The fuel shortage in Bali was notionally caused by a fuel tanker suffering a mechanical anchor failure, which delayed its offloading of some 18 million litres of liquid fuels last week. But for an entire island to brought to its knees because of a single supply delivery failure points to a deeper, structural problem.
Since the crisis in the Strait of Hormuz began most Australians have belatedly realised that our mantra “Energy Security is National Security” is indeed a reality.
Anthony Albanese engaged in a flurry of shuttle diplomacy in the Indo-Pacific shoring up fuel supplies, and appears to consider the job done. The Coalition, meanwhile, has pledged dollars and legislation to extend the national fuel reserve to be at least 60 days.
What we have now is a “mess”, applying the definitions developed by pioneering systems theorist Russell Ackoff decades ago. Not merely a “problem”, where at least everyone agrees on the question, but a mess, where neither the diagnosis nor the cure has consensus. That is precisely the condition of Australian energy policy in 2026.
Start with the facts, because they are damning. In 2000, Australia refined 828,000 barrels of oil a day, which was enough to meet domestic demand. Today, just two refineries remain, producing 29 per cent of that figure.
Since March 2012, Australia has been in continuous breach of its International Energy Agency obligation to hold 90 days of net oil imports in reserve. The previous government leased space in the US Strategic Petroleum Reserve. All the small reserve volume of oil purchased in 2020 was released in 2022 as our contribution to the response to the Ukraine crisis. Now the cupboard is bare.
Behind this was complacency and the quiet triumph of ideology over arithmetic, including the Renewable Energy Act of 2000 whose first object – to subsidise renewable generation – directly contradicted the first object of the National Electricity Market’s governing legislation: to promote efficiency and competition.
Nobody in Canberra seems to have noticed the contradiction. And 26 years later, the consequences are dawning upon us.
For three decades, the proper hierarchy of government priorities of security, then prosperity, then environmental stewardship was quietly inverted. Security was assumed, prosperity was taken for granted, and sustainability promoted as sitting above, rather than alongside, the other two priorities. The result is a country with abundant energy resources becoming one of the world’s least energy-secure nations, with some of the highest power prices in the developed world.
It took the battle for Hormuz in 2026 to alert the wider public. The absurdity of the Prime Minister’s peregrinations in response was that he was seeking assurances from Korea, Japan, and Singapore, which between them produce not one drop of oil. Their strategic advantage is their surplus of strategic insight, of which Australia has a great deficit.
As Queensland Treasurer David Janetzki noted afterwards, it was the state’s gas industry – operating against the grain of federal hostility to new exploration – that gave Canberra a card to play. It worked, this time, in a diplomatic scramble short of war. Nobody should assume it would work in a real one.
Australia’s post-war generation was able to rapidly build a fleet of refineries, each commissioned within three to four years of decision. Notably, these were built before the major oil discoveries of Bass Strait.
The orthodoxy that made this mess is finally facing scrutiny. Former MI6 chief Sir Richard Dearlove bluntly told a London audience that climate change is most definitely not the most pressing threat faced – and that treating it as such, while real security questions go unaddressed, is “the height of naivety”. His warning to Britain applies equally to Australia, and to the West in general.
Boris Johnson, who hosted then prime minister Scott Morrison at the Glasgow COP summit where they toasted net zero by 2050, admits he “got carried away” believing renewables could fill the energy gap, leaving electricity “too expensive for ordinary people”.
Unravelling the mess is a strategic and sequential operation, first requiring the clear objective of energy security. Not easy, and execution will be even harder, but we must commence the task.
More affordable energy will inevitably arise as the system is restored, but to place that objective first just invites politicians to achieve user-friendly outcomes via subsidies and quick fixes, as they do now.
There were local issues in Bali, but “unexpected” events always come along to reveal the nature of a mess, and that’s what we need to avoid in Australia. Energy Security is National Security.
Scott Hargreaves is executive director and Stephen Wilson is visiting fellow in energy security at the Institute of Public Affairs.
Extracted in full from: https://www.theaustralian.com.au/commentary/energy-security-mess-puts-whole-country-at-risk/news-story/08dfe15ca4a9fb08c50eecff64600930
Australians with fond memories of Bali holidays are concerned by recent videos circulating of massive queues at petrol stations arising from their latest liquid fuels crisis. Concerned for the people of Bali, and perhaps concerned at the prospect of similar scenes in Australia.