The current oil crisis is three times as bad as the 1979 oil crisis and can cause further price rises that will rattle global markets, a leading economist has warned.<\/p>\n
Massive fuel prices have plagued Australians after Iran blocked the Strait of Hormuz, where 20 per cent of the world\u2019s oil is transported.<\/p>\n
Unleaded is selling for about $2.20 per litre in Sydney while Diesel is up to about $2.50 per litre.<\/p>\n
AMP chief economist Shane Oliver delivered a dire warning that this fuel crisis could be one of the worst in history.<\/p>\n
He said humans consume about 100 million barrels of oil a day and estimated about 15 per cent of this is impacted.<\/p>\n
\u201cSomething like 20 per cent of world oil and gas supplies flow through (the Strait of Hormuz) on a daily basis,\u201d Mr Oliver told Sky News.<\/p>\n
\u201cGlobally, we consume about 100 million barrels of oil a day – so you’re potentially taking out 20 million barrels.<\/p>\n
\u201cIt’s probably not that bad because you can divert some of that oil through pipelines that the UAE and Saudi Arabia have. Let’s call it 15 per cent of global supply or 15 million barrels per day.\u201d<\/p>\n
Reducing the world\u2019s oil supply by 15 per cent is three times as bad as the oil shock the world experienced during the Iranian Revolution.<\/p>\n
\u201cThe 1979 shock that occurred with the Iranian revolution, that basically took out about 5 per cent of global supply,\u201d Mr Oliver said.<\/p>\n
\u201cThis time at present we’re knocking out about 15 per cent. So it’s an order of magnitude three times what it was back then.\u201d<\/p>\n
Oil prices globally rose threefold at the time, sparking concerns Australians could be in for a much larger shock if the Strait remains closed for an elongated period of time.<\/p>\n
The price of oil has risen from about US$65 per barrel to US$95 per barrel.<\/p>\n
In an attempt to mitigate massive fuel prices rises escalating, Energy Minister Chris Bowen temporarily lowered Australia\u2019s fuel quality standards<\/a>.<\/p>\n The government will allow higher sulphur petrol to be sold domestically for 60 days – a move intended to redirect fuel that would normally be exported back into the local market.<\/p>\n \u201cThis will allow around 100 million litres a month of new petrol supply that would otherwise have been exported to be blended instead into Australian domestic supply,\u201d the Energy Minister said.<\/p>\n