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Interview with Seven's Sunrise

23 April 2020

Interviewer: 
David Koch

Subject: Fuel prices, fuel security, electricity and gas prices

E&OE

DAVID KOCH: Australia is taking advantage of historically low global oil prices which at one stage this week went into negative territory for the first time in history. Plans are underway to create a strategic fuel reserve with the Government committing $94 million to get it started. With no storage capabilities here however, the reserve will be stored in the United States until a local facility is established. For more I'm joined by Energy Minister, Angus Taylor. Minister, thanks for joining us. Do you know where the storage facility will be built or is it part of an existing one?

ANGUS TAYLOR: We've been in discussions with the refiners now for some time on the potential locations. The critical point here is that this is an extraordinary opportunity right now to take advantage of these very low prices. We've seen them at the bowser, they've been progressively passed through to consumers of course. The Government is going to take advantage of that. In the short term, we can get access to storage in the United States, but of course, we want to have local storage. We've been in discussions with refiners, there's a number of potential sites. I'm not going to front run any decisions on that. But the critical point here is we're looking to look after, ensure that those fuel intensive industries whether it's truckies or farmers, manufacturers, miners, commuters who need fuel, even when there's a global disruption, have access to that fuel with complete surety. So, that's what it's all about-

DAVID KOCH:  [Talks over] Okay so how much are you looking to store?

ANGUS TAYLOR: We don't have shortages right now by the way.

DAVID KOCH:  No, no. The world's awash with oil.

ANGUS TAYLOR: Awash - exactly, exactly right. Look, you know, $94 million goes a long way at the moment, it depends what the price is over the coming weeks and months, Kochie, and I don't want to predict that price.

DAVID KOCH:  Okay.

ANGUS TAYLOR: But look, you know, it can go a long way with current prices which is why now is as good a time as you'll ever get to begin building this fuel reserve.

DAVID KOCH:  Some great news on the energy front - wholesale gas and electricity prices have fallen to the lowest levels since 2016. That was for the March quarter before our big slowdown basically starts. Do you expect more reductions in energy prices as our economy continues to slow over the next few months?

ANGUS TAYLOR: Yeah, we're seeing that in the marketplace. So, to put it into perspective we've seen gas prices for the first quarter down 41 per cent; electricity wholesale prices down 49 per cent - that's wholesale prices. That's about half of your viewer's household prices, so it's a very big component of their price we've seen coming down. We want to see that passed on to consumers, that's absolutely critical, Kochie.   But you're right, we've seen even larger drops happening since COVID-19 came along. I mean, we want to see demand resume, we want to see the economy get moving again but we will see longer term, we're already seeing these big structural changes, reductions, great news for energy intensive manufacturers, all of those industries that use lots of energy, and of course households.

DAVID KOCH:  Okay. Prices to continue to drop. Minister, thanks for joining us.

ENDS