In recent days a mood of calm has descended on markets, with the S&P 500 recently trading at record highs and oil back under $90 a barrel.

For some on social media it is enough to declare that the only way is up for equity markets and that the “Nothing ever happens” crowd has once again emerged on top, yet out in the world of physical oil things could scarcely be more different.

According to HSBC CEO Georges Elhedery, a Sri Lankan importer recently paid $286 a barrel for oil.

The performance of shorter term proxies for physical oil delivery and dated contracts is vastly different.

This is illustrated nicely in the chart below from S&P Global Platts, the gap between the price for Brent crude is around $35 a barrel, a completely different world to the normal spread between dated Brent and the oil price for the next futures contract.

As the chart below indicates this is a deeply abnormal set of market circumstances.

In the words of FT Alphaville editor Robin Wigglesworth in a recent article:

“This is pretty strong evidence of a distressed physical energy market, with the stresses particularly acute in Asia”

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A Reality Check

Simply put, there is a growing gulf between the perception of the oil futures market and what importers and traders are actually paying for oil in the physical world.

This is something that HSBC CEO Georges Elhedery recently went into detail on in an interview with the U.K Financial Times.

“What worries me is not the headlines. I mean, oil headline is above $100, $110. Realistically, if you are now trying to get oil from the Middle East, you may be paying $140, $150.

Realistically, if you try to get oil from the Red Sea, you are paying more than $30, $40 for shipping. Insurance costs, which used to be 25 basis points, is more like 5%, and war insurance has been scrapped — you’re paying 5% without even the war insurance component.

So the barrel of oil door to door or the barrel of refined oil door to door is way above the headline price of oil.”

These are the challenges in the oil market in the here and now.

If the crisis continues into the coming weeks and months, which will intensify as exports of Iranian oil filter out of global refining chains, then the situation will only become more desperate.

As nation’s attempt to secure oil and fuel in what is quite literally an existential struggle for the state of their economy’s, they will continue to accept higher and higher prices until they simply can’t afford to pay anymore.

This is ultimately how we arrive at up to 13 million barrels per day of demand destruction to balance the market on a long term basis.

To put this into perspective, at the absolute height of the pandemic in early 2020 peak oil demand destruction was 15 million barrels with much of the world in de-facto or literal lockdown.

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As the lack of granular transparency surrounding Australia’s future fuel supplies continues, the public have been left relying on the commentary of the Albanese government, most notably that of Energy Minister Chris Bowen and Prime Minister Anthony Albanese.

In a press conference on Saturday, Bowen stated that:

“Australia’s fuel supply remains strong, still more than 50 ships on their way to Australia”

“3.7 billion litres booked in for April”

Billions of litres fuel sounds like a great deal of supply and the fact that multiple members of the government have delivered this statistic with enthusiasm suggests that it’s a very positive outcome.

But once you get into the hard historical petroleum imports data from the Department of Climate Change, Energy, the Environment and Water, the picture swiftly begins to change.

As the chart below of combined petrol, diesel and jet fuel imports on a monthly basis illustrates, 3.7 billion litres or 3,700 million litres is on the low end for monthly volumes in recent years.

With the exception of August 2024 and February 2025, each and every month has produced a higher figure for imports than the 3.7 billion litres the Albanese government has pencilled in for April.

As one might expect there are also significant seasonal variations.

For example, last April saw fuel imports in these categories of 4.06 billion litres of fuel, with May coming in at 4.22 billion.

This naturally makes no allowance for growth in fuel demand, which expanded by 198 million litres per month comparing April 2025 with April 2024.

While passenger cars and commercial vehicles have all generally become significantly more fuel efficient since the Department of Climate Change, Energy, the Environment and Water data kicks off in 2010, the reality is that the closing down of refineries and the dramatic expansion of the population has seen demand for imported fuels rise dramatically.

For example, on a rolling 12 month average monthly basis, in mid-2011 Australia imported 221.1 million litres of automotive petrol per month.

On the same metric as of the latest data, that figure has risen to 902.6 million litres per month.

Its a similar story with jet fuel, up from 173.8 million per month to 692.7 million per month.

But the biggest nominal increase in demand came in the form of the nation’s diesel imports up from an average of 737.0 million litres to 2.52 billion per month.

The Takeaway

While all Australians very much hope that the fuel supply situation will not become an issue, the 3.7 billion litres in April figure provided by the Albanese government is not especially confidence inspiring for those who have done the homework on what normal import volumes look like for this time of year.

Which begs the question, if fuel imports are going to come up below the expected par, is this emblematic of a shortfall arriving in late April, as JP Morgan forecasted Australia would become vulnerable to from around this point in time in a recent note?

Source: JP Morgan

Or is it merely a weak month amidst something akin to business as usual as the Albanese government uses the nation’s fiscal firepower to buy up fuel and oil cargos on the spot market.

At least within the realm of diesel things are seemingly looking quite promising for April according to an analysis from Episode 3.

The problem at this stage is Australians lack the necessary granular data and transparency from the Albanese government to be able to feel reassured or if necessary to prepare for a more significant disruption to their lives.

Queensland Premier David Crisafulli has proposed that there should be a government dashboard website, which shows the public all the relevant data such as stock levels,

But instead, many Australians, even some experts, are left making suppositions based on the limited data we do have at hand, such as the historic import volumes we assessed here today.

Ultimately, there is a lamentable lack of transparency and information from the Albanese government, who in opposition urged just that.

This is unfortunately a major departure from what we are seeing from other government’s in hard hit developed world nation’s.

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As most of the world attempts to come to grips with the new reality of the largest interruption to global oil supplies in history, much of the focus has been placed on China, which is on paper the largest recipient of flows of oil through the Strait of Hormuz.

According to figures from the EIA, China imports 5.35 million barrels of crude oil through the Strait of Hormuz every day, significantly more than second place India with 2.09 million barrels per day.

While the Middle Kingdom has strategic reserves amounting to approximately 1.3 billion barrels of oil, condensates and fuel stockpiled, worth up to 140 days worth of net imports, the closure of the Strait of Hormuz to maritime trade would in time become a major issue for China.

But this is the thing, it isn’t closed to Iranian tankers.

According to data from Kpler and reported by the Wall Street Journal, total Iranian exports have recently risen from to 2.1 million barrels per day.

Figures from a recent ANZ report circulated on social media suggests that exports may be even greater than that.

S&P Global concluded in early March that 100% of oil being exported from Iran was currently being shipped to China.

So instead of being down 5.35 million barrels per day, China is actually down to roughly 3.25 million barrels per day.

And the news get’s better for the Middle Kingdom.

Two of it’s largest import sources, Saudi Arabia and the United Arab Emirates both have pipeline infrastructure capable of delivering crude to ports outside the Strait of Hormuz.

