Australia’s Labor Party pledge to create national fuel reserve

Australia’s Labor Party has committed to create a government-owned National Fuel Reserve, describing it as an essential step to protect Australia from natural disasters or global crisis that could disrupt oil supplies. Australia’s maritime union (MUA) welcomed the commitment, in line with its recently-published report raising concerns over the country’s fuel security.

MUA National Secretary Paddy Crumlin said the fuel reserve commitment, along with Labor’s previous announcement of a National Strategic Fleet that will include oil tankers and gas carriers, were vital steps required to safeguard the security of an island nation that is reliant on fuel imports.

Namely, MUA noted that Australia has been in breach of the the International Energy Agency’s 90-day fuel stockholding obligation since March 2012, with figures released last month showing the country had just 22 days of petrol and 17 days of diesel on hand.

Despite countless reports warning about Australia’s lack of fuel security and the urgent need for action, the Abbott, Turnbull, and now Morrison Coalitions Governments have done absolutely nothing. Australia is the only developed oil-importing country without government-controlled stocks of crude oil or refined petroleum products, which has become more and more of an issue as the proportion of our fuel that is imported has risen to well over 90%,

…said Mr Crumlin.

In this regard, MUA commissioned a report by shipping expert John Francis, ‘Australia’s Fuel Security – Running on Empty’, in December 2018, which found that Australia now relies on the equivalent of almost 60 full-time fuel import tankers to keep us supplied with petrol, diesel and jet fuel.

This research concluded that the Australian economy would grind to a halt within weeks of a major crisis in the region that interrupted fuel shipments,

…Mr Crumlin said.

Key findings of the report included:

Key findings

1. Australia’s oil import dependence (crude and clean products) stood at about 90% in 2017-18.
2. The exclusive reliance on foreign flagged tankers for crude and CPP supply chains removes any opportunity for the Commonwealth to be able to requisition national flag tankers if necessary to secure minimum import or coastal distribution requirements following major economic or geopolitical disruptions to oil markets.
3. Any risk assessment of bank liquidity and potential disruption to world credit markets needs to include consideration of the cascade effects on world freight markets.
4. If a comprehensive risk assessment indicates that retention of a minimum number of tankers owned, managed and crewed by Australians is justified on national security grounds, the Commonwealth, in consultation with stakeholders, should investigate options to equitably apportion the differential costing.
5. The additional cost per litre of cargo carried by an Australian tanker carrying clean petroleum import cargoes ranges from 0.49 cents to 1.25 cents per litre, and depends on the size of the ship and the distance from the supply country to the port of importation.

The commitment that a Shorten Government will both create a national fuel reserve, along with a strategic fleet that includes Australian-flagged oil tankers, provide a welcome end to years of political inaction that continues to put all Australians at risk,

…he concluded.