Interview with Lisa Millar, ABC News Breakfast
LISA MILLAR: The Federal Government has announced it is stockpiling oil as coronavirus continues to spread around the world. It's spent nearly $100 million on fuel to bolster Australia's supply and along with the price of petrol dropping, household energy prices are also falling. For more the Energy Minister, Angus Taylor joins us now from Goulburn in New South Wales. Good morning Minister, welcome to Breakfast.
ANGUS TAYLOR: Thanks for having me, Lisa.
LISA MILLAR: Let's talk first about that oil purchase. How many days do you get for about $94 million at this stage?
ANGUS TAYLOR: Well, it depends on the price, but the point at the moment is the price is very low and that's historically low indeed. And that's why we're getting on with it now, building these fuel stocks, ensuring we've got fuel security. It's an issue that we need to deal with, to ensure that our critical industries, our essential industries, whether it's manufacturing, farming, tradies, commuters have access to that fuel they need to live their lives. I think we're all attuned to essential industries more now during the COVID-19 crisis than we were. We don't have a problem with fuel security at the moment - there's more than enough - but we have faced disruptions historically, we've handled them well, but having access to a strategic fuel reserve strengthens our position in the event that we do fear disruption into the future. And now is a historically good time, because of low prices, in order to do that. You know, we would expect this would buy many millions of barrels of oil, and a million barrels is about a day's worth of supply for Australia. But it'll depend on the price in answer to your question, Lisa.
LISA MILLAR: Yeah, but I guess for people who are not familiar with oil purchasing, myself being one of them, it's not as if we are purchasing months’ worth of oil, this is a handful days that we're purchasing with this.
ANGUS TAYLOR: Well the initial purchases - the $94 million - it'll depend on the price, but it'll be many millions of barrels and what it will do is start to secure our position. I mean right now, we have international obligations on this. We have between 55 and 80 days-
LISA MILLAR: Which we haven't been meeting.
ANGUS TAYLOR: Yeah, well we've got a 90-day obligation and right now, depending on the definition you use, it's between around 50 and 80 days, it ebbs and flows a bit that we're actually holding. This will start to build those stocks and ensure we're compliant and that's an important thing. We came out of compliance back in 2012 under the previous government. We're moving now, when the opportunity presents itself. Look, if you're buying at $80 a barrel, you've got to spend a lot of taxpayers' money or you're going to have to pass this on at the bowser. When you're buying at much, much lower prices - indeed we saw negative prices just within the last 48 hours - you're in a position to buy a lot of fuel and give really good value for taxpayers' money.
LISA MILLAR: No surprises though that the critics have said how are you improving the domestic fuel security for Australia if you're buying fuel and storing it in the US?
ANGUS TAYLOR: Well that's an interim measure. Right now, there is no storage available almost anywhere in the world and that's not surprising because of COVID-19. That's one of the reasons why the oil price went negative, buyers couldn’t store it anywhere. Now, we, through our strategic relationship with the US, have the opportunity to store oil, crude oil, in their pre-existing storages they've had for many, many years. And over time what we want to do-
LISA MILLAR: How much is the rent?
ANGUS TAYLOR: Well, the good news is, the good news is, without giving you commercial confidences, is that our relationship with the US is good and so it's obviously a very attractive rate. But the important point I make here is that over time-
LISA MILLAR: So what's interim though? When you say interim?
ANGUS TAYLOR: Well over time, we want to build more storages here in Australia. We do need that. Now, our storages right now are creaking, they're full because of the collapse in demand. Our refiners have continued to produce fuel and use fuel, crude oil, and so we've, we're filling our storages, or we're very close to full for all of our storages. So we need more longer-term storages. We've been in discussions with the refineries in recent times to start looking at locations and the best way of increasing those stocks here in Australia. The alternative right now of the US is good one, they're a strong strategic partner. Obviously in the event of a disruption, they're about as good a partner as you could hope for and that's why we're getting started in that way, at a time which is absolutely historic because of the low prices.
LISA MILLAR: Low prices as well with energy, we're getting the reports out today that it's the lowest in four years. Are you confident all of that is being passed on to consumers, both domestic consumers and businesses?
ANGUS TAYLOR: Well, we want to see it passed on - there's no doubt about that. Consumers, depending on who they are, how big they are, will have contracts, pre-existing contracts. As those contracts turn over, we want to see these reductions pass through. They're very significant in both gas and electricity and they were occurring, Lisa, importantly, before the COVID-19 crisis came along.
LISA MILLAR: These decreases. Yeah. When you say you want to see them, are you confident you'll see them?
ANGUS TAYLOR: Well the good news is that we put legislation through the Parliament only a short while ago which requires the electricity retailers to pass on substantial and sustained wholesale cost reductions. Those wholesale costs are about a 50 per cent or more of a bill, but around 50 per cent, up to 50 per cent for a typical household customer or small business customer - significantly more for a major industrial customer. So these are really significant cost reductions we're seeing. There is a legislative requirement now that this is passed on. The ACCC will be watching really closely. I've had discussions with the ACCC Chairman to ensure that we are monitoring this and we're ensuring there is compliance. But yes, we expect them to be passed on.
LISA MILLAR: Angus Taylor, thanks for your time this morning.
ANGUS TAYLOR: Thank you for having me.