Australia’s performative democracy is a circus of jingling clowns pretending to care about national interests while doing nothing of substance.
This situation is largely due to the structure of political parties, which lends itself to corruption and cowardice in the face of vested interests.
Therefore, political parties avoid conflict at all costs, even when it is necessary and constructive for change.
Well, the mother of all conflicts is about to land in Australia, and dancing a distracting jig around it is neither going to stop it nor mitigate the damage.
30-40% of Australia’s fuel comes through the Straits of Hormuz.
The Straits are shut. There is no sign of them reopening. The US can’t reopen them. Only a very pissed-off Iran can do that.
And right now it is doing the opposite. Last night, it droned three commercial ships and an Oman oil depot. Opening the Straits is getting more, not less, remote.
When Iran does reopen the Straits after a deal, it will take weeks to resume production at shut-in oil fields, two more weeks (at least) to ship any oil to Asia’s refining hubs, and another week to ship it to Australia.
This estimate assumes the Straits simply reopen. If Iran mines them instead, it will take six weeks to clear the shipping lanes, presuming no attacks occur during this period.
No shipping will traverse the Strait while drones are targeting them.
What about the strategic reserve release coordinated by the IEA? In flow terms, that amounts to about 1.2m/bd. So we are still going to lose 15 mb/d from the Middle East in flow terms while the Straits are closed.
Assuming there is no panic hoarding, Australian fuel inventories would be fine for 2–3 weeks from the start of the closure. We are nearly at the end of week two.
We will start to see material shortages in 3–4 weeks as shipments from Asian refineries begin to taper off, and the strategic reserve will run down fast.
If we assume an equal share of the Middle East oil reduction, we can expect a 15% reduction in Australian fuel supplies after six weeks.
More realistically, add panic hoarding and reduce everything by a week, which could mean we see fuel material shortages in just 2–3 weeks from today instead of 3–4 weeks.
Australia has a pure oil intensity of about one-quarter of every $1000 of GDP. This is likely a severe underestimate given enormous spillovers.
If, six weeks after the start of the closure, Australia has a 15% reduction in fuel supplies (petrol, diesel, and jet fuel), the immediate impact will be 3.7% of GDP.
Considering spillovers, the odds are twice as much, as folks can’t get around, and 15% of machinery just stops.
In short, we are 3-4 weeks from the Great Australian Oil Depression of 2026.
It doesn’t bear thinking about what it means if we are forced to reduce our fuel consumption by the full 30-40% that traverses the Straits. Let’s just assume we can buy it elsewhere and keep the damage to 15%.
Call me a lunatic, but I believe we should immediately ration fuel supplies to take a little pain up front and extend the timeline to Armageddon.
An incremental system that gradually reduces the maximum litres per vehicle allowed if the crisis continues would be effective.
Offset it with free public transport.
It would prevent hoarding, allow people time to adapt, and extend the timeline of fuel depletion.
But hey, maybe we’ll get lucky.
Energy Minister Chris Bowen told reporters this week that Australia’s fuel stocks remained “secure” and that shortages across the country were due to “a huge spike in demand, not an impact on supply”.
Labor MP and Employment Minister Amanda Rishworth clashed with Today host Karl Stefanovic on the Today show this week, insisting that “there isn’t an issue with supply when it comes to fuel”, and that “the suggestion that there is a crisis in fuel supply in this country is incorrect”.
