Dwindling reserves. Fuel security politics hides the truth

Because the consequences of a fuel cut are serious, neither Labor nor the Opposition can be trusted to tell the truth about our dwindling fuel reserves. Rex Patrick checks the facts.

In 2002, Australia (under Howard) had a 300-day fuel stockpile. In January 2010 (Rudd), Australia had 83 days. In January 2012 (Gillard), it was down to 60 days in Australia and in January 2015 (Abbott) we only had 51 days.

Last week, One Nation’s Barnaby Joyce asked Minister Bowen in Parliament: “… how many days of diesel do we currently have in storage on Australian soil?”

The Minister answered: “The answer to the question is 34 days in relation to diesel…” and Barnaby rightly interjected: “I respectfully said ‘on Australian soil’…”

The Minister backtracked, “I want to commend the Member on this point. That is a reasonable point of clarification. These figures only include fuel on ships in Australia or in our economic zone.”

Barnaby was I am aware that the Government publications ‘Diesel consumption coverage days’ online (total stocks in Australia at the end of the month average daily consumption of each fuel type over the previous 12 months).

The 34 days cited by Bowen were intended to calm the public; return.

long-standing neglect

In 2000, we had eight refineries. In 2003 the refinery at Port Stanvac in SA was closed. In 2012 the refinery at Clyde in NSW closed. In 2014 the refinery at Kurnell in NSW closed. In 2015, the refinery on Bulwer Island in Queensland closed. In 2021, the Kwinana refinery in Western Australia and the Altona refinery in Victoria closed.

Regardless of which Uniparty was in office, little was done to address the deficiency.

From September 2014 to June 2015 the Senate conducted an inquiry into ‘Australia’s transport energy resilience and sustainability’, focusing predominantly on fuel security. Following the committee’s report, the Turnbull Government launched its own fuel safety review, which was kept secret until it was released following a protracted FOI Challenge in the Administrative Appeals Tribunal.

Fuel safety. What happens if the bowsers start to dry out?

Drawing on the liquid fuel safety review, the Morrison Government introduced the 2021 Fuel Safety Bill to Parliament.

The bill envisaged making a ‘Fuel Security Service Payment’ to the remaining two refineries in order to eliminate the ‘negative financial risk’ and ensure the continuation of capacity in difficult times.

The bill also introduced a ‘minimum stock holding obligation’ on the sector to ensure that essential transport stocks are always at a basic level. The mandate is designed to ensure that diesel stocks are maintained at 2018-19 average levels (about 22 days for diesel) starting in 2022, and then increase by 40% (about 32 days) by 2024.

More storage was needed to increase storage capacity to accommodate growing diesel stocks and so the Government agreed to co-invest in this storage through the Australia’s Diesel Storage Enhancement Program (BADSP).

Increasing Australia’s Diesel Storage Program (Source: Government)

Additionally, in the March 2022 budget the Government committed to maintaining a stockpile of Commonwealth technical grade urea to reduce harmful emissions from diesel trucks to ensure the security of Australia’s supply of diesel exhaust fluid. The current Government expanded this program in its Mid-Year Economic and Fiscal Outlook 2025/26.

We can see politics being played out with the facts behind us. Besides the return.

Politics of the Labor Game

Diesel shortages have been the subject of questions and debate every day in this parliamentary session.

Minister Bowen told parliament that diesel stocks were “the highest they have ever been in the last 15 years”. This was repeated repeatedly by other ministers in response to questioning and by Labor MPs and senators during the debate.

Although it is true that we are talking about several cover days. As it stands now, 25 days is higher than the typical 22 to 24 days, but the Government’s statement deliberately misleads listeners, at least optimistic listeners, into thinking things were much better under Labour.

And if politics were to be eliminated, Bowen would credit the Coalition for that success through the 2021 legislative changes and the BADSP programme.

Bowen also told the House of Representatives when talking about stockpiling: “… that’s why we introduced minimum stockpiling. This was something that was not done by the previous government”.

The last sentence is completely wrong and the first sentence is misleading. The Fuel Security Act 2021 is the legal source of the obligation to hold a minimum shareholding, but the beginning of this was always to be determined by the rules that would be developed after the passage of the Bill and in relation to the transition to the sector. It entered into force on July 1, 2023.

There was even more politics at play in Parliament, with Bowen saying: “The previous government (Abbott and Morrison) saw four of six oil refineries close while they were in office; four of six oil refineries closed. The two we inherited are still in operation. That’s not because of an accident; it’s because of government and industry working together.”

More accurately, Gillard could have mentioned the closure of a refinery under the Labor Government and that ‘no accidents’ is actually the Liberal’s 2021 ‘Fuel Security Service Payment’.

This turnaround (and we are being generous in using that word) serves two purposes: to calm the public and to strengthen Labour’s political standing in an area where, on the facts, it is not performing well.

Iran says get ready for $200 per barrel oil, ships are being fired on

strategic fleet

While the Fuel Security Bill was being debated in Parliament in June 2021, Catherine King, currently Minister for Transport, said:

“When things go wrong and our fuel is a long way off, what matters is a fleet of ships our nation can truly rely on. An Australian-flagged strategic fleet is an important foundation in ensuring Australia’s fuel security and wider supply chain security. But this government is leaving it to languish. In recent years, Australian shipping has almost collapsed. Over the last 30 years, the number of Australian-flagged ships has fallen from 100 to barely 10.”

Anthony Albanese went to the 2022 election with the promise of creating a strategic fleet, and a ‘Strategic Fleet Task Force’ was established when Labor came to Government with a report circulated in June 2023.

However, there was no movement. The strategic fleet is I’m caught in trouble.

The coalition also plays politics

The Labor Party is not alone in its politics.

The fact is that fuel supplies to Australia have not yet been disrupted, but some fuel distributors and gasoline outlets have experienced fuel shortages. This is because people buy fuel in advance to avoid higher prices that may come and/or avoid actual shortages.

This is not a matter of supply, it is a matter of increasing demand.

The coalition is taking advantage of these shortcomings and dealing a blow to Labor in parliament and the media. This is disingenuous.

The reality is that supplies are currently normal. But people hoard because of a lack of trust in the major parties and a lack of trust in our ability to withstand subsequent shocks.

The facts are not in the Parliament

The facts cannot be learned by watching the Parliament. We need to be careful about fuel supply risk; There is a real potential for trouble in the near future, with the Strait of Hormuz remaining closed and fuel infrastructure in the Middle East coming under attack.

The International Energy Agency just announced the release of reserves held around the world. This will help. Australia, which cannot meet its 90-day reserve obligation, will not contribute.

There is no doubt that insufficient fuel reserves have contributed to public distrust and the increase in fuel prices.

Both major parties are responsible for the delicate situation we are in. Both ignored the fact that our country is vulnerable to fuel shortages and instead focused on ‘sexier’ capabilities like fighter jets, tanks and submarines (all of which require fuel). Both failed to meet their national security and national resilience obligations.

We’re investing tens of billions of dollars in submarines we’re unlikely to buy right now, and we’re pouring money into the world’s most expensive frigates. We can hope that the events of the last few weeks will lead to a rethink and spark a security solution.

But maybe we’re the only ones here MWM smelling gasoline fumes.

Fuel crisis – Government playbook revealed

Rex Patrick is a former South Australian Senator and formerly a submariner in the armed forces. Known as an anti-corruption and transparency warrior, Rex is also known as “Transparency Warrior“