Over ten years ago, a grave issue was highlighted by a former senior Air Force officer regarding Australia’s susceptibility to disruptions in global fuel supplies. Yet, a decade on, progress on this front remains scant. Government exercises simulating realistic disruptions still underscore this vulnerability starkly.
Australia’s dependency on imported diesel for the distribution of essential goods like food and medicine is particularly concerning. According to the Australian Petroleum Statistics, should the market falter, only 22 days’ supply of diesel remains in reserve.
Retired Air Vice-Marshal John Blackburn has been a vocal advocate for change since 2014, highlighting the perilous state of the nation’s fuel reserves. At the time, he noted that in a crisis, Australia would only have enough diesel to support the delivery of chilled and frozen goods for a week, dry goods for slightly longer, and essential pharmacy supplies for a mere few days.
Despite some improvements, Australia still falls short of meeting the 90-day oil reserve standard set by the International Energy Agency (IEA). Currently, Australia holds 48 days’ worth of net imports, which includes 22 days for diesel, 17 for jet fuel, and 29 for petrol.
The National Oil Supplies Emergency Committee (NOSEC) conducts periodic emergency response drills that simulate real-world geopolitical tensions. One such exercise in 2019, revealed under Freedom of Information, depicted a scenario where conflict in the Middle East and South China Sea severely disrupted shipping lanes and refinery operations, leading to a significant reduction in fuel imports to Australia.
The mock exercise showed governments opting to hoard fuel rather than release it into the market as per IEA commitments. The exercise highlighted severe attacks in the Middle East, reducing Saudi Arabia’s crude output significantly and slashing Australia’s fuel imports to just 35%.
The report from this exercise expressed concern over the delayed governmental response and the general lack of preparedness. The scenario demonstrated that significant delays in action—21 days to declare a fuel emergency—could deplete nearly all the national fuel reserves.
In response, a Liquid Fuel Security Review was commissioned to reassess and propose measures to enhance fuel security. The review underscored the need to maintain and possibly increase diesel reserves, preserve domestic refining capacities, and ensure robust coordination across industry and government sectors.
However, disruptions like the Australian bushfires and the COVID-19 pandemic have stalled the finalisation of this review. Meanwhile, former energy minister Angus Taylor launched a grants program in 2020 to bolster onshore diesel storage capacity, though progress has been limited.
John Blackburn criticises the slow pace of legislative and practical measures to secure fuel supplies, despite the evident risks highlighted by ongoing global conflicts and the pandemic. He points out the stark contrast in governmental priorities, where tangible steps to bolster fuel reserves lag behind more high-profile defence acquisitions.
A spokesperson from the Department for Climate Change, Energy, the Environment, and Water has stated that Australia holds more diesel than ever before and has met recent stockholding obligations. However, Blackburn remains sceptical, highlighting discrepancies in how these figures are calculated and the actual availability of these reserves.
This lingering issue of fuel security continues to be a contentious point, with Blackburn concluding that economic perspectives often overlook real-world security concerns, leading to complacency and eventual crisis.
As Australia navigates these complex challenges, the need for a comprehensive and proactive approach to fuel security becomes ever more critical, calling for leadership that prioritises long-term resilience over short-term political gains.
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