Chart: Visual Capitalist

The East-West Pipeline (EWP) in Saudi Arabia is currently reportedly running at a rate of approximately 4.8 million barrels per day.

Based on the rate of exports from the Saudi General Authority for Statistics (GSTAT) for that year, it equates to capacity of approximately 78.7% of 2024’s export volumes to be maintained at that level.

Theoretically the EWP is reportedly capable of flowing up to 7 million barrels per day, but whether that level of flow will be achieved is unclear.

Meanwhile, in the UAE, the Abu Dhabi Crude Oil Pipeline (ADCOP) is capable of moving 1.5 million barrels a day to the export terminal at Fujairah in the Gulf of Oman.

According to a recent analysis from Goldman Sachs, it is currently operating at approximately this capacity.

This equates to capacity to reroute exports around the Strait of Hormuz of approximately 54.5% of current total exports.

If we assume that oil exports from Saudi Arabia and the UAE are distributed evenly among existing customers (which is an enormous if), this would provide China with roughly 1.24 million barrels per day from the Saudi’s and 388,000 barrels per day from the UAE.

Overall, this comes to 1.63 million barrels of additional supply, reducing China’s shortfall in crude imports to 1.52 million barrels

If Iran is capable of ramping up exports through the relatively new terminal outside of the Strait of Hormuz at Jask on the Gulf of Oman, there is theoretically scope for potentially another 500,000 barrels a day in exports to China by some estimates.

According to the 2024 BP Statistical Review, China exported approximately 1.14 million barrels per day of petroleum products, with the recipients by weight of value illustrated in the graph below.

Source: OEC

Put the Chinese export ban together with the aforementioned factors including continued Iranian exports that are higher now than pre-war and the ability to get existing contracted supplies rerouted to other ports, China’s shortfall of crude imports required for domestic consumption theoretically comes to under 500,000 barrels per day.

It’s a challenging and deeply inconvenient set of circumstances for China, but purely from the perspective of crude oil, it’s not an entirely unsustainable scenario.

If Beijing wanted to maintain the status quo in terms of domestic oil supplies, it could do some relatively minor releases of reserves and maintain that in a vacuum for the best part of a decade.

Broader Implications

While the current circumstances are far better for China than it is for most it’s rivals in Asia, for the U.S it comes with geopolitical risks.

With the surge in exports and oil prices, Iran’s tanker fleet is now delivering significantly more cash to Tehran than it was prior to the war.

But if the U.S was to remove those tankers from the board and thereby the flow of up to a billion dollars a week to Tehran, it would remove the last thing keeping the current circumstances regarding oil supply a deeply inconvenient scenario for Beijing but not a full blown crisis.

To say that may agitate an already frustrated Beijing would be an understatement.

The Takeaway

Looking at the issue of the closure of the Strait of Hormuz to a majority of maritime trade, a surprisingly decent picture emerges from the perspective of the Middle Kingdom when viewed solely through the lens of oil supplies, much better than the headline flows of oil through the strait would imply.

Chart: Visual Capitalist

Between the impact of rerouting of existing export contracts through pipeline infrastructure and even greater flows of sanctioned Iranian crude than pre-war, it’s a surprisingly manageable situation in a vacuum.

While one can only speculate, this may be playing a role in so far staying Beijing’s hand from a more forceful diplomatic response toward both Iran and the United States.

But this is only one aspect of the picture.

There are also supply chain issues on everything from sulphur to produce fertilizer to helium for manufacturing computer chips.

But in all this turmoil there is a silver lining for Beijing, the United States is currently doing significant damage to its relations with nation’s throughout Asia, some of which will soon face a deeply challenging energy crisis.

Last week it was reported that Beijing had agreed that it would not limit fertiliser exports to the Philippines, despite the fact that China itself will in time face challenges with supply should the crisis persist for long enough.

Like with so many other commodities China has a sizable reserve of fertiliser, although details of exactly how large is kept under wraps.

The current status quo is also doing significant damage to America’s standing in the region.

According to a poll conducted by The Asahi Shimbun on March 14-15 of the Japanese electorate, 82% of people do not support the U.S attack on Iran, with only 9% supporting the actions of the Americans.

With Japan a close ally of the U.S and in possession of one of the largest oil reserves in the world relative to consumption levels, it’s not challenging to imagine that people in other parts Asia who will suffer from an energy crisis in the coming weeks will have a similarly disapproving perspective on the actions of the United States.

While in time a protracted closure of the Strait of Hormuz would morph into something akin to 1973 style crisis, in the meantime it may hold opportunity for China.

Ultimately, even though the hit to China is smaller than one might imagine and the new status quo holds a significant silver lining, Beijing’s patience will not be infinite.

— If you would like to help support my work by making a one off donation that would be much appreciated, you can do so via Paypal here or via Buy me a coffee.

If you would like to support my work on an ongoing basis, you can do so by subscribing to my Substack or via Paypal here

Thank you for your readership.

Over on my YouTube channel, Martin North and I recently did a full length deep dive on Australia’s fuel supplies and the state of the economy pre-war, that can be found here.

Yesterday morning, the latest ANZ-Roy Morgan consumer confidence survey was released, revealing that the metric had fallen further from already depressed levels to the lowest level since records began 53 years ago.

The news from across the board was less than favourable.

The overall index fell by 5.4 points for the week, to hit a figure of 63.1.

To put this into perspective, the average since 1990 is around 109, with the average since 2001 at 115.

In terms of the outlook of households for their financial situation over the next 12 months, that has fallen to sit dramatically below it’s pandemic era lows.

On a more long term basis, the 5 year economic outlook is also extremely poor, but this is also nothing new, with this subindex sitting trending below the pandemic era lows for quite some time.

Meanwhile, the inflation expectations of households with a two year time horizon have rocketed to 6.9%, higher than even the absolute peak seen during the pandemic.

Concerns of rising inflation held by households was swiftly confirmed by the release of the Australian S&P PMI.

“March saw a steep rise in input prices faced by Australian private sector firms. At the composite level, the rate of cost inflation jumped to its strongest in over three years, with the equivalent reading for charges reaching its highest level since August 2023.”

The rise in selling prices to consumers has also swiftly taken off, with price growth hitting it’s highest level in 31 months.

The broader picture painted by the PMI was also concerning, with the composite measure falling from 52.4 in February to 47.0 in March.

PMI’s are diffusion indexes, with a result above 50 indicating growth and below 50 indicating contraction.

The fall in the services sector was particularly acute, with the subindex falling from 52.8 in February to 46.6 in March.

As the chart below from AMP Chief Economist Shane Oliver reveals, even the limited impact of less than 3 weeks of war (the snapshot was taken between the 12th and 20th of March) has seen input prices rise to the highest level since late 2022.

