Fears average petrol prices could peak at $2.65 as Energy Minister Chris Bowen convenes fuel roundtable

Australians could soon be paying an average of $2.65 a litre for unleaded petrol and almost $3 for diesel, a former Shell executive says, as the regional fuel shortage threatens to halt the supply of milk, bread and fresh produce at supermarkets.

Fueltrac director Geoff Trotter, who was previously a national sales manager with Shell, made the prediction about higher petrol prices as Energy Minister Chris Bowen convened an emergency fuel roundtable in Canberra with farmers and insisted oil companies had 32 days’ of supply.

“We are seeing a big increase in demand particularly for diesel, and I understand why Australians are concerned,” Mr Bowen said on Tuesday.

“But my key message is that every single expected arrival of diesel supply in recent days and expected in coming days and weeks has arrived on schedule as expected.

“There is no need for panic buying.”

With Sydney motorists now typically paying $2.18 for unleaded, Mr Trotter said petrol prices were likely to conservatively rise by 40 cents a litre, and could go even higher should crude oil prices go back above $US90 a barrel.

They hit new record highs of $US120 a barrel on Monday, but have since moderated after US President Donald Trump promised the Iran war would be over “very soon”.

Even if the Middle East conflict didn’t intensify, average petrol prices were expected to hit new record highs and surpass the $2.20 levels of four years ago after Russia’s Ukraine invasion sparked oil sanctions.

“In capital city markets, they should top out at $2.50 a litre if there is no further escalation in the war in Iran from this point,” Mr Trotter told The Nightly.

“This is a very volatile situation. That latest increase should take five to seven days to be reflected in petrol prices at the pump.

“So, on that basis new average peak of $2.65 cents a litre.”

Before the US strikes on Iran, capital city motorists were paying an average of $2 a litre for basic E10 unleaded petrol, depending on where they were in the weekly price cycle.

But since then, the national wholesale or terminal gate price of petrol has risen by 45 cents a litre, which Mr Trotter said would be likely to add another 40 cents a litre to average retail unleaded prices in the coming week, and 50 cents a litre for diesel - pushing it to $2.90 a litre.

This wholesale price before retail margins includes the 10 per cent GST and excise of 52.6 cents a litre which was indexed for inflation in February.

Dairy farmers are also struggling with eastAUSmilk board member Joe Bradley, who represents producers on the Sunshine Coast and southern Queensland’s Scenic Rim, saying a diesel shortage and supply delays threatened to halt the supply of milk given it was needed to power tractors and trucks.

“Unless you order ahead, everything comes to a halt,” he told The Nightly. “We just don’t know what we’re up against.

“Just got the odd farmer who is saying that they’re having trouble getting diesel.

“Diesel is the lifeblood of agriculture: without it you don’t have agriculture and if you don’t have agriculture, you don’t have food on your table.”

Rebecca Reardon, who has been a grain farmer at Moree in northern NSW for the past 25 years, said high fertiliser and diesel prices could lead to higher bread prices in coming months if producers found it uneconomical to plant crops in coming weeks for a pre-Christmas harvest.

“If those import supply chains continue to be interrupted to the point where we can’t get it, that means our food production will come to a grinding halt,” the vice president of NSW Farmers told The Nightly.

“When fertiliser and fuel goes up, basically that affects our cost of production, in which case supply falls. The effect is prices go up.”

The Victorian Government on Tuesday announced service station would be required to set a daily price cap that would be published on the State’s Servo Saver website.

“The new 24-hour price cap will help you shop around for the best deal and put more downward pressure on prices,” Consumer Affairs Minister Nick Staikos said.

With consumers expecting higher prices Howard Collins, Transport for NSW’s co-ordinator general, said bus and regional rail operators were now buying extra diesel supplies in advance.

“Others are making spot calls on additional supply but as far as we’re aware, and we get an update twice a day, we have good supply of fuel for public transport, for our emergency vehicles, and we continue to monitor that,” he told a parliamentary hearing on Tuesday.

Diesel is now typically selling for $2.40 a litre and a shortage in regional areas is coinciding with a shortage of vegetables on supermarket shelves with stocks of potatoes and grapes running low at Coles in Laurieton, on the NSW mid-north coast.

“It will get worse,” a Coles staff member at the checkout said.

At nearby North Haven, the Mobil service station had run out of diesel and 95-octane unleaded only days after Laurieton’s main independent Liberty service station also ran out of diesel, which has since been replenished.

One local resident said her husband, who drives a four-wheel drive, was considering working from home instead of driving 30km north to Port Macquarie each day.

“It’s awful. Everything is going up. Cost of living is already high and now it’s going to be ridiculously high,” she told The Nightly.