move in this enduring conflict, it seems. Alan, I want to talk about China and its role in this conflict and how it has been affected by this global oil supply shock. Now, it is a massive consumer of oil and it is the biggest, in normal times, purchaser of Iranian oil. oil. How has China played this conflict and what's your assessment of how impacted it has been?
Well, the first thing China did was to ban exports of fuel, that is to say diesel, petrol and jet fuel, that it was making from the Middle Eastern oil it was buying from Iran mainly. And that's just stopped.
But also during the last 12 months or so, they've gradually been building up their stockpile so that by the time the war began, they've got and still have apparently got four months or 120 days of oil cover left. in storage there, which is more than anyone else, certainly a lot more than Australia's got, which we went into the war with about a month's worth of storage stockpile.
They've got four months. So they've done pretty well, really. And it's not just their stockpiles of oil and fuel which they're holding. It's also the way they've electrified their economy to get off fossil fuels and oil in particular more generally. And they've been doing that for 20 years.
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Chapter 3: What is Project Freedom and why is it paused?
And Australia is very reliant on the Chinese economy and they've been pretty smart in the way they've dealt with it, for sure. I mean, it actually began in 2003 when they began the electrification of the economy and also marshalling and looking after their oil storage at the same time.
And it was specifically because, in 2003, specifically because of the vulnerability they had because of all the oil coming through two narrow straits. The Strait of Malacca, which is between Indonesia and the Malay Peninsula in Singapore, and and the Strait of Hormuz. And so they recognised then that they were vulnerable because of those two straits being able to be closed, and off they went.
They built an incredible amount of fast rail, more than the rest of the world combined. They've really pushed on electric vehicles, and they've built a huge renewable energy solar power and wind power industry. So that's helped. And then as we've discussed, they've been increasing their stockpiles of fuel and oil.
Now, Donald Trump is supposed to be visiting China very soon. This has been a delayed state visit to China. Donald Trump, though, has been hyping this up. But at the same time, we've also had the Treasury Secretary, Scott Besant, threatening and putting in place sanctions on Iran, but also going after Chinese companies, telling them not to do business with sanctioned Iranian companies.
Now, what has been fascinating, though, is that China is pushing back aggressively on that and telling its companies to ignore these threats. Do you think that this does risk being a full-blown confrontation between the world's two most important countries? Well, I don't think they're going to go to war about it.
I mean, what's America going to do? And Scott Percent can carry on all he likes. I mean, if China doesn't want to obey the sanctions, they won't. And there's nothing America can do about it, really. I think... You know, America and China are rivals. They're engaged in a geopolitical contest, which has been going on for a while, obviously, and that'll continue.
But I think the last thing that Scott Percent or anyone wants to do is actually go to war with China, and they won't. Even if China invades Taiwan, they won't do it.
Yeah, absolutely. Alan, thank you so much for joining us on Fuelcast. Remember, you can catch ABC Business Daily in your feed this afternoon. And we'll be watching for the fuel announcement expected from the National Cabinet meeting later today. And we'll check back in with you about it and all other fuel news on Friday. Thanks, Alan.
Thanks, Carrington.
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