While the impact of the war of the Middle East is deeply concerning, the reality is things were not in a great place even before the war.

Consumer confidence had been trending down from already well below average levels for over 6 months prior to the war.

Meanwhile, conditions for households as measured by the Commonwealth Bank’s Household Spending Index (HSI), revealed that even prior to the war consumer spending was contracting at an aggregate level.

On an inflation adjusted per capita basis, the year on year result was also extremely poor, with real spending for outright home owners falling by 3.0%, renters falling by 2.2% and mortgage holders rising by 0.2%.

In short, the growth in the real consumer spending of households on this metric was being driven almost entirely by the expansion of the working age population, which is being driven overwhelmingly by net overseas migration.

The Takeaway

As I have previously covered here at Burnout Economics, the Australian economy is hardly in amazing shape.

It is an economy heavily reliant on the expansion of government as a proportion of economic activity, growth in taxpayer funded employment and high levels of migration.

If for whatever reasons the economy and labour market were forced to stand on their own two feet without that support, a very different picture would have emerged even prior to the war in the Middle East.

Now with the prospect of a global recession and energy crisis looming on the horizon, as well as the possibility of fuel shortages domestically, it has become a perfect storm for a potential episode of stagflation should the crisis not be resolved relatively swiftly.

Ultimately, the outlook for Australia’s future is a deeply concerning one that could very plausibly turn into a bout of stagflation, followed or perhaps even accompanied by a recession.

— If you would like to help support my work by making a one off donation that would be much appreciated, you can do so via Paypal here or via Buy me a coffee.

If you would like to support my work on an ongoing basis, you can do so by subscribing to my Substack or via Paypal here

Thank you for your readership.

You can also find clips of my chats with Martin at my YouTube channel here.

— If you would like to help support my appearances on DFA by making a one off contribution that would be immensely appreciated, you can do so via Paypal here or via Buy me a coffee.

If you would like to support my work on an ongoing basis, you can subscribe to my Substack or make a recurring contribution via Paypal.

Thanks for watching.

In recent days much of the hopes to fully reopen the Strait of Hormuz to maritime trade has rested on the notion of U.S President Donald Trump building a coalition to escort civilian shipping through the strait.

Trump has quested assistance from both friend and rival alike, asking for warships to be sent to run escort missions to secure passage through the strait.

So far Trump’s push for help has largely fallen on deaf ears.

The Albanese government in Australia has declined to provide ships for the effort.

“But we won’t be sending a ship to the Strait of Hormuz. We know how incredibly important that is. That’s not something that we’ve been asked or we’re contributing.” said Transport Minister Catherine King on Monday

But perhaps the greatest blow has come in the form of the Japanese government of Sanae Takaichi largely pouring cold water on the plans, noting legal and constitutional issues in deploying the Japanese Navy for such a mission.

The Japanese government did however note that other more peaceful operations such as mine clearance would be a different matter.

As the holder of the 3rd most powerful and capable surface naval fleet in the world, securing Japan’s help would have dramatically increased the number of capable escorts in the theater.

Looking at the issue from a high level Japanese perspective, they arguably see an entirely open ended commitment, the possibility of mission creep and the degradation of it’s active fleet’s capabilities through the expenditure of munitions and the required of maintenance and downtime after a protracted deployment.

But there is more to it than that for Japan and other potential allies, running escort simply isn’t going to be enough to reopen the Strait of Hormuz to the full pre-war volumes of traffic by itself.

Source: Visual Capitalist

According to Lloyd’s List Intelligence, which is connected to the famous naval insurer Lloyd’s of London, the best case scenario put forward by eight naval security experts suggests that under 10% of normal tanker flows could be restored using the current in theatre capabilities of the U.S Navy to escort tankers through the strait.

This represents just 4-5 tankers per day, instead of the normal 45 to 50 and doesn’t cover the long list of other traffic transiting the Strait of Hormuz, such as bulk carriers, LNG carriers and other cargo ships.

Estimates vary, but the consensus across eight well-placed security experts from both naval and commercial operations indicate that a best-case scenario would see just under 10% of the normal flow of 45-50 tankers daily transiting the Strait of Hormuz.

There are also geographical constraints to consider.

“We’re obviously not looking at Second World War Atlantic convoy sizes, because you’re operating in very constrained waters,” stated Mike Plunket, senior naval platforms analyst at Janes Intelligence.

“You simply can’t fit 30 tankers through at the same time, and you don’t have enough escorts available to protect them all, so I would say four or five tankers with maybe two or three escorts would be what you were looking at.”

The dimensions of the strait and the required size of the convoys would also make it “difficult” to run convoy’s through the strait in both directions, so it would arguably require the strait to constantly have one way traffic, switching from one direction to the other as convoy’s safely passed through.

The Lloyd’s list analysis also warned of the impact of the strait potentially being mined.

“The Iranians have a wide selection of mines of varying levels of sophistication available to them, and they only have to sow a few in in the Middle East Gulf or in the strait and we would have to assume the whole thing’s a minefield. It only takes one mine being found, or one ship hitting a mine and then everything stops,” said Plunket.

This is even more problematic today than it would have been this time last year.

This time last year the U.S Navy had four purpose built Avenger-class minesweepers in the region ready to spring into action if required.

Today, they are tied up at the Philadelphia Navy Yard awaiting their fate.

Source: Warship Cam

The Avenger-class were non-metallic hulled purpose built mine hunting vessels, perfect for a scenario where Iran mined the strait.

In reality what America has is just four purpose built mine countermeasures vessels in its fleet to fill the gap.

There were three other vessels with specialized mine countermeasure equipment aboard previously in the region, but not purpose built for the task, but two of these recently retired to the port of Penang in Malaysia.

There is also a fourth vessel currently reportedly underway to the region.

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The Takeaway

If we take a step back and take in a broad overview the situation, we are confronted with a situation where no reasonable amount of warships from allied navy’s would be enough to fully reopen the Strait of Hormuz, even if those allies were so inclined to commit their forces at this stage of the conflict.

Meanwhile, the U.S Navy continues to remain reticent on doing it’s own escort missions through the strait:

According to sources who spoke to Reuters, the U.S Navy has continued to state during briefings for shipping and oil industry figures that it is unable to provide escorts at this stage.

One of the sources said that the U.S Navy’s assessment has not changed and that escorts would only be possible once the risk of attack was reduced.

Eventually the Strait of Hormuz will be fully reopened to maritime trade, but when that will come to pass remains deeply uncertain and the more time passes the greater the damage will be to the global economy will be and the higher the risks that we could see deeply damaging second order effects.

— If you would like to help support my work by making a one off donation that would be much appreciated, you can do so via Paypal here or via Buy me a coffee.

