Ninety per cent of Australia’s liquid fuel comes from overseas, which leaves us vulnerable to geopolitical threats and trade wars. To keep trucks on the road and planes in the air, we need to take a new approach.
Petrol, diesel and jet fuel keep 98 per cent of the nation’s transport moving and account for 37 per cent of our total energy use. In May, former Prime Minister Malcolm Turnbull announced a National Energy Review, beginning with a report on our ability to withstand disruptions to our liquid fuel supplies. That report is due later this month.
According to Engineers Australia Energy Security Spokesperson Neil Greet, the government is taking action to return our national oil reserve to the 90 days required to meet our obligations as a member of the International Energy Agency by 2026.
But Greet told create that replenishing our national reserves only addresses part of the “multi-layered” problem of fuel security.
“It’s not so much about oil reserves as how we get our liquid fuel. Our liquid fuel security is vulnerable on a number of fronts,” Greet explained.
Onion skin effect
A recent report released by Maritime Union Australia (MUA) has shed light on the tangled web of global and local factors affecting Australia’s fuel supply. These include our reliance on international vessels for delivery, economic instability caused by Brexit and US-China trade relations, and potential conflicts in areas such as the South China Sea.
The report, titled Australia’s Fuel Security: Running on Empty, states that Australia is facing a fuel security crisis, with reserves averaging across the country at three weeks or less.
As Greet reported to the 2015 Senate inquiry into fuel security, the picture at the petrol pump could be much more dire. For instance, although the national oil reserve is currently at 53 days of net imports, the available supply could be much lower in rural and regional areas if supply is blocked.
“It could be down to three days in some country towns,” Greet said.
The report also states that Australia is the only developed oil-importing nation in the world that has no government controlled oil stocks, mandated commercial stock requirements or involvement in oil markets.
Greet said this sets us apart from nations such as the US and China, which hold significant liquid fuel reserves in case of supply disruptions.
Another issue mentioned by the MUA report is the absence of Australian-crewed vessels supplying fuel to the nation. If a credit squeeze, natural disaster or war led to vessels being requisitioned by foreign governments, Australia would be left in the lurch.
Greet said this adds another layer to the issues already being tackled.
“It’s the onion skin effect. The more layers we get, the more vulnerable we are,” he said.
From ‘just in time’ to ‘just in case’
According to Greet, addressing the multiple, interconnected threats to supply is key to ensuring future fuel security. He believes that engineers can play a part.
“It’s a complex system – an engineering mind can assist in working through it,” he said.
He also mentioned that the continued closure of local refineries meant that much of the nation’s engineering expertise in the field had been shifted offshore.
Engineers Australia is assisting the Australian Security Policy Institute (ASPI) and Air Vice-Marshal John Blackburn from the Institute of Integrated Economics Research in their efforts to understand the issues and work towards a solution.
The MUA report states Blackburn has expressed concern that Australia’s fuel supply chains have not been subject to a comprehensive, independent security assessment.
“We need to apply the national security framework and analytical methods that we have applied to our nation’s defence forces to areas of risk such as energy security that are critical to our national security,” Blackburn said.
Blackburn believes that Australia should conduct an investigation into geopolitical and economic threats to fuel supply, and move from a ‘just in time’ to ‘just in case’ approach.
Greet concurred, stating that volatile financial and political climates have changed the way the supply chain works, and we need to improve our resilience. To do this, Greet said we need a national transition plan for the next decade, to shift from reliance on petroleum products to alternative sources such as electric and hydrogen fuel cell vehicles.
“The vulnerability we have is about the supply chain, but having a transition plan means we won’t have to rely on it,” he said.
Greet said the Federal Government needs to provide vision, leadership and incentives for change. Most importantly they must address the broader issue of overall energy security through a National Energy Review encompassing electrical, liquid fuel, natural gas and emerging technologies.
“There hasn’t been an across-the-board National Energy Assessment since 2011… this isn’t going to be solved over Christmas,” Greet said.