The “diesel squeeze” is now threatening basic services that we’ve taken for granted.
Here are five key ways this crisis is about to hit home.
Will our rubbish still get collected?
It is the ultimate “out of sight, out of mind” service, but the humble weekly bin run is now teetering on the edge.
Local Government NSW (LGNSW) President and Inner West Council Mayor Darcy Byrne has mobilised more than 50 councils for emergency talks, held on Wednesday, aimed at preventing waste collection services from grinding to a halt.
“Communities rely on their councils for waste collection. Without fuel powering the trucks, councils can’t collect waste,” Mayor Byrne warned.
Although urban areas such as Sydney’s Inner West were managing, many regional councils rely on independent fuel retailers whose tanks could soon run dry, Darcy said.
Most regional councils only have enough backup diesel to last a few weeks. If a guarantee of supply isn’t secured, Australians could face a public health nightmare with garbage piling up on suburban streets.
Furthermore, the skyrocketing cost of diesel is pushing cash-strapped councils towards a financial cliff.
Mayor Byrne is calling on the NSW Government to guarantee fuel supply for councils and repurpose the $1 billion collected annually via the waste levy – which currently sits in consolidated revenue – to subsidise these surging fuel costs.
“We can’t have a situation in which communities… suddenly find that garbage is piling up on the street,” Byrne said. “That will make a bad situation so much worse.”
How much will food prices rise?
Even if you don’t drive, it is likely that you will be paying for the fuel crisis at the checkout soon.
Australia’s “just-in-time” food delivery model is entirely dependent on heavy-vehicle transport, experts say.
With diesel surcharges hitting 10 per cent, every head of lettuce and carton of milk carries the weight of the fuel crisis.
Farmers are also facing a crisis of their own; if they cannot fuel their harvesters, crops will rot in the ground, leading to scarcity and even higher prices.
“High fuel costs may compromise both food security and the resilience of domestic logistics infrastructure,” she said.
This sentiment is echoed by Associate Professor David Ubilava of the University of Sydney, who noted that energy costs are “baked into” every stage of the food chain.
In a bid to blunt the impact on families, Prime Minister Anthony Albanese announced a “triple-intervention” strategy on Monday, and reiterated the measures taken in a rare national address on Wednesday evening.
The emergency package includes halving the fuel excise for the next three months and axing the heavy vehicle road user charge for the same period.
The government has also temporarily lowered diesel standards to allow more fuel to flow into the market.
While these measures provide a temporary “circuit breaker” for transport companies, the volatility of the global oil market means it remains uncertain whether these savings will be enough to subdue price rises at the checkout.
Will my mortgage rates go up again?
The “diesel squeeze” is a primary driver of cost-push inflation. As transport and production costs rise, the Consumer Price Index (CPI) follows.
This puts the Reserve Bank of Australia in a corner; to prevent inflation from spiraling out of control, the RBA may be forced to raise interest rates again, meaning the fuel crisis at the pump could directly lead to higher monthly mortgage repayments.
“This shift reflects the longer disruption to and slower recovery in fuel supply assumed… with the Strait of Hormuz essentially closed for eight weeks and traffic recovering only slowly after that,” she said.
Is my renovation or new build about to stall?
The construction industry is one of the largest consumers of diesel in the country. From the excavators digging foundations to the semi-trailers delivering timber and steel, the entire sector is fueled by the very resource that is now in short supply.
Builders say rising diesel prices are blowing out almost all of their costs.
“We are seeing price increases across multiple materials and suppliers, PVC pipe around 50 percent, plant hire 15 percent, civil earth works about 25 percent, asphalt 15 percent and concreting around eight to 12 percent,” Matt Moran, CEO of the Master Builders Association of WA told ABC radio.
“We’re getting messages and comments from our members daily,” he said.
While fixed price contracts often meant these increases could not be passed on to customers, it increased the risk of builders going insolvent, he said.
Is this the end of the great Aussie road trip?
Beyond essential services, the crisis is hitting our way of life. High fuel costs and limited supply are already forcing schools to cancel excursions and families to scrap Easter holiday plans.
Westpac data revealed on Thursday that just over half, 52 percent, of Australians are cancelling or changing their Easter long weekend plans due to cost and fuel shortage concerns.
For many regional communities that rely on “drive-in” tourism, the absence of families taking road trips these holidays could prove to be an economic disaster, effectively cutting off these towns from their primary source of income.
Operators at the Ocean View Holiday Park’s told nine.com.au bookings are now quieter than usual.
“Yeah, light on, not got a few bookings but nowhere near like what we usually have,” Jenny Smart said.
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