If you would like to support my work on an ongoing basis, you can do so by subscribing to my Substack or via Paypal here

Thank you for your readership.

For the longest time the issue of energy security and ensuring adequate supplies of vital fuels in a crisis has not been a major consideration for successive Australian federal governments.

Members of Parliament such as Independent Bob Katter and former Senator Rex Patrick have raised the issue on multiple occasions, but concerns have largely fallen on deaf ears.

According to recent stats shared by Energy Minister Chris Bowen, Australia has stockpiles equal to 36 days of petrol, 32 days of diesel and 29 days of jet fuel.

This is well below the obligation Australia holds under its agreement with the International Energy Agency to hold reserves of fuel equal to at least 90 days’ worth of imports.

In the new world of a Strait of Hormuz that is largely closed to traffic, all of a sudden energy security and adequate fuel reserves has been catapulted to the forefront.

So today we are going to be examining Australia’s energy security in detail covering:

• Australia’s strategic oil reserve

• Domestic refining capacity over time

• Sources of Australian fuel imports by nation

• Sources of Australian fertilizer imports

• Proven reserves of oil and gas. Current production and consumption levels for both.

• The possibility of an “Every man for himself” type scenario, a ‘Mad Max’ world if you will and how Australia may cope.

Australia’s Strategic Oil Reserve

During the height of the pandemic in March 2020, the Morrison government signed an agreement with the United States to create an Australian strategic oil reserve, with the oil to be held within the holding tanks of the American Strategic Petroleum Reserve (SPR).

In April 2020, it was confirmed that the Morrison government had purchased $94 million worth of oil.

In March 2022, the total size of the stockpile was confirmed by the Morrison government at 1.7 million barrels, in a press release detailing how Australian oil in the U.S SPR would be part of the coordinated release of oil reserves with 30 other nations to add to global supply amidst the impact of the war in Ukraine.

As part of this sustained effort the entire stock was sold and Australia’s short lived strategic oil reserve effectively ceased to exist.

But it was never really much of a reserve to begin with.

At today’s rate of consumption this accounts for roughly 36 hours’ worth of supply.

This is a stark contrast to other parts of the developed world that are heavily reliant on imports of fuel or oil.

For example, the South Korean government possesses reserves of around 100 million barrels of oil.

According to OPIS: “Combined with private sector holdings, South Korea’s total strategic reserves equate to roughly 200–208 days of demand.”

It’s a similar story with Japan, which possesses reserves domestically equivalent to 247 days worth of consumption, 146 days in government owned facilities and 101 held by the private sector.

Despite Australia’s extreme reliance on seaborne imports of fuel like nations such as Japan or South Korea, Australia lacks both the oil reserves to ensure domestic supply over a more protracted period and the refinery capacity required to deliver it.

Domestic Refining Capacity

Over the last 15 years the capacity of the Australian energy sector to refine oil has declined dramatically.

In 2009, the nation held capacity for refining 734,000 barrels of fuel and other refined hydrocarbons per day.

According to figures from the Australian Institute of Petroleum, this equated to approximately 83.4% of total refined petroleum product consumption at the time (880,000 barrels per day).

Over the next 17 years, Australia’s refinery capacity would continue to dwindle.

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As of 2025, capacity has fallen to just 235,000 barrels per day and that is with the two remaining refineries running above 100% of their sticker rates of production.

Meanwhile, data from the U.S EIA has seen production rise significantly since 2009, with total refined petroleum product consumption up 1.15 million barrels per day.

“Distillate fuel oil” mostly refers to diesel fuel and other derivatives.

Sources For Australia’s Fuel

Overall Australia imports approximately 90% of its liquid fuels such as petrol, diesel and aviation fuel, with consumption coming to roughly 1.035 million barrels each day.

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You can also find clips of my chats with Martin at my YouTube channel here.

— If you would like to help support my appearances on DFA by making a one off contribution that would be immensely appreciated, you can do so via Paypal here or via Buy me a coffee.

If you would like to support my work on an ongoing basis, you can subscribe to my Substack or make a recurring contribution via Paypal.

Thank you very much for watching.

As the war in Iran continues to unfold, I thought it would be worthwhile sharing various data and relevant information that comes into my possession here on Substack.

For those looking for a basic primer on the importance of Iran to energy markets, the importance of the Strait of Hormuz and the potential geopolitical implications, that can be found here.

Today we will be examining two major topics in detail:

• If the Strait of Hormuz is effectively closed to civilian transits, can it be circumvented and to what degree?

• Is there significant capacity for other nations to make up the short fall in oil production should a large proportion of Middle East output be stranded?

Can the Strait of Hormuz be circumvented?

As of the time of the writing of this article, the flows of maritime traffic through the Strait of Hormuz has slowed to a trickle, with getting on for 200 tankers now anchored on either side of the strait waiting to transit once it’s considered safe and appropriate.

For decades a blockade or closure of the Strait of Hormuz has been the nightmare scenario for the nation’s on the Persian Gulf, a means by which the flow of oil, gas and other exports could be strangled off and present a huge military and economic challenge.

For this reason, varying degrees of contingency plans have been put in place by Saudi Arabia and the United Arab Emirates.

For the Saudi’s their strategy rests on the East-West Pipeline (EWP).

Construction initially began on the 1,200km pipeline in 1982, prompted by concerns that the flow of Saudi oil could be impacted by the Iran-Iraq war.

The EWP transports oil from the Abqaiq processing hub to export terminals at Yanbu on the Red Sea.

Source: EIA

According to a 2024 analysis by the U.S EIA, the pipeline provides scope for shipping up to 7 million barrels a day of Saudi production to the Red Sea ports, up from a previous total of 5 million barrels a day following the conversion of a gas pipeline to carry crude.

However, it is worth noting that 1.7 million barrels per day of oil already flows through the EWP and doesn’t count toward the little over 14 millions barrels per day transiting the Strait of Hormuz.

In better news, this represents on paper, a large majority of current Saudi oil exports having a means to avoid the Strait of Hormuz.

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However, this also means that the Saudi’s would not have the adequate infrastructure to export their current spare capacity in the event of a protracted crisis, which is estimated to be around 1.84 million barrels of oil per day.

The United Arab Emirates (UAE) has also constructed pipelines to avoid the Strait Of Hormuz.

The Abu Dhabi Crude Oil Pipeline (ADCOP) moves 1.5 million barrels of oil to Fujairah, which is on the other side of the strait from the Persian Gulf and in the Gulf of Oman.

Currently, approximately 600,000 barrels per day transit the ADCOP pipeline, leaving around 900,000 barrels in spare transit capacity.

There is a second pipeline currently under construction also to Fujairah, adding a further 1.8 million barrels per day of capacity for rerouting. It is expected to become operational in 2027.

The existing pipelines held by the UAE provide scope for approximately 54.5% of current total exports to be rerouted.

