Energy Minister Angus Taylor has announced that the government is negotiating to buy millions of barrels of oil from America’s fuel reserve under an emergency strategy to lower the risk of Australia plunging into an economic and national security crisis.

What he is trying to do is to meet our obligations as a member country of the International Energy Agency (IEA), which requires us to hold 90 days of net import of fuel and oil. We are the only member country that does not meet our obligation.

However, this obligation does not mean we would actually hold 90 days of diesel and 90 days of unleaded and 90 days of jet fuel. The 90-day figure is just an accounting measure. In reality we currently have about 21 days of diesel stocks (but it has been as low as 12 days in the past three years.)

Will this “deal” make any real difference to our own energy security, given that we import more than 90 per cent of all our transport fuels as either oil or refined product? Will it mean there is significantly less risk for Australians running out of fuel in days, or weeks, in the event of a supply disruption?

Unfortunately, it will not. What we are seeing here is marketing instead of real action and a clever accounting move to avoid having to address our real fuel security problem.Advertisement

Paying for US oil stocks, which will stay in the US, is a move to try to meet the IEA measure set in the 1970s. A lot has changed since then. The security of our fuel supplies has become much more complex – a simple move to count oil in a foreign country as our own will do very little for our domestic energy security.

Don’t forget that we would have to ship it to Australia (a 20-day process, according to the minister) then refine it and then get it to the bowsers. This is a long process given the reality of very low stock levels in our country. Who would ship it and who would refine it in Australia?

We used to have four oil refineries. We will soon only have three operating, as the Caltex refinery in Brisbane is apparently being shut down for an undefined period for maintenance.

We used to have 100 Australian-flagged ships … we now have 13 flagged ships, and that number is diminishing. We now depend on foreign-owned ships to bring oil and fuel to Australia.

Our government seems to think the foreign-owned “market” can be left to manage our energy security for us, shipping foreign-sourced oil and fuels in foreign-owned ships. This is a significant risk in this day and age. This “deal” will not change these facts.

Most other developed countries take a far more rigorous view of their energy security. Our government does not mandate minimum stock levels for our fuel companies to hold; it is left to the “market”.

The government’s own interim fuel security report published in April this year admitted that we do not have an adequate model of how our energy supply chain works. The report also stated that Australia may be left behind as the world moves away from oil-based fuel to other forms of transport energy. How does buying oil stocks that are stored in the US address these issues?

The bottom line is this: We do not have a coherent energy policy, we have not done a comprehensive risk analysis of our fuel supply chain, we have not updated our national energy security assessment since 2012, and Minister Taylor seems to think buying some oil stocks in the US will fix our fuel security.

My advice to Australians is that it will be too late to think about this when you are queuing at a petrol station for rationed supplies of fuel, or when the local supermarket or chemist hasn’t received any food stocks or pharmaceuticals.

Fuel security is a key component of our energy security. Energy security is the foundation of our national security. We do not have a national security strategy for Australia and we do not have an adequate level of energy security.

Future generations will look back at this period in our history and see a lot of marketing and spin, but a complete absence of political leadership and coherent policy. What kind of a legacy is this to leave to our grandchildren?

Air Vice-Marshal John Blackburn (Retd) is chair of the Institute for Integrated Economic Research, Australia.

Extracted from SMH