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Senate warned over Australia's lack of fuel security

October 19, 2018 3:26 PM

A lack of coherent policy for managing Australia's liquid fuel reserves represents a risk to national security, according to retired Air Vice-Marshal John Blackburn.

Earlier this year, Australia's liquid fuel reserves dropped to 22 days supply for crude oil, 59 days for LPG, 20 days for petrol, 19 days for aviation fuel and 21 days for diesel.

The International Energy Agency expects member countries to keep 90-day supplies of net oil imports, which it says Australia fails to comply with.

Mr Blackburn, who was due to give evidence to a Senate select committee late Thursday, said Australia was "in a strategic warning period for fuel security".

A number of MPs want to see Australia establish better liquid fuel reserves in Australia.

"When more than 90 per cent of our transport energy is imported, if something goes wrong, what can the government do? Nothing basically," he said. 

"When you put a national security lens on it, you start to ask the question: what could somebody else do to us to either control us, or to influence us?"

Mr Blackburn said Australia was the only country in the world that didn't have either government-owned reserves, mandated industry minimums for fuel stocks or the ability to control the market.

"All other developed countries in the world have some of those things at least, and countries in the region here are increasing their fuel and oil stock holdings because of their concerns," he said.

Electric vehicles

Mr Blackburn's comments were made in the context of the Senate select committee investigation into electric vehicles being led by independent senator Tim Storer.

Senator Storer raised concerns about brent crude trading above $US80-a-barrel and reports it could top $100-a-barrel on the back of tensions between US president Donald Trump and Saudi Arabia.

"Electric vehicles provide us with an opportunity to reduce our reliance on imported foreign oil and to take control of how much we pay for our transport fuel," Senator Storer said.

"Increasing our uptake of EVs will dramatically improve our terms of trade by shifting transport fuel payments from international oil companies ... to Australian electricity companies."

It is understood there are a number of MPs who want to see a policy that addresses the emerging geo-strategic risks that could disrupt shipping lanes and supply to Australia.

Liberal MPs, such as Andrew Hastie and Jim Molan, have been raising the risks over Australia's domestic liquid fuel supplies for some time.

Government review

Earlier this year, then energy minister Josh Frydenberg announced a review of liquid fuel security, which is due to report by the end of this year.

"The assessment is the prudent and proper thing to do to make sure we aren't complacent," Mr Frydenberg said at the time.

"The assessment will also help inform Australia's plan to return to compliance with the International Energy Agency's emergency stockholding obligations by 2026."

But Mr Blackburn said he had "no confidence in the outcome" because the government had no coherent policy framework around energy.

"Without any policy framework, apart from 'get electricity prices down', it makes it incredibly difficult to do a proper assessment or to look at the options for what the government should do," he said.

Originally published in the AFR by Ron Mizen