Iraq does have a theoretical option in the form of the Kirkuk-Ceyhan pipeline to Turkey, which would provide the capability of transferring up to 1.2 million barrels per day, but this route has reportedly been closed since 2023 amidst still ongoing political and legal disputes.

If this was somehow reactivated and fully utilized it would represent capacity to reroute roughly 37.5% of Iraq’s current oil exports.

On the other hand Kuwait and Qatar, lack such contingencies.

Overall, if all the spare pipeline capacity was able to be fully utilized, which is a big if, it would represent up to 7.4 million barrels per day still making it to market despite the closure of the Strait of Hormuz.

If realized that is equivalent to around half the oil transiting the Strait of Hormuz having a secondary avenue to market, if given the time to set up the required logistics.

But the issue unfortunately goes beyond solely oil.

According to an analysis from global trade analysis firm Kpler, 33.0% of the world’s exportable fertilizer flows through the Strait of Hormuz, along with 18.6% of exportable liquefied natural gas (LNG) and 17.2% of global mineral exports.

While fertilizer can theoretically be rerouted overland, it would represent a near impossible challenge to do so, particularly on short notice and based on a problem that may not exist by the time a solution started to be put in place.

Meanwhile, due to the complex process of liquifying natural gas, the overwhelming majority of LNG exports would be trapped in the Persian Gulf, resulting in slightly larger proportional blow to global gas supplies than to oil if the pipeline infrastructure is used to it’s full potential.

The reduction in the flow of LNG cargos would also impact fertilizer production in the rest of the world, acting as a double whammy on natural gas prices and the availability of fertilizer.

If the crisis persists, I will look into doing a long form article on the potential implications for fertilizer supplies and by extension the potential for food price inflation.

Spare Capacity?

Amidst the potential reduction of oil flows to market of over 7 million barrels per day, the question on a lot of minds is to what degree is there spare capacity from oil producers to deliver additional supply.

According to the January IEA Oil Market Report, total OPEC+ spare capacity is around 4.35 million barrels per day.

Which on paper is quite promising.

The problem is 76.5% of spare OPEC+ capacity is held by nations impacted by a potential closure of the Strait of Hormuz.

The largest unimpacted holder of spare capacity is Kazakhstan, with 490,000 barrels per day of extra capacity.

But this comes with potential issues of its own, due to the lack of access to open sea lanes, Kazakh oil flows through pipelines to Russian Black Sea ports for export.

The next greatest holder of spare capacity is Venezuela, with 220,000 barrels per day.

To what degree that capacity can be brought to market on a short term basis is an open question.

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The Takeaway

If for whatever reason transits of commercial shipping through the Strait of Hormuz were blocked on a protracted basis, there is scope for around half of oil flows to be redirected on paper.

While part of the short fall could be made up by other nations outside the region ramping up production, the reality is that this would make a dent in the problem, but it wouldn’t solve it.

All in all, the world could be left short potentially over 5 million barrels a day of oil on a short term basis.

It’s also worth noting that from a purely financial perspective this would not be an awful scenario for the Saudi’s.

A large majority of their current production could still be exported and prices would be dramatically higher than they are now.

A protracted closure of the Strait of Hormuz represents a nightmare scenario, whether it be due to passage being directly impeded by attacks or the lack of insurance coverage on ships attempting to make the transit.

Ultimately, this is just one nightmare scenario of several currently potentially in play, after all it could be worse, we could be looking an Iranian attempt at the wholesale destruction of Gulf State oil infrastructure.

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Following U.S and Israeli strikes on Iran over the weekend, the eyes of the world have once again turned to the Middle East, as a multitude of questions about the future of region and the balance of global geopolitics are raised.

While exactly how events will unfold remains unclear, what we can do is examine the existing data on why Iran is extremely relevant and explore some of the potential implications of the Iranian regime’s fall.

By The Numbers

According to a recent analysis from S&P Global, Iran exports 1.424 million barrels of oil and condensates per day.

Of this approximately 1.3 million barrels per day is crude oil, which equates to 3.0% of total global crude oil exports globally.

Where things start to get complicated from an energy perspective is Iran’s potential to influence the flow of oil and other energy through the Strait of Hormuz, one of the world’s most vital maritime trade chokepoints.

According to figures from the U.S Energy Information Administration (EIA), on an average day over 14 million barrels of crude oil and condensates are transported through the Strait of Hormuz, with over 8 million barrels destined for refineries in Asia.

According to an analysis from global trade analysis firm Kepler, 30.9% of global crude oil exports make their way through the Strait of Hormuz.

But there are other vital commodities which flow through the Strait of Hormuz that could be at risk.

Including but not limited to 33.0% of the world’s fertilizer exports, 18.6% of the world’s liquified natural gas (LNG) and 17.2% of the world’s minerals.

As of the time of this article being written a Palau flagged oil tanker, the Skylight has reportedly been attacked by Iran as it was passing through the Strait of Hormuz, four sailors were wounded in the attack and the ship is now burning.

The entire crew has been evacuated.

The China Factor

Back in 2018, when Iran’s oil exports hit their most recent cycle peak, the list of nation’s receiving Iranian energy exports was a rather long one, encompassing nation’s in all four corners of the globe.

But in more recent times, more or less the only destination for Iranian oil exports has been China.

According to figures from S&P Global, in December 2025, China was the sole recipient of Iran’s 1.424 million barrels of oil and condensates per day.

Based on estimates from Columbia University’s Centre on Energy Policy, this is equivalent to 12.3% of Chinese oil imports.

Source: Visual Capitalist

This oil also comes with an added bonus, it is approximately $8 to $10 per barrel cheaper than comparable oil of a similar grade produced in Oman, according to a recent analysis from Reuters.

Combined with the potential loss of Venezuelan oil export’s, a scenario in which Iranian oil was taken off the table for Beijing would represent a major blow to China’s push to secure its energy supplies.

Depending on which estimate one uses for the flows of sanctioned oil to Beijing, having Iranian and Venezuelan oil exports to the Middle Kingdom taken out of the equation is the equivalent of 15.5% to 19% of China’s total annual oil imports.

The Geopolitics

Iran has long been a thorn in the side of the United States, from the Hostage Crisis shortly after the Islamic Revolution in 1979 to Iran armed and trained proxies attacking U.S forces in Syria as late as last year.

The toppling of the Iranian government, which is the stated goal of Washington, would be a seismic shift in the balance of global geopolitics, even beyond the aforementioned potential transformation in control over the flows of oil.

Perhaps one of the best explanation’s of the shift in American policy comes from U.S President Donald Trump’s Truth Social account, where he recently shared an article entitled:

‘The “Donroe Doctrine” In Action’ from Claremont Institution publication ‘The American Mind’

For those who may not be familiar with it, the term ‘Donroe Doctrine’ is a play on the 19th century Monroe Doctrine.

