We can ignore a problem for a decade, then panic-buy it in a single afternoon.
To see it in action, head to the cheapest servo in Sydney. Four pumps. Fifty-kilometre pilgrimages. Horns, abuse, and the modern Australian war cry: “beats getting rorted.”
That’s what an oil shock looks like before it shows up in the CPI.
Make no mistake, the Iran war isn’t some distant desert drama. It’s a stress test of Australia’s energy dependence, policy complacency, and cost-of-living fragility all at once.
Iran has threatened to burn ships attempting to transit the Strait of Hormuz, the world’s most important oil chokepoint. About 20 per cent of global oil supply moves through that narrow stretch of water. Even if it is not formally sealed shut, insurers, shipping companies and crews only need to believe it is dangerous for trade to slow to a crawl.
Oil markets have reacted accordingly. Prices spiked sharply, then partially retreated. That tells you traders are not sure whether this will be a short, brutal episode or a drawn-out disruption. The price may move around day to day. The risk premium is what lingers.
But here is the part that should worry Canberra: Even if the strait is not officially closed, the commercial reality can still be paralysis. Ships do not sail on diplomatic nuance. They sail on insurance cover, naval protection and the willingness of crews to risk their lives.
Australians talk about oil prices like we buy crude in a jerry can.
We do not.
We buy delivered, refined fuel in a global market where freight costs, war risk premiums and refinery margins can jump overnight. That means you can get smashed at the bowser even if crude only spikes and then eases.
NRMA has warned that international shocks can take about a week to flow through to local prices. That is the calm version. The pricing wave arrives when the next cargoes are booked and landed. When it arrives, it will not politely stop at petrol.
Diesel is the bloodstream of the economy. Trucking, construction, agriculture, mining and backup generation all rely on it. Jet fuel keeps tourism and business moving. If those costs rise, everything rises, including groceries. Politicians may not understand that, but households do.
The Reserve Bank has already flagged the bind. Governor Michele Bullock has warned the Middle East conflict could deliver a supply shock that adds to inflation, while a prolonged energy hit could also choke growth. That is the nightmare scenario for a central bank. Higher prices and weaker activity at the same time.
This is where the political class will try to find villains. Expect talk of price gouging. Expect moral outrage at servos charging over two dollars a litre.
It is comforting. It is also largely beside the point.
The deeper problem is structural. Australia is a net fuel importer in a world where the marginal barrel sets the price. When the marginal barrel is being threatened by drones and missiles, we pay for it.
We do have minimum stockholding obligations and fuel security frameworks. But it’s very minimum, lasting days not weeks. That buys not much time. And it does not change global supply and demand.
If consumers lose confidence and start topping up every day “just in case”, the psychology of shortage can amplify the economics of it.
Watch three things.
First, the real risk in Hormuz, not just the headline oil price. Even limited interference can keep war risk pricing embedded in every cargo.
Second, the Australian dollar. If global risk aversion strengthens the US dollar and weakens ours, imported fuel becomes more expensive regardless of what crude is doing.
Third, Canberra’s reflexes. Expect press conferences. Expect reassurance. Expect the phrase “monitoring the situation”. Do not expect an honest reckoning about how exposed Australia remains to distant conflicts.
We are unlikely to run out of fuel tomorrow.
But we will feel it in instalments. At the pump. In freight bills. In supermarket prices. In interest rate uncertainty.
This is how dependence works. Not with a bang, but with a slow squeeze on living standards while leaders insist everything is under control,
Thought for the Day
“Safety and certainty in oil lie in variety, and in variety alone.” – Winston Churchill
I’m a journalist, former politician, Christian, and campaign director for CitizenGO Australia. My mission is to challenge the media lies, government overreach, and corporate censorship that threaten our freedoms.
