Yeah.

There's three things we need to do.

Number one, you have to reduce demand, and in this case here, electrification is the only really viable way to go.

However, now, I've been driving electric cars for 12 years, on my second car now.

I do understand electric vehicles.

I just recently had a ride in an electric truck, and the technology's great.

But it will take decades for us to transfer either the car fleet trucks across to electrification.

... be susceptible to, do you think?

Is this just a Band-Aid solution?

Yeah, mate, it's a bad idea.

Look, it's good news because by doing this, the G7's doing two things.

They're going to put a fair bit of diesel into the market over the next month, which will hopefully contain or reduce prices a bit.

The analysts in Europe are saying perhaps 3% to 5%.

But in doing so, they've managed to get Donald Trump to agree not to ban fuel exports from the US.

Now, that would have shoved prices up.

Look, it does sound small, but when

Mm-hmm.

So I would start with that.

I would y- that-- I mean, I think you have to start there to be effective.

Um, start by really carefully defining and describing what stability would mean for you without being too influenced by what anybody else tells you it's supposed to be.

And, and if I may, a big part of any of these things, goal setting, especially coming with this, um, NLP, this neuro-linguistic programming, uh, background that I have, um, is that when you, when you define, for example, stability or security, you don't do it in like a dry set of bullet points way.

You can start with that for sure, and writing things down is a great idea.

But in order to really set a goal that does something for your neurology, for your system, you've, you've gotta sort of create an internal experience of that goal.

Mm-hmm.

AI pans about productivity and efficiency...

And you look at this sort of stuff, and I go, oh, that's written by an economist.

what's it going to do to our society in other words this is an interesting technology it's going to have a lot of good application but what are the what's the downside what's the risk and from what i can see the national ai plan is not even looking there and i've been using ai now for four years i started using it in 2022 to try and help analyze all the outputs of our national resilience project you know so back in 2020 and 21 we had 250 people looking at things from energy to the health systems to the economy to research and industry, all this sort of stuff.

Well, one of my jobs at the end of that was to integrate all these reports from these different people.

It just about fried my brain.

And then I realized the ability to look at the very high-level complex interactions between parts of our society is a bit beyond the human brain's capacity.

So I started experimenting with AI.

So, John, in relation to that, where are we? And are these the kind of things we need to focus on to make sure that we are doing things here if we end up being isolated?

Is now the right time to wind it back?

Well, the first three months of the discount actually cost the government, therefore us, $2.9 billion.

This last month, the reduced discount, that cost about $400 million.

So with oil prices sitting at about $88 US barrel for September, you can see the government said, well, if we're going to remove it, this is the time to do it.

But in doing so, it's not an even impact.

So lower income households, small businesses are going to feel this a lot more.

than the higher income parts of it.

Right, so now that that fuel excise is back to normal, what happens next? Because as you say, it's sort of like the situation in the Middle East hasn't changed.

And so if you subsidise this one, the other two, I'm assuming they've got some sort of subsidy already, the Geelong one in Morningsland?

Yeah, absolutely.

So what happened in about 2020, I think it was, Angus Taylor, when he was Energy Minister, offered subsidies to the four remaining refineries because he could see the essential nature of having a refining capacity.

Only two took that subsidy, the ones that remain today, and the Labor Party extended that subsidy in the last few months, I think.

So currently the subsidy contracts go out till 2030.

What happens after that, who knows? But if we lose our refining industry, what it means is that you can't import oil as well as refined fuel.

At the moment, about 5% of our transport fuels come from Australian oil through the two refineries.

Would that be right? Well, you'd want

The Geelong one in Queensland.

Yeah.

Yeah.

Absolutely.

So what happened, uh, in about twenty twenty, I think it was, Angus Taylor, when he was energy minister, offered subsidies to the four remaining refineries because he could see the essential nature of having a refining capacity.

Only two took that subsidy, the ones that remain today, and the Labor Party extended that subsidy in the last few months, I think.

So currently, the subsidy contracts go out till, uh, twenty thirty.

Would that be right?

Is that the worst case scenario? Where are we headed?

[laughs] Regardless of what happens in the Strait the next few months, we're heading for a couple of very difficult years that's largely out of our control.

So oil prices have been kept contained because since March, IEA member countries have released 400 million barrels of strategic stocks into the market, and that's kept the price down.

Those stocks run out in the next couple of weeks.

So that p- is not there to keep prices contained.

So you're saying we're in for a difficult qu- difficult couple of years.

Yes.

So let's just say the Strait stays closed for a few months, more months at least, we'll see the oil prices go up.

Should the government keep that on for now and see what happens?

My view is absolutely because it's not just the closure of the strait, which we now know is going to go on for a long period of time.

The Houthis overnight announced that they're going to start attacking the Saudi infrastructure in the Red Sea.

And the other factor that's going to affect us is that the Ukrainians have taken out a very large proportion of the Russian oil refining industry.

And so refined fuels will also be affected by that globally.

And Australia being the largest importer of refined diesel in the world, it's going to get us.

So there's all these other factors that will affect the price.

And what about fuel stocks? Are we OK with supply at the moment or should the government be getting ahead of this like they didn't last time and try and shore up the supply?

Could prices really be worse than when the war first kicked off, and why?

I think it's gonna head back that way.

One of the reasons the prices haven't got out of control in recent months is IEA member countries released 400 million barrels of oil to the market from their strategic stocks.

That was a progressive release, and the end of those stocks is probably the end of this month, which means prices will most likely go up.

