Prudhoe Bay Oil Field Shutdown Could Hurt Australian Motorists More Than Any Other War or Disaster

Strategic Insights -

Australian motorists can expect to pay higher prices at the pump as the US thinks that the possible shutdown of North America's largest oil field, Prudhoe Bay in Alaska, could severely impact supply chains. The shutdown could cause oil prices to surge, making it a difficult time for motorists, with the NRMA predicting that petrol prices could reach as high as $A1.80 ($US1.36) per liter in the next few months.

Key Takeaways:

  • The Prudhoe Bay oil field in Alaska produces 400,000 barrels of oil per day, accounting for about 8% of US oil production.
  • The shutdown of the Prudhoe Bay oil field could not only impact the US market but also affect Australian motorists, as the Australian government is heavily reliant on imports from the US.
  • The NRMA predicts that petrol prices could reach $A1.60 ($US1.21) to $A1.80 ($US1.36) per liter in the next few months.
  • The US government has assured that there are sufficient crude oil inventories and additional crude oil availability to alleviate any disruption from Alaska.
  • The US has secured offers for additional crude oil supplies from Mexico and Saudi Arabia, with Saudi Arabia having up to 1.3 million barrels per day of surplus crude capacity.
  • Stratfor, a private sector intelligence group, believes the problem could not come at a worse time, as markets already know about other potential disruptions in the region.

Statistics:

  • 400,000 barrels of oil per day produced by Prudhoe Bay oil field in Alaska (about 8% of US oil production).
  • $A1.60 ($US1.21) to $A1.80 ($US1.36) predicted petrol price in the next few months (NRMA forecasts).
  • 1.3 million barrels per day of surplus crude capacity in Saudi Arabia.
  • US oil reserves at healthy levels, with the possibility of additional supplies from Mexico and Saudi Arabia.

Sources:

  • Stratfor's recent briefing on the shutdown (date not specified)
  • NRMA president Alan Evans (AAAP, 09-08 0952)
  • US Energy Secretary Samuel Bodman (AAAP, 09-08 0952)
  • The White House (AAAP, 09-08 0952)
  • Britain-based private sector intelligence group Stratfor (The World According to Stratfor, Briefing, Date not specified)