www.abc.net.au /news/2020-05-01/australian-oil-buy-deal-of-the-century-or-dud/12202852Australia's $94m oil purchase: Deal of the century or PR stunt?
Phillip Lasker5-6 minutes 5/1/2020How much oil do you get for $94 million?
With the crude market in turmoil and prices at record lows, the Energy Minister Angus Taylor made his move, purchasing oil at dirt cheap prices and arranging for it to be stored in the US.
Then he embarked on a round of media appearances, telling the ABC's morning program: "We would expect it 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."
The Minister's office told the ABC that the amount of oil purchased could not be disclosed. It was commercial-in-confidence.
Angus Taylor announced the purchase more than a month after the Government announced it had leased storage space in the US to begin building Australia's strategic reserves.
In mid-March, shortly after the deal to lease US storage space, West Texas crude was selling for around $US20 a barrel but the exchange rate was heading down, plunging below 58 US cents.
Right now, on the spot market, a barrel of West Texas crude will cost about $US16 a barrel with the exchange rate around 65 US cents.
The Minister is correct. The nation has indeed purchased "many millions of barrels", although some might challenge use of the word "many". These calculations suggest the Government has purchased somewhere between 2.7 and 3.8 million barrels.
As the Minister pointed out, Australia consumes about a million barrels a day, so $94 million worth will barely last a long weekend.
