When supply reduces, we expect prices to rise. That\u2019s why petrol and diesel prices have shot up<\/a>. Farmers and trucking companies are worried about possible fuel shortages, especially for diesel. <\/p>\n Many people will wonder why governments aren\u2019t acting. But they are not sitting idly by. Australia and New Zealand<\/a> are among the 32 member nations in the International Energy Agency (IEA) that have agreed to release reserves of oil to tackle price spikes, though it\u2019s unclear<\/a> how much this will help. <\/p>\n New Zealand\u2019s fuel reserves could last perhaps four weeks<\/a> if all new supply was completely cut off, while Australia has a little more<\/a> after recent expansion of fuel reserves. <\/p>\n It\u2019s important not to panic. Losing 20% of oil supply affects prices. But the other 80% of oil is unaffected by the war. Current price spikes are likely to be more affected by panic buying and perhaps even price gouging<\/a> than by an actual supply shortage. <\/p>\n What are authorities doing?<\/p>\n Yesterday, the IEA announced<\/a> its members would release a collective 400 million barrels of oil onto the market to try to bring oil prices down \u2013 the sixth and largest release in the agency\u2019s history. <\/p>\n Globally, oil prices have spiked 25%<\/a> since the Iran conflict began on February 28. In turn, petrol and diesel prices have risen at the pump. <\/p>\n Some have asked whether prices rose before supplier costs increased. This is something the Australian Competition and Consumer Commission is watching. Commissioner Anna Brakey has said<\/a>: <\/p>\n we are closely watching market behaviour and if there is conduct that is collusive or misleading or deceptive, we will investigate it and take action where appropriate<\/p>\n New Zealand\u2019s Commerce Commission is watching closely<\/a> as well. This scrutiny won\u2019t fix supply problems, but it could avoid price gouging. <\/p>\n Australia has just two oil refineries left in operation, down from eight about 20 years ago<\/a>. New Zealand\u2019s last refinery closed in 2022. As refineries have closed, their fuel storage capacity has gone too. <\/p>\n This is one reason why Australia has long fallen short of the goal set by the IEA to have 90 days\u2019 worth of stored fuel. In 2018, diesel reserves fell as low as 16 days<\/a>. To counter this, the Morrison government arranged in 2020 to store more fuel<\/a> in the United States, while the Albanese government has been expanding domestic reserve capacity \u2013 especially for diesel<\/a>, which fuels trucks moving freight around the country. <\/p>\n After the Ukraine conflict began, the government introduced<\/a> minimum stockholding levels for fuel companies. <\/p>\n So while 36 days of petrol, 32 days of diesel and 29 days of aviation fuel sounds low, it\u2019s more than it has been for a long time. <\/p>\n As wars and tensions increase around the world, the Australian government may have to expand these reserves again. <\/p>\n Diesel is a particular concern for Australia, given the country\u2019s reliance on trucks for freight. What else can authorities do?<\/p>\n Federal energy minister Chris Bowen has blamed price spikes on panic buying. This is a big factor \u2013 many people are filling up ahead of expected price surges. <\/p>\n If petrol and diesel prices stay high, we can expect to see more calls for action. <\/p>\n The problem is, the government can\u2019t do too much in the short term. It can\u2019t easily increase supply into Australia. If it moves to cap petrol prices, this would quickly send suppliers broke. If suppliers are profiting excessively by raising prices well above the higher costs, this is something the ACCC will examine. <\/p>\n Releasing reserves onto the domestic market could temporarily drop prices. But Australia and New Zealand\u2019s reserves are not huge, which limits how effective this could be. If the Iran conflict drags on, it could even prove a bad move. <\/p>\n Over time, unaffected oil producers such as the US will likely raise their output. Embargo limits on Russian oil are being loosened<\/a>. <\/p>\n Don\u2019t forget gas<\/p>\n Gas from Qatar \u2013 the world\u2019s second-largest producer \u2013 has also stopped flowing. Gas prices have risen far more<\/a> than oil in Europe and Asia \u2013 up by 50%. <\/p>\n After Russia invaded Ukraine in 2022, gas prices skyrocketed globally. While Australia is a major gas exporter, domestic gas prices usually follow international prices. In response, the Australian government put a domestic price cap on gas of A$12 a petajoule. This, it turned out, didn\u2019t do much to lower prices<\/a>. But over time, prices fell back. <\/p>\n![\"fuel](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/03\/file-20260312-57-a4vt.jpg\")
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\n Lukas Coch\/AAP<\/a><\/p>\n