A lack of liquid fuel security could present a dire threat to Australia in the event of a shortage.
Certain Royal Australian Navy helicopters require a fuel known as F-44.
Until a few years ago, it was produced in Brisbane. The Navy now buys the fuel from South Korea.
The fuel is shipped via the South China Sea, meaning that if there is a disturbance in the region it likely won’t arrive, Air Vice-Marshal John Blackburn (Retd) told create.
And that’s exactly when we’ll need it most.
Potential shortages
This story serves as a neat example of what is going on more broadly with Australia’s supplies. It’s not just our military under threat of breakdown. The Department of the Environment and Energy’s Liquid Fuel Security Review says that, despite the International Energy Agency (IEA) requiring member nations to maintain stocks equivalent to 90 days of annual net imports, Australia only holds 53.
It gets worse. In terms of fuel consumption, Australia holds just 18 days of petrol, 22 days of diesel and 23 days of jet fuel. So, in the case of an external event — military, weather or trade related — the nation will grind to a halt within three weeks.
Transport, agriculture, military and business will be crippled.
“When we consider countries of similar economies, most see fuel security as part of their strategic capability and take steps to manage fuel security with that in mind. Australia, by comparison, has chosen to apply minimal regulation or government intervention in pursuit of an efficient market that delivers fuel to Australians as cheaply as possible,” the Liquid Fuel Security Review said.
The oil industry in Australia has welcomed the option of importing fuel refined in other parts of the world. It’s cheaper, cleaner and requires far less infrastructure compared to managing a refinery.
But should supply be cut, we have no infrastructure to supply fuel.
“Because of a lack of past political threats or market problems, all we are worried about in Australia is the price at the pump,” said Neil Greet, Australian Energy Security Spokesperson at Engineers Australia.
“We expect that someone behind the scenes is ensuring it will always be there. But they’re not.”
Dr Paul Barnes, head of the Risk and Resilience Program at the Australian Strategic Policy Institute, said the global fuel market is led by profit and just-in-time efficiencies as opposed to national security.
“We’re at a point now where if everything is perfect, if the market is completely unperturbed, we can rely on the market and get our refined product via ships from Singapore, South Korea and China,” Barnes says.
“But that’s in an ideal, purist view of the world which is not the geopolitical reality that many economies face.”
Confronting the problem
So, what does a solution look like?
First, Blackburn said, Australia should reduce demand for fuel by moving over to hydrogen vehicles and electric vehicles.
Stockpiling is also important. In the European Union, it is a requirement for member countries to hold at least 61 days of actual stocks or the IEA net-imports 90-day stockholding amount, whichever is higher.
Fuel emission standards must also be introduced. “We’re one of the few countries that doesn’t have emission standards,” Blackburn said. “If standards were introduced, Australia would reduce its fuel consumption by 8.8 million barrels of oil per year.”
Australia could re-tool some existing refineries, so they have a scalable operational capacity to produce greater amounts of fuel, Barnes said.
Greater diversification of supply is also important, Blackburn believes.
“We’re actually buying fuel from the Chinese Government. So, if we had a problem with the Chinese Government … they can switch off 25 per cent of our aviation fuel, tomorrow.
“Energy is the lifeblood of our society and I’m sure that even if Australians had to pay an extra few cents per litre — not a tax but instead a security resilience guarantee — they would happily do so.”