I don’t drive much these days. Working from home and living in a small town has it’s advantages and a big one that we have is that we don’t have any real Commute. My wife works less than 5 minutes drive away and my kids school is even closer. I’ve always wanted to have a simple life and I hated commuting primarily because of the time lost in the car / bus / train, but now there is another big reason to avoid commuting - Fuel prices are expensive and they are getting worse!
Today I went to fill up our Van with Diesel Fuel. In the past I haven’t been too concerned about basic costs like this but now we’re on a Budget and the cost-of-living pressures are getting real – not just for Australia but people around the world are dealing with some serious Inflation. So what I do these days is check out the Petrol Spy to see what fuel prices are like around my area and then I’ll fill up where it makes sense when I am in that neighborhood. I was shocked today to see a massive spike in prices across the state just since I last filled up, only a couple of weeks ago.
Since I am intrigued by markets and like to understand Macroeconomics I went on a bit of a rabbit hunt to try and understand what’s going on. To go from an average of $1.81 up to $2.10 in a month is an increase of over 16% and if you annualized that increase it’s something like 92% - which is getting near on Hyperinflation territory. I found a couple of articles from SkyNews like THIS ONE and THAT ONE but as is typical from mainstream journalists they really are primarily just reporting on the symptoms and not the cause. There are some vague references to the Fuel Excise being cut but that happened almost a year ago and shouldn’t be news to anyone unless they are doing some funky belated calculations.
This looks to me more like a supply shortfall, which is a much bigger concern and has the potential to see more rises ahead. Australia has fairly poor Fuel Security and we will be particularly vulnerable to major supply shocks if, for instance, a regional war broke out. Looking back into 2022 a lot of the inflation was blamed on the Ukraine War but our fuel prices here in Australia are higher now than at any time during 2022 so they can’t be using that old chestnut of an excuse with us in 2023.
Inflation is getting real here in Australia and I think we could be starting to get a real taste of what Hyperinflation might eventually look like, so be prepared for it and plan accordingly.
