Diesel price surges as Middle East War continues | The Business | ABC NEWS

The Middle East war continues to drive up the price of liquid fuels, particularly diesel that powers our industrial, transport and agricultural sectors. NSW Farmers’ Grain Committee chair Adrian Roles says “it’s not like we can pass on these additional costs because we sell into a global commodity market, so we’re price takers as well.”

The price of diesel has soared since the conflict began and will accelerate because the base product – brent crude oil – is back above $US100 dollars a barrel. In addition, a global reduction in the capacity to refine diesel means the gap between the price of crude oil and what diesel costs is increasing. A specific problem is that the oil being disrupted is the most conducive to being turned into diesel but there are no plans to reduce the fuel excise.

The shortage of diesel could get worse with US Senate Majority Leader John Thune sparking a discussion about a US export ban as prices in America surge too. Earlier in the war, Australia did receive shipments from America.

Before the conflict, transport companies would adjust fuel surcharges once a month, now they do this weekly. Neil Chambers from the Container Transport Alliance Australia says it’s because of the volatility in fuel pricing. So it means that the increases in fuel costs have been passed through to the consumer much more quickly in the supply chain.”
All of which adds to inflation, something the Reserve Bank is worried about as well. The RBA’s assistant governor Sarah Hunter recently said “over the last few weeks, the conflict hasn’t reached a sort of sustainable resolution. We are definitely concerned about, therefore, what that means for fuel prices and the flow of crude oil and refined products through the global economy.” The RBA will meet to decide interest rates on September 28-29.

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