The Monroe Doctrine has its origin in 1823 and is named after it’s creator U.S President James Monroe.

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In short, it was a major goal of U.S foreign policy that the European powers should not interfere in the America’s, that it would effectively be in the sphere of influence of the United States and no one else.

In the article it’s author argues that by toppling the Venezuelan government of President Nicholas Maduro and end the rule of Iranian theocracy, that it “just might have forestalled Communist China’s expected invasion of Taiwan.”

The logic is that by raising costs for Chinese consumers through higher oil prices driven by the removal of cheap sanctioned oil will deter a Chinese invasion of Taiwan.

Perhaps the most illuminating element of the article is it’s final word:

“Iran and Venezuela helped fuel the Communist China-dominated order. By helping remove hostile regimes in both countries, Trump is pulling out the linchpins without resorting to war.”

In short, the United States has significantly undermined Chinese interests and geopolitical influence without firing a direct shot at the Middle Kingdom.

A similar conclusion has long been shared by Geopolitical Strategist Velina Tchakarova.

“Those believing there’s no structure behind Trump’s actions were led by their disdain. All flashpoints are connected dots in a strategy that aims to concentrate all efforts on China & the Indo-Pacific.

Venezuela, Panama, Cuba, Arctic, and Iran are part of the DragonBear network.” Tchakarova recently wrote on X (formerly known as Twitter)

The Takeaway

Back in January, I wrote in the conclusion of my article on the American attack on Venezuela that:

“Claims of a “Rule based international order” were always a soundbite that didn’t live up to it’s promises when confronted with more challenging geopolitical scenarios, but this has effectively removed the velvet glove from the iron fist.”

Today, that is even more self evident than ever, as the air power of the United States Armed Forces streaks through the skies of Iran with near impunity.

The gloves are off and President Trump is telegraphing the intentions of the United States.

China expert, author and former Associate Professor Christopher Balding characterised it as as sending as message like a mob boss.

“China and the CCP don't operate under a system most normal people can relate to. You want to send a message? You put a horse head in the bed, put one between the eyes, make them an offer they can't refuse. Have I made myself clear?”

“So when Trump lands in Beijing he will be able to scroll through pictures on his phone of the Ayatollah, Maduro, and others in his group chat with Xi. Trump doesn’t even need to say anything the message is very clear.” Balding wrote.

Going forward, there are on one hand claims that this brings the world one step closer to a clash of the superpowers, that by moving to reduce China’s sphere of influence and threaten the supply of vital energy imports, that Trump has ratcheted up the chance of conflict.

On the other, there is the argument that by showing overwhelming strength and the willingness to use it, Trump has reduced the chance of a clash over Taiwan and by extension kept the peace by the sword.

Ultimately, the geopolitical landscape is undergoing the most profound shift in the tectonic plates underpinning it in decades and the road ahead is more filled with uncertainty than at any point in recent memory.

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In every year of post-pandemic data there is always a seasonal surge in housing auction clearance rates in Sydney and Melbourne.

As the chart below from SQM Research (which I and many others believe to be the absolute unchallenged gold standard for auction data) illustrates, every year the Sydney market in particular surges as the summer auction season kicks off following the hibernation of the property sector over the Christmas period.

In the entirety of the post pandemic era, Sydney auction clearance rates have risen by an average of 7.7 percentage points between the 4 week average for the final weeks of the year unimpacted by the holiday season and the fourth auction weekend following Australia day.

It’s a similar story for Melbourne, with clearance rates rising by 8.1 percentage points on this metric.

But this year that hasn’t happened.

In Sydney, clearance rates are up by 1.5 percentage points compared with the aforementioned November/December period and up by 3.5 percentage points in Melbourne.

Looking at the statistics from a perspective of overall clearance rates rather than the relative change in trend, both Sydney and Melbourne are seeing significantly weaker results than last year.

Sydney is down by 4.3 percentage points from 50.9% in 2025 to 46.6% for the same time of year.

Melbourne on the other hand is down by 2.6 percentage points compared with last year’s total, 53.5% vs 56.1%.

This relative weakness is now manifesting in Cotality’s (former known as Corelogic) data, with Sydney and Melbourne seeing price growth dive into negative territory, despite the other major capitals still recording extremely high levels of price growth.

Source: Antipodean Macro

It’s worth noting that is what the picture looks like with the Albanese government’s 5% deposit scheme boosting outcomes in the segments of the market that are under the price caps, which for Sydney are $1.5 million and $950,000 for Melbourne.

According to an analysis from Cotality on the first full quarter of the scheme, price growth below the cap in Sydney was 2.3%, while above the price cap prices fell by 0.1%.

It was a somewhat similar story for Melbourne, with prices up by 1.4% in the range below the cap and up by a significantly lower 0.3% above the cap.

Part of the reason for this divergence in price outcomes between Sydney and Melbourne, and the other major capitals is the amount of stock coming to market.

While overall listing volumes nationally remain deeply depressed even compared with the already historically low 5 year average, new listings are rising significantly more robustly in Sydney and Melbourne.

Source: Cotality

In Sydney, new listings are up by 11.6% compared with the same period last year, up by 15.5% in Melbourne, 4.9% in Canberra and 6.4% in Hobart.

Source: Cotality

Looking at the latest month ended price growth data, each of the aforementioned capitals are underperforming the capital city and national average.

Source: Cotality

Meanwhile, Melbourne’s price growth also faces the headwind of the strongest per capita dwelling completions on a rolling 12 month basis of any major state.

The Takeaway

With affordability as stretched as has ever been in the history of some data set’s such as the Cotality Housing Affordability Report, which goes back to 2001, the growing headwinds may finally be taking the positive momentum out of the sails of the Sydney and Melbourne property markets.

It’s worth noting that the complete collapse in total listings on market has played a major role in amplifying and later facilitating price growth trends across much of the country.

Now that has started to reverse ever so slightly and without this tailwind at the market’s back in Sydney and Melbourne in particular, price growth has suffered.

If over time stock levels do continue to move toward normalization, this will become a more and more significant drag on these markets.

Another major factor going forward will be the role played by first home buyers, in particular those having their purchases facilitated by the Albanese government’s 5% deposit scheme.

As widely anticipated the schemes first months saw a dramatic surge in demand from this cohort, but the question is what sort of tempo can be maintained over a long term time horizon. As the ranks those with the means and the opportunity to buy the right home for their needs eventually dwindles back toward trend, as has been seen with other government interventions to boost demand.

Ultimately, it’s early days for property market outcomes in 2026, but there are signs that this may be a year of even greater divergence in price growth outcomes between the major capitals than we have already witnessed in recent years.

