From Watts Up With That?

Essay by Eric Worrall

Too bad all those Aussie oil refineries had to close.

Australian wheat harvest to drop almost 50 per cent as farmers adapt to energy crisis

Cecile Lefort Markets reporter
Updated Jun 1, 2026 – 3.31pm,first published at 12.01pm

Farmers have drastically scaled back their wheat crops this year in a trend that threatens to worsen the country’s cost-of-living crisis after soaring fuel and fertiliser prices from the Iran war and dry weather prompts growers to rethink the food staple.

The three-month conflict in the Middle East and the closure of the Strait of Hormuz has already triggered a massive shake-up in global agriculture and sent commodity markets into a spin. Rabobank is now forecasting oil prices could spike to an average of $US120 a barrel in the coming months up from about $US70 before the conflict.

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Vincent Carse, a commodity strategist at NAB, warned that Australia was more exposed from disruptions than other large grain-producing countries, owing to its reliance on imports from the Middle East.

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To survive the financial squeeze, many farmers are abandoning wheat altogether in favour of lower-maintenance options like barley and canola which is on the rise.

…Read more: https://www.afr.com/markets/commodities/energy-crisis-prompts-wheat-farmers-to-slash-crops-this-year-20260531-p602fe

Australia was on the brink of moving to correct this disaster, back in March Premier Crisafulli announced a Queensland Government backed oil refinery and fuel storage programme.

Then the Australian Federal Government decided now was a good time to crash risk taking business investment, by announcing a major hike in capital gains tax, a programme to treat profits from capital gains as equivalent to employee wage income. A legislative minimum of 30% of any profit investors make from starting a new business then selling the business as a going concern now ends up in the pockets of the Australian Federal Government.

There has also been a well funded left wing campaign to demonise extractive industries in Australia and demand even more taxes on energy extraction, by caricaturing gas executives as sneaky cheats.

Strangely I haven’t read much about the plan to build lots of new oil refineries recently.

If only Australian domestic energy producers had an advocate in the Federal Government, who could argue the case Aussie energy investments to be excluded from the new tax hikes. Sadly Australia’s Federal Minister for Energy and Climate Change Chris Bowen has been too busy focusing on his role as President of Negotiations for the upcoming COP31 climate conference in Turkey to spend time fixing Australia’s energy problems. In any case, Bowen thinks everyone should convert to electric vehicles if they are worried about diesel prices.

I’m sure we’ll stumble through somehow. Perhaps President Trump can send us a few shipments of wheat, along with all the fuel the USA has been sending to Australia lately.