Virus crisis and lack of local storage infrastructure complicate issue
With oil-producers paying traders to take oil off their hands, discussion has turned again to Australia’s miniscule domestic reserves.
The commodity has rarely if ever been as cheap and, despite federal energy minister Angus Taylor spruiking a deal with the US to tap into that country’s Strategic Oil Reserve regarded more as a fudge than a strategy, observers remain of the view that it is a national security weakness.
Certainly the subject was raised in March by investment news site stockhead.com.au.
It quoted Anastacia Dialynas, who leads Bloomberg New Energy Finance’s oil supply analysis team in New York, as saying there would no better time to build such a strategic reserve than now, a point also raised by The Australian’s economics editor, Adam Creighton, on Sky News.
It also notes that both Dialynas and Taylor point out such a reserve may not be needed, given the rise of electric vehicles, a point backed up by Australian National University academic Christian Downie, who, along with others, believes a greater focus is needed on renewable energy exports than imports of fossil fuels and their precursors.
Read how outsourcing fuel security convinced few in freight transport, here
Such arguments cut little ice in the freight transport industry, where both industry and manufacturers see diesel engines in use for a variety of transport tasks for decades to come.
The Australian Trucking Association (ATA) has also been vocal in its support for a strategic reserve based within the country, rather than on the US’s Gulf of Mexico coast.
But there is a barrier to a solution that the Budgetary impact of the Covid-19 crisis exacerbates – the lack of suitable storage and government cash to create one once the crisis passes.
And it would need thorough planning.
ATA transport and infrastructure adviser Sam Marks says that without a plan for national fuel security stored in Australia, there are limited options for storing and taking advantage of current oil prices.
It is a point Creighton also makes.
“There is limited excess storage capacity, as it is a commercial system built for business as usual needs,” Marks says.
The ATA reiterates that fuel security is critical to trucking and the economy, which is why it is a strong advocate for a staged plan to develop a national fuel reserve.
“Current global events show we can’t rely on ‘business as usual’ and need to take action to protect trucking, protect our economy and protect access for our community to essential supplies,” Marks says.
“We need fuel security in Australia, not stored halfway around the world.”