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Many moons ago, way back in April 2013, SBS’s Dateline produced a special report entitled:

The Impact of Japan’s Declining Birthrate

It explored the impact of a declining fertility rate on Japan’s demographics, it’s economy and it’s culture.

The segment concluded with some brief commentary from a Japanese cafe owner in an area where demographics had already turned heavily toward an elderly population:

“This situation cannot continue. We know this very well.

The government or the state knows this as much as we do.”

In the year that SBS produced this report, Japan’s total fertility rate or TFR was 1.43 babies per woman.

According to recent estimates from the federal government’s Centre For Population, Australia’s fertility rate for 2026 will be 1.42.

The deterioration in Australia’s fertility rate in the post-GFC era has been swift, at least from a long term demographic perspective.

In 2008, Australia’s fertility rate recorded its post 1970s peak of 2.023.

Since then it has all very much gone wrong.

Looking at various economic indicators, it’s rather obvious as to why, despite the rather dumbfounded approach of some policymakers.

While 2008 marked the high point for fertility rates, it was also the peak for real per capita household spending for Australians aged 25 to 34.

Despite more than 17 years passing since this high watermark, it has not only never been eclipsed but gone backwards quite heavily.

As the chart below illustrates fertility rates rose with the means of per capita spending and then it fell with them.

While this data set ends in June 2022, the data set on real household spending excluding housing from CommBank iQ picks up where the ABS left off, admittedly with a different methodology.

It reveals that the real spending of 25 to 29 year old’s underwent a technical depression between March 2022 and March 2025, falling by over 13%.

30 to 34 year old’s fared better, but not by a huge amount, with their spending down over 9%.

I’m not overly fond of combining different data sets, but if we were to make a very rough estimate of the fall in real spending of 25 to 34 year olds since 2008, it would arguably be in the region of 20%.

When looking at things through this lens it’s hardly surprising that fertility rates fell by 0.21 percentage points between 2022 and 2025.

Meanwhile, real wages growth for 25 to 34 year old’s more or less flatlined between 2008 and 2018, resulting in whatever meager gains that were on offer being eaten up by taxes through bracket creep and then some.

Naturally, household spending and income is only one lens with which to look through this complex and multifaceted issue.

There is also the lagged impact of falling levels of households per capita in the 25 to 34 age demographic.

In a previous analysis linked here, I explored how the ratio of households to people in the 25 to 34 cohort has fallen.

2003-04 marked the high point for household formation in this age demographic and it has continued to deteriorate since.

In short, there are over 300,000 households in this demographic who would have come into being had the peak ratios been maintained, but the simply haven’t.

As illustrated by the chart below from the ABS, this era saw a surge in rents as vacancy rates fell dramatically amidst the first impact of the big Australia migration intake came at the same time as younger Australian households were at their peak formation rates.

According to the Corelogic Housing Affordability Report, produced late last year, the affordability of homes has deteriorated dramatically over the last 25 years.

At the start of their data set in the September quarter of 2001, a mortgage on the median house nationally assuming a 20% deposit consumed 23.6% of the median household income.

Today it takes 48.7% of the median household to afford the median home, despite the fact that the last quarter of a century has seen the further rise of the dual income full time working household.

In terms of price to income ratios, the median house nationally cost 4.4 times the median household income.

Which is roughly where the U.S home price to income ratio is today, which is ringing alarm bells.

Today, the median house nationally costs 8.9 times the median household income, putting into perspective how divergent Australia’s housing affordability outcomes have become compared with some of our peers.

The Takeaway

While this is naturally a complex issue, the data clearly illustrates that the fortunes of the vital 25 to 34 demographic have deteriorated dramatically.

From falling real household spending outcomes to a more doubling of the cost of servicing a mortgage a quarter of a century ago, creating favourable conditions to have children has got quantifiably harder.

But unlike Japan, which has placed a heavy but ultimately failed emphasis on fertility rates, Australia’s policymakers continue to persist under a set of priorities that it’s seemingly not that big of a deal.

The simple reality is that beginning to undo the damage of the fortunes of Australians in the vital childbearing age demographics is going to be a challenging process, particularly due to the fact that there are vested interests and millions of Australians who have built their success on the very same settings that have delivered us to today’s circumstances.

Ultimately, the right choice is obvious, Australia’s future children and their parents should be our priority and the consequences of that accepted as the cost of social cohesion and national survival.

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Recently I hit over 40,000 followers over on Twitter, so to celebrate we are running the first ever sale on subscriptions to Burnout Economics.

From Saturday the 24th till the end of January, all subscriptions will be 20%.

A big thank you to all of you have subscribed or followed me on Twitter, it is very much appreciated.

Onwards to more great long form content in 2026.

Recently the chart below contrasting growth in Britain’s government funded GDP and non-government funded GDP went viral on social media.

It illustrated quite nicely how non-government GDP growth had been anaemic since the start of the pandemic, while government GDP had grown dramatically.

This left me with a question, what would Australia’s path look like if charted in the same way.

To that end, today will be something of a deep dive into this and go into a much greater level of granular detail, including:

• Government vs non-government GDP growth over time

• Growth in government vs non-government GDP in per capita terms (as deflated by ABS)

• Growth in government vs non-government GDP in per capita terms (as deflated by headline consumer price index)

• Growth in different elements of government, day to day spending vs investment in relative terms

We will also being doing something a bit different to the usual analysis of the national accounts from this perspective.

While there will be the traditional numbers based on how the ABS adjusts each component of the national accounts for inflation (various components have different inflation deflators), I will also be taking the numbers that are unadjusted for inflation and instead deflate them by the headline CPI.

Government Vs Non-Government

In order to get a handle on today’s key questions, we’ll be looking at the data based on two different timelines, one from the end of 2019 and another from Q2 2022.

Why Q2 2022?

While it marked the election of the Albanese government, from an economic perspective it also marked the end of robust growth in GDP per capita.

Since then 10 out of the last 13 quarters have recorded negative levels of growth in GDP per capita.

In terms of relative headline real growth since Q2 2022, government GDP has risen by 11.4%, while non-government GDP has risen by 3.4%.

If we shift the focus to a per capita measure as deflated by the working age population, things swiftly become significantly less favourable.

Government GDP per capita has risen by 3.2%, compared with a fall of 4.2% for non-government GDP per capita.

It’s here that someone usually raises the point of the impact of pandemic driven stimulus and how it can distort the numbers.

So let’s take a step further back to when non-government GDP per capita actually peaked, Q2 2018 and then rerun the analysis from then instead.

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Bonus chart because I thought it was interesting.

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Just a quick chart filled one today folks, normal service will resume later this month.

Coming up in the next few months we have articles on government attempting to pull back on taxpayer funded job creation, the catalysts for the bull run in precious metals, assessing whether or not Australia has “Mass migration” by the numbers and much more.

