Starving amidst plenty: Australia’s oil dependency problem

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U.S. wartime poster (Image public domain via Wikipedia Commons)

Australia is the only International Energy Agency member state to consistently fail to maintain the mandated stockpile of oil. Dr Binoy Kampmark considers the Australian Government's cavalier attitude towards energy security.

IT'S THE SORT of situation that reanimates Donald Horne and his key work, The Lucky Country (1964), with apt terror. In his classic, which has been silenced by the literalism of those who did not care to appreciate its irony, Horne had little time for the stewards that had come to occupy positions of power in Australia.

For him, Australia was country of plundering managers, visionless misfits and those distinctly incapable of handling modern times. In such times, this has led to something of a perversion: a country otherwise keen to export what it extracts from the earth is rather incapable of keeping up a decent oil reserve. Nor can it boast alternative energies to overcome this noxious reliance. The resource-rich garden, goes this theme, is vulnerable to the flabby thinking of those who tend to it.

For several years, warnings have issued about Australia’s cavalier attitude to the issue of oil, the base substance that has produced almost as many wars as barrels. 

'We’re one of the world’s top energy exporters', observed Dr Vlado Vivoda in The Conversation in 2014, 'but our stocks of liquid fuels – such as the oil on which most of the transport sector depends – are far from healthy.' 

Horne would have appreciated that irony. 

Dr Vivoda has made it something of a theme to speak of concerns associated with Australia’s oil problem, though his prognostications have tended to fall on the deafest of ears.

In 2012, Vivoda noted that, despite

'... the country’s economy riding the waves of a resource boom, one facet of the country’s energy situation has largely been under the radar —  [Australia’s] growing reliance on oil exports.'

Australian oil production had been on a steady decline in recent years (in 2011, it fell by 14.5%), while consumption has been only increasing.

(Source: United States Energy Information Administration via indexmundi.com)

Much of this can traced back to the discovery in the mid-1960s of oil in the Bass Strait. The discovery hardly dwarfed those in other countries, but it did increase self-sufficiency from 10% to 70% up to the oil shock of 1973. Complacency duly set in.

Vivoda makes a few points that have not been addressed in Australia’s energy jumble. The country remains the only International Energy Agency (IEA) member state to consistently fail in maintaining a mandated stockpile amounting to 90 days’ worth of net oil imports. A laissez faire attitude has tended to be taken by successive governments, a sentiment riddling the first Energy White Paper released in 2004.

There has also been a certain laxity and misplaced confidence that other resources will cover the fall, taking the country out of any crisis that might engulf it.  The 2011 National Energy Security Assessment stressed the high degree of liquid fuel security that seemed to verge on pietistic.

'Specifically,' went the foreward from then Minister for Resources and Energy Martin Ferguson'the NESA finds all three sectors [natural gas, electricity and liquid fuel sectors] have a ‘moderate’ or above energy security assessment over the short, medium and long term.'

The optimists are, however, in retreat. 

Last month, Liberal Senator Jim Molan told Sydney radio station 2GB that Australia’s low fuel reserves would be affected in the event of such engagements as air strikes in Syria:

“We stand in real trouble and this is a single point of failure for Australia, very similar to what could happen in a cyber situation.”

Molan reproached the entrenched

“... business as usual approach. It’s like saying we can determine the size and shape of the Australian Defence Force based on commercial factors and making the market decide.”

Such concerns have been building on the lamentations of a few big wig Cassandras. Retired Air Vice-Marshall John Blackburn, former deputy chief of the Air Force, has been earning his keep over the last few years advising the National Roads and Motorists’ Association about fears that Australia is imperilling itself, gradually sawing the branch it finds itself perched upon. Says Blackburn, a '100% import dependency' was a genuine risk. 

By way of illustration, he took the example of the UK:

'... when the British were passing 40% import dependency, they said they had an national security concern.'

Not the sort of words that have made certain Government ministers rest easy.

The Turnbull Government, after a stint of inattentiveness, has decided to review the situation, prompted by reports that Australia has, currently, a mere 50 days of fuel left in reserve. 

“The assessment is the prudent and proper thing to do to make sure we aren’t complacent,” commented Federal Energy Minister Josh Frydenberg, announcing the review this month.

Reports on what is left in the tank vary, although Fairfax media have supplied a rough breakdown. The crude supply comes down to a meagre 22 days. Petrol came in at 20 days; aviation fuel at 19; diesel, 21. Highest was LPG, coming in at 59. 

Much of this has been seen before. In November 2013, Australia’s stockpiles were similarly placed at 57 days worth, with the National Roads and Motorist’s Association estimating that the country’s in-house stockpile came to a mere 23 days, excluding shipments en route to Australia.

This has greater relevance given the prospect of any conflict between such powers as the United States and China, where strangleholds over supplies are bound to be maintained. Those issuing warnings have yet to be headed. The speed at which Australia greens itself is becoming not just a moral matter, but a security one.

Dr Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. You can follow Binoy on Twitter @bkampmark.

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