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New report sheds light on lack of Australia’s independence in fuel supply and security

Danny O.

A damning report released earlier this week by the Maritime Union of Australia (MUA) has highlighted the remarkable lack of Australia’s independence in regards to its fuel supply and security.

The report titled “Australia’s Fuel Security: Running on Empty”, was commissioned by the MUA and authored by John Francis, a management consultant and lawyer with a background in the maritime industry. Francis drafted the report after extensive consultation with retired RAAF Air Vice-Marshal John Blackburn who has been a vocal critic of Australia’s fuel supply situation. Blackburn identifies fuel supply as a national security issue.

Startling statistics
 
A number of significant and concerning facts are revealed in the report. For example, it shows that Australia’s oil import dependency was approximately 91% in 2017-2018. This includes both crude and clean (refined) petroleum products. In other words, just 9% of all refined petroleum products in Australia came from Australian crude that is refined in oil refineries in Australia. In contrast, 56% of all petroleum products consumed here are now refined abroad and imported on international ships with ‘just-in-time’ delivery. The remaining 35% comes from imported crude oil that is then refined in Australia.
 
Interestingly, the report notes that until 2004, “Australia largely produced and refined enough fuel to meet its own needs.” Since then however, “imports began to increase significantly”, and Australia’s “refined petroleum imports have more than doubled since 2010-11.” It is no surprise that this increase in imports closely coincides with the closing of half (i.e. 4 out of 8) of the oil refineries operational in Australia since 2009, all of which are owned by major foreign multinational oil and gas companies such as BP, Shell, ExxonMobil, and Caltex. Notably, 3 out of the 4 refineries that were closed have since been converted to fuel import terminals.
 
This relatively recent turn to increased reliance on imports has coincided with the startling fact that since 2012 Australia is the only member of the International Energy Agency that has consistently failed to meet its 90-day fuel stockholding obligation, an obligation that requires member nations to hold in reserve 90-days’ worth of fuel at all times. The report mentions that according to estimates given at a Senate inquiry on fuel security in 2015, “Australia’s total stockholding of oil and liquid fuel comprised two weeks of supply at sea, five to 12 days’ supply at refineries, 10 days of refined stock at terminals and three days stock at service stations.” Other sources cited suggest stock levels of fuel are somewhere between 18-21 days.
 
Furthermore, the report points out that “Australia is the only developed oil importing country in the world where none of the following three areas are addressed: a) there are no Government controlled stocks of crude or CPP ; b) no mandated commercial stock requirements for oil companies; and c) no government involvement in oil markets.” In other words, Australia’s fuel security is completely in the hands of the “free-market” and the whims of the profit-hungry foreign multinational oil companies that dominate the industry in this country.
 
War and Economics
 
In light of all of these facts, it easy to see the catastrophic effect on Australia that a major fuel supply disruption would have. While the report mentions that a possible military conflict, especially in the South China Sea and surrounding areas where some fuel tankers pass on their way to Australia, may be one risk, the report suggests the biggest risk actually comes from the possibility of a global economic crisis. With many capitalist economists now recognising the inevitability of a debt-driven financial crisis bigger than the crisis of 2008, this is a fairly pertinent point.
 
The report goes to some length to detail the workings of the maritime freight market and explain the risk posed by the possibility of a credit crunch in the shipping industry. The shipping industry requires high levels of credit for day-to-day operation, including for the cost of refuelling ships and the payment of workers’ wages. A major disruption to liquidity in the banking sector (i.e. if the banks were forced to stop giving out cheap credit due to the inability of debtors to make repayments) could have a serious impact on fuel supply chains as shipowners would no longer have access to the credit needed to fulfil their contracts at agreed prices.
 
For Australia, this risk is somewhat exacerbated by the fact that today there is no longer a single Australian-flagged or Australian-crewed tanker supplying fuel to this country or even transporting it domestically around our coasts. There were 12 in 2000, 6 in 2011, but since 2016, there are none. Every single delivery of imported or domestic crude or refined petroleum is carried on foreign-flagged vessels sourced from the shipping freight market. The Australian government does not have access to a single fuel tanker of suitable size should it require it in an emergency. For an island nation the size of Australia, this a remarkably disturbing fact.
 
Solutions and independence
 
The MUA’s report concludes that, as well increasing our levels of fuel stocks, a possible solution to mitigate the risk posed by the current fuel supply chain situation would be to have a dedicated number of “tankers owned, managed and crewed by Australians.” The report sets out some modelling suggesting that all of Australia’s current fuel supply chain could be fulfilled by the equivalent of 60 large tankers operated full time by Australian crews and that economically “even carrying Australia’s entire import volume on a fleet of Australian tankers would cost less than one extra cent per litre.”
 
The report further notes that just “20 Australian owned and crewed vessels would provide 850 permanent jobs (100 ashore and 750 at sea) and provide training for 100 seafarers each year.” The impact on Australia’s ability to support a broader range of industries and national economic development due the loss of vital industry skills as a result of not having our own fleet of Australian crewed oil tankers should not be underestimated.
 
The solutions raised by the report are important and are worth fighting for. But for the Australian people to achieve real fuel and energy security, as well as job, economic, and national security much more revolutionary solutions are needed.
 
It will require the fight for an independent Australia under the leadership of the working class. That will mean the takeover of the multinational oil giants that dominate and control our fuel industry and subject this country and its peoples’ fate to their profit margins. It will require similar action in other major industries controlled by the multinationals. It will also require the fight against the US-Australia “alliance” that drags our country into imperialist wars to ultimately fight for the interests of these same multinational corporations. Only once we have achieved these things will we be able to run our industries and economy to meet the needs of the people. Only then will we be able to talk about real security for the working people of Australia. Only then will it be possible to say Australia is an independent and sovereign nation. It’s that revolutionary change we are fighting for.
 
The MUA’s full report can be read here
 
For further reading on Australia’s economic dominance by multinational corporations check out our pamphlet “Who Owns Australia: Exposing the Multinationals” available here
 

 

New report sheds light on lack of Australia’s independence in fuel supply and security
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