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As the U.S air strikes and ground forces attacks continue on Venezuela, it’s worth exploring why this nation on the Northern coast of South America matters.

Oil And It’s Geopolitical Impact

First off it has the largest proven oil reserves in the world, possessing 303 billion barrels of oil, 37 billion more than the second place Saudi’s.

Despite this, Venezuela is only the 18th largest oil producer in the world, producing approximately 1 million barrels per day in 2024.

Prior to the election of socialist President Hugo Chavez in 1999, the cost price of a barrel of Venezuelan crude was just $14.33 USD per barrel.

In a scenario where the government of Nicholas Maduro was removed and replaced with one more friendly to the West, it could in time have a significant impact on the balance of the global oil market if it was backed with enough capital and manpower to revitalize Venezuela’s badly damaged and mismanaged oil infrastructure.

If Venezuelan oil production could be brought back to 2000 levels of output (a very big if), it could in a vacuum place significant downward pressure on global prices.

It could in time also give the United States and European allies an additional card to play in it’s dealings with Moscow.

With flows of Russian gas to Europe thoroughly decimated, the Kremlin is arguably more reliant on oil to fund the government and it’s war machine than ever.

Anything that keeps downward pressure on oil prices and keeps them relatively contained in the current price range would be deeply problematic for Moscow.

It could also theoretically contribute to giving the Ukrainians a green light to interrupt or even destroy some Russian oil export infrastructure.

So far strikes on Russian energy infrastructure have been limited to refineries and other targets vital to Russia’s domestic petroleum industry, not on Russia’s oil export infrastructure to the rest of the world.

Monroe Doctrine

Despite Venezuela existing at least somewhat in both Russia and China’s sphere of influence, this has been tolerated by the United States for decades in direct contravention of the Monroe Doctrine.

The Monroe Doctrine has its origin in 1823 and is named after it’s creator U.S President James Monroe.

In short, it was the U.S foreign policy that European powers should not interfere in the Americas.

In the post-Cold War era, which was heavily defined by ideas of American exceptionalism and the so called ‘End Of History’, Russia, Iran and China were allowed to gain a degree of influence in Venezuela that any other U.S administration that came after Monroe likely would have vehemently opposed.

Despite the likely unpopular nature of American strikes on Venezuela in at least some quarters, what are we seeing is arguably just the resumption of established American foreign policy in the Americas.

This is no doubt going to be debated in Washington and by an endless parade of talking heads on cable TV news programs, but one thing is clear, this is hardly breaking new ground for U.S foreign policy in the Americas.

The Takeaway

At the time of this articles writing, there is a lot we don’t know about how events are unfolding in Venezuela.

As a result, there is any number of scenarios that could play out from here, of which we have explored elements of a handful in passing.

What is more clear is that this is a message, that America is reasserting itself based on a much more 19th century-esque ideas of foreign policy.

Claims of a “Rule based international order” were always a soundbite that didn’t live up to it’s promises when confronted with more challenging geopolitical scenarios, but this has effectively removed the velvet glove from the iron fist.

Historically military actions have been one of the relatively few things that most Republicans and Democrats could agree on.

That may still be the case and this could be the beginning of a shift of a more aggressive foreign policy in Washington, regardless who wins the White House in 2028.

Or it could be the beginning of a historic schism over U.S foreign policy and the usage of American military might.

2026 was always going to be an interesting years and less than 72 hours in, it has already lived up to that in spades.

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Following the tragic events of the shootings at Bondi Beach, which at the time of this article being written claimed the lives of 15 victims and injured a further 40, the Albanese government and various state leaders tabled a proposal to further tighten Australia’s already extremely tight gun control legislation.

But are gun homicides with registered firearms a major problem? Or is this a reflection of a knee jerk reaction from the political class?

Despite my strong views on this issue, I will avoid making further political commentary in this article and focus solely on the data.

Gun Homicides Overall

According to data from the ABS, as of 2023, Australia had less than 1 gun homicide per million people.

This figure had been trending down since hitting a peak in the data set of 8 gun homicides per million people in the early 1980s.

In the last data point prior to the Port Arthur Massacre, there were 3.2 gun homicides per million people.

To put this into perspective, Australia has a firearm homicide rate is roughly in the middle of developed nations in Europe, despite being a much larger land mass with a sizable population in the regions having a genuine need for firearms.

Legal Firearms And Gun Homicides

This brings us to the crux of today’s issue, the level of gun homicides perpetrated with legally owned firearms.

For over a decade the Australian Institute of Criminology (AIC) has studied who commits gun homicides in Australia.

What they consistently found was the overwhelming majority of firearm homicides were perpetrated by individuals without a firearms license.

According to an analysis by Griffith University Senior Research Fellow Samara McPhedran:

“When the figures are averaged across several years of reports, almost nine out of every ten firearm homicides involved an unlicensed offender.”

“The reports also show that more than 90% of guns used to commit murder are not registered.”

If we extrapolate that onto the AIC’s data for 2023-24 and assume that it continued to hold true, there would be 3.1 gun homicides with a legally owned firearm in that year.

If we take a step back and look at the latest five years of data as a whole, there have been 149 gun homicides in Australia.

If we extrapolate the AIC’s long term findings on to this data, we arrive at a figure of 14.9 firearm homicides conducted with a legally owned firearm.

In short, Naveed Akram and Sajid Akram killed just as many people on the fateful day at Bondi Beach with a set of legally owned firearms as every single Australian did in the five years prior to that.

Despite the relatively commonly held perception that more legally owned firearms in the community means more gun homicide, that is not the case in Australia.

According to the findings of Samara McPhedran:

“Police data show steady increases in the number of people licensed to own firearms as well as the number of firearms legally owned. But despite growing levels of gun ownership, there have been ongoing declines in firearm homicides in Australia. The downward trend emerged in the 1970s and has continued to the present.

This suggests that, in Australia, more guns do not mean more gun-related murders. And firearm suicides, which account for most firearm-related deaths in Australia, have also continued to fall.”

The Takeaway

Over the last 50 years a combination of changing Australian culture and later gun control legislation has helped to deliver a dramatic reduction in firearm homicides.

While there are somewhere between 260,000 and 6,000,000 illegal firearms out there, Australia’s gun control legislation and law enforcement has created a set of circumstances where using an illegal firearm in a crime can have an immediate and serious cost, not only for the offender but for the individuals who provided them with the firearm to begin with.

This is a success that Australians should be proud of and that nations that face major issues with gun crime should be attempting to replicate, not something that policymakers should be deriding.

There is certainly more that law enforcement and intelligence services can do to keep firearms out of the hands of terrorists, but this is largely a separate issue to broader gun control legislation which has been effective.

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