Union’s fuel warning: only three weeks of reserves

MUA-commissioned report highlights Australia's risk from over-reliance on foreign supplies

Union’s fuel warning: only three weeks of reserves
The launch of Australia’s Fuel Security: Running on Empty report


The Maritime Union of Australia (MUA) has warned that Australia has less than three weeks of liquid fuel reserves and "risks grinding to a halt" unless certain measures, such as restoring a fleet of Australian-owned tankers, are put in place to address the issue.

It says the nation’s lack of strategic fuel reserves and over-reliance on foreign petroleum supplies is leading to the potential crisis, proposing restoring a fleet of Australian-owned tankers as a solution.

The MUA cites its commissioned report, Australia’s Fuel Security: Running on Empty, written by former Australian Maritime College’s Maritime Transport Policy Centre director, John Francis.

The report examines the number of tankers required to maintain supplies, along with the cost, per litre, of using Australian-owned and crewed tankers, avoiding any crises brought on by a global economic shock or conflict along major trade routes.

Key points include:

  • 91 per cent of Australia’s refined petroleum was imported or produced from imported oil
  • More than half involved "just-in-time shipments" on ships carrying finished petrol, diesel, jet fuel and other products
  • Of the 677 tankers that visited Australia in 2017, not one was owned, managed or crewed by Australians
  • Australia is the only International Energy Agency member country that fails to meet its 90-day fuel stockholding obligation (only a quarter of the obligation), which has been the case since early 2012
  • Australia is the only developed oil-importing country where there is no government controlled stock of crude oil or refined petroleum products, no mandated commercial stock requirements for oil companies, and no government involvement in oil markets
  • Fuel reserves are generally less than three weeks.

The MUA highlight’s the report’s warning that Australia’s reliance on foreign flagged tankers "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".

"The cost of addressing this risk is comparatively low: even carrying Australia’s entire import volume on a fleet of Australian tankers would cost less than one extra cent per litre."

At the turn of the century, there were 12 Australian-owned tankers supplying Australian fuel needs, but this entire fleet has been lost.

Francis deduces that the cost involving the use of tankers owned, managed and crewed by Australians, would be a "very modest cost per litre" when spread across the entire import volume.

"The cost of five Australian ships spread across the projected import volume ... in 2018-19 results in a cost of less than one-tenth of a cent per litre," he says.

"Even if the whole future import volume covered by 60 ships, the cost is less than 1 cent per litre."

Alliance calls for national transport energy plan. Read more, here

Given that much of the petroleum products shipped to Australia on foreign tankers pass through potential conflict zones, MUA deputy national secretary Will Tracey highlights a sense of urgency around the issue.

"In the worst case scenario, a major economic crisis or a conflict that disrupts the supply chain — such as in the South China Sea — could cut fuel supplies, leaving us with just three weeks in reserve before transport systems collapse, food supplies are impacted, and essential services cut," he says.

"In May, the Turnbull government finally announced a National Energy Security Assessment would be undertaken to examine declining domestic production, diminishing refining capacity, and the risks posed by potential flashpoints in the Middle East and South China Sea.

"To be comprehensive, this risk assessment must also examine the risk of relying entirely on foreign-flagged vessels, rather than having tankers owned, managed and crewed by Australians.

"This report, by a leading maritime expert, shows that this is an extremely cost-effective option that would improve fuel security while having an imperceptible impact on prices."

The movement has gained the support of Western Roads Federation CEO Cam Dumesny, who confirmed that Western Australia’s peak road transport industry body has also been alarmed by the situation.

"We have been actively raising the fuel security issue across regional NT and WA at transport and logistics forums. It is a real and serious issue," he tweeted.

The full report can be found here.


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