Because with the chaos in the Middle East, there's no ceasefire, there's no resolution, that supply shortfall will be accentuated, so we're looking at price increases.

So that's a disingenuous statement that he's made.

[laughs] That's normal for Trump.

I mean, you've got a neurotic man in charge of the most powerful military in the world, and we're seeing the symptoms of that.

John, what's your take on the federal government's response and the numbers there in terms of what our supply is looking like?

Firstly, I think the government, working closely with industry and with regional partners, has done a good job reacting to the problems we've seen, and that's ensuring that they're subsidizing the industry where necessary at the additional prices, having deals with regional refineries, because we do export a lot of oil condensate and LNG, so the bilateral deals are good.

But those weekly figures you hear are a lag indicator.

They're the result of what we have been doing.

What the government's not coming out with is, "Okay, what's the next six months look like? What might we have to do differently?" And so they're not projecting forward.

I think the extension of the excise is gonna be very important because we will see these cost pressures rise.

So they've done a good job to date reacting.

Are there any other ways that we can keep fuel prices lower?

you've gone into great detail and people can go to your institute's website and see the papers because you're arguing for this parliamentary inquiry but just for those of us who are lay people what are some of those challenges

Okay, first off, is the Gulf, is Australia really opened? And that's not a clear case.

The amount of traffic going through it now is still only a fraction, probably a third of what was before the war.

And that's going to be difficult because to get things moving again, they're going to have to get any mines out of there.

The insurance industry is going to have to agree that the risk is low enough to start stuff flowing again.

But let's assume that happens.

It's going to take probably a couple of months, right? before things will start moving the analysts say probably 2027 before it gets back to full capacity if there's not another conflict between iran and the us after that once they start slowing again refineries have to be restarted in various parts of the world they have to now readjust to the type of oil coming out of there because they adjusted away from it that's going to take a few months now at the back end of it There's strategic reserves that have been drawn down around the world.

Is that right, that it could be done? Yeah,

You've gone into great detail and people can go to your institute's website and see the papers because you're arguing for this parliamentary inquiry but just for those of us who are lay people, what are some of those challenges? Okay, first off,

is the Gulf, is the strait really opened? And that's not a clear case.

The amount of traffic going through it now is still only a fraction, probably a third of what was before the war.

And that's going to be difficult because to get things moving again, they're going to have to get any mines out of there.

The insurance industry is going to have to agree that the risk is low enough to start stuff flowing again.

But let's assume that happens.

It's going to take probably a couple of months.

Is that right, that it could be done? Yeah, it

In your opinion, does that sound like a lot? Would that be a record amount?

No, it won't be a record amount.

When you have a look at what was coming up beforehand, normally you'd say 21 million barrels a day is a figure.

And even his Defence...

His Energy Secretary is having some conflicting statements.

He's making this statement, as he often does, when he starts to play the markets.

What figures I've heard is somewhere it might be, you know, an eighth or, you know... a quarter coming out of the straights compared to beforehand, but it's not steady.

Is that a blip, is it? Is it going to go back up again, you're saying?

John, what needs to happen to open up the strait?

Okay, so if you just look at, let's assume that agreement goes ahead and they start doing something.

Well, from my reading, I'm seeing a couple of things.

To physically reopen the strait, they need to do things like make sure there are no mines in there.

So they have to demine the area.

Some of the port infrastructure around the area was damaged as well.

That needs to be repaired.

How do you see that playing out?

Defense and energy analyst John Blackburn says despite the promise of a peace deal between the United States and Iran, there are still concerns about the future of fuel supply in Australia.

My concern right now is that whilst the minister says, "Oh, don't you worry, we've got more fuel stocks than we had before the war," he's not talking about what does the next couple of years look like, because if you don't look at these scenarios, they may do something stupid like put the fuel excise back up without understanding the impact on Australian businesses.

Businesses will go out of business, basically.

How soon do you think it will get back to normal?

As Donald Trump is saying it, God only knows.

Look, he changes his mind every week.

So what we've got now is basically a framework that over the next 60 days, if they sign this on Friday, they'll negotiate the details.

60 days is a long time.

There may be the start of some fuel flying in that period.

Let's just assume the deal eventually goes through and it flows.

Is it going to stay there based on what you're seeing at the moment?

Has our situation improved much since then?

Well, uh, no, uh [laughs] fundamentally.

So I wrote a series of three reports, and then we went on a whole campaign after that.

Now let's talk about what's happened since I wrote those reports.

Well, we've gone from seven refineries we had then down to two, and the contracts to support them have just been extended till 2030.

But there's no guarantee those two refineries will decide to stay open, so we're not thinking about what we're gonna do then.

Uh, the other thing is that back in 2013, we didn't have any mandated stocks.

Because they can't do it straight away.

... of international supplies for our fuel and oil?

Step back to 2012.

At that point in time, 40% of all our fuels came from Australian oil through Australian refineries.

Now, by 2012, we still had seven refineries, but we could see them going downhill.

So in about 2014, I went and spoke to the Department of Energy.

It was called something else then.

And I said, "Listen, you can just see where the refineries are going." And I'll never forget it.

What's the truth, and who's pulling our leg?

What does readjust mean?

Well, there's a bunch of stuff we can't do.

They're gonna have to start prioritizing.

If we don't prioritize things like food production, logistics around the country, that's a real problem.

So there are things we won't be able to do.

Now, the case then is, well, the government has a thing called Liquid Fuel Emergency Act.

In 2019 they identified that that was not fit for purpose, needed to be modified, ref- you know, reviewed, to allow the government to act fast enough in an emergency to take control of things.

Why?