Perfect storm’: uncertainty in fuel prices threatens food prices

Conflict in the Middle East may drive up grocery prices as farmers struggle to secure affordable fuel.

With global oil prices surging, diesel suppliers are prioritising long-term contracts and holding back extra fuel, reducing availability on the spot market.

Many Australian farmers rely on ad hoc deliveries rather than long-term contracts, leaving some struggling to secure fuel at predictable prices.

Some say disruptions could impact production and transport, driving up prices for consumers.

Grocery prices could rise on the back of higher fuel costs for growers and truckers. (Diego Fedele/AAP PHOTOS)

Cattle grazier John Lowe said the uncertainties had come at a terrible time for many producers as diesel prices in some regions jumped about 40c per litre.

Many farmers were reporting fuel deliveries becoming harder to secure, while prices surged.

In one case cited by Mr Lowe, a producer locked in a delivery of about 27,000 litres at $1.70 a litre, only to be later told the price had jumped above $2.

“The dry summer meant a lot of people were deferring their costs for as long as possible, which has made this a bit of a perfect storm,” the NSW Farmers committee chair told AAP.

“As we started getting a bit of rain in the farming belt, we got this supply problem at exactly the same time.”

Farmer John Lowe says uncertainty over diesel availability and cost has come at a terrible time. (PR IMAGE PHOTO)

Mr Lowe, who runs a cattle breeding and grazing operation in the NSW Central Tablelands, said the uncertainty had already disrupted his planning.

“The crops we thought we were going to plant, we may not get to plant,” he said, adding it would have a flow-on effect on cattle grazing.

“We’ll have to have a pretty big heart-to-heart with our bankers.”

Fuel retailers say the disruption has been driven partly by panic buying and efforts among wholesalers to prioritise existing contracts.

“Unfortunately, there has been some panic buying of diesel which has depleted stock in some areas; however, these sites have been quickly replenished,” Australian Convenience and Petroleum Marketers Association chief executive Rowan Lee told AAP.

The federal government insists Australia’s fuel security remains strong.

Petrol prices in Australia have jumped following the attacks on Iran by the US and Israel. (James Ross/AAP PHOTOS)

Energy Minister Chris Bowen said the country remained above its minimum fuel stockholding levels and warned companies against exploiting the crisis.

“Australia’s fuel pricing follows global markets, but the government has been clear – this is an international crisis, not a commercial opportunity,” he said.

He cautioned industry to ensure farmers and smaller businesses could access the fuel they need.

But Nationals leader David Littleproud said farmers were already struggling to secure forward fuel contracts at agreed prices and obtain supply quotes.

“农民目前无法获得所需的燃料,尤其是在区域和农村地区,这给农业行业带来了巨大的压力,” 他说。

零售商尚未报告短缺或供应链问题,澳大利亚零售协会发言人告诉《澳大利亚新闻社》(AAP),任何影响都可能在更长的时间内出现。