Fuel stocks hit crisis point

Government launches urgent review of national supply security

AUSTRALIA has less than 50 days of emergency fuel stocks held in reserve, prompting the Turnbull Government to launch an urgent review of the nation’s fuel security.

Fears that a future conflict in the Middle East could threaten the already recordlow supply — which is well below the 90 days of fuel Australia should have at minimum — have also prompted the review, announced by Federal Energy Minister Josh Fryden- berg today. The urgent review will examine our ability to withstand “disruptions” to the supply chain, as well as how fuel is supplied and used in Australia.

Mr Frydenberg said the urgent review “should not be construed as Australia having a fuel security problem”.

“We have not experienced a significant disruption to fuels supplies since the OPEC oil crises in the 1970s, but there is no room to be complacent,” he said.

“Australia’s liquid fuel supply increasingly depends on overseas sources and relies on market forces to maintain reliability and affordability.

“The assessment will identify whether the Government should take further steps to ensure Australia’s domestic fuel supply is reliable.”

Australia’s transport systems and energy needs would be devastated by a supply crisis, with liquid fuel accounting for 37 per cent of Australia’s energy use, including 98 per cent of transport needs.

But the nation has had less than 90 days of fuel in reserve since 2012, breaching a deal with 30 other nations that have signed up to an International Energy Agency agreement to have the three months’ of supply in case of emergency.

Only nine other nations have dipped below the agreed reserve level in the same time.

Government figures show Australia has just 22 days supply of crude oil, 21 days of diesel, 20 days of petrol, 19 days of aviation fuel, 59 days of LPG and a net supply of about 49.6 days fuel.

The dip in reserves follows the closure of three of Austra- lia’s seven domestic refineries over the past decade. The nation’s reliance on imports has increased to the extent it now imports 75 per cent of crude oil and 55 per cent of refined product.

“On any one day, there are up to 45 oil tankers en route to Australia, with more than 20 days’ worth of supplies on board,” Mr Frydenberg wrote in an opinion piece for Fairfax Media before the announcement yesterday.

He said that the rationale behind the IEA agreement was that “in the event of a major disruption of the global fuel supply chain, members’ stocks should not only be sufficient for domestic use, but also to contribute to a collective effort to plug the gaps in the global supply”.

“Such action has been triggered only three times, including in 1991 during the Iraq conflict, in 2005 after Hurricane Katrina and in 2011 with the turmoil in Libya.”

Australia aims to return to 90 days of supply by 2026.

The new review will be led by the Department of the Environment and Energy.