The tyranny of distance and the Australian oil crisis

Distance is the key factor affecting Australia in the current oil crisis, he writes Doctor Norm Sanders.

The Tyranny of Distance: How Distance Shaped Australian Historyis the title of the historian Geoffrey BlaineyHis groundbreaking book in 1966. He argued that distance was the primary factor in Australia’s development.

Today, distance is the primary factor in Australia’s looming oil crisis. With the closure of the Strait of Hormuz due to Donald Trump’s war, the Middle East oil that Australia once had after being refined in Asia is no longer available. All other sources are too far away.

The best possibilities are the USA and, surprisingly, Africa. Australia has historically sourced approximately 18% to 21% of its crude oil and refinery feedstock from Africa. Major African suppliers who can provide immediate, established supply links include Nigeria, Algeria, Angola and Gabon, which are major exporters with existing trade relationships in the Asia-Pacific region. Sourcing crude oil directly from African suppliers offers a way to bypass disruptions in the Strait of Hormuz. Australia has allowed its refinery capacity to drop to just two plants, so crude oil must be refined in Asia.

The United States is a potential immediate source. Australia has a strategic fuel reserve in the US Strategic Petroleum Reserve (SPR). 2020 bilateral agreementThis allows Australia to store 1.7 billion barrels of oil owned by the Australian Government in US underground caverns. This regulation covers Australia’s International Energy Agency (IEA) 90-day compliance obligations and focuses directly on domestic transport storage.

Unfortunately there is a problem and it is a big one. Australia does not have direct access to this oil. Instead, in emergencies, Australia could collaborate with the International Energy Agency to bring these stocks to the global market. The arrangement was seen as an alternative to emergency domestic capacity building. In reality, this is a classic smoke and mirrors exercise in juggling numbers on paper.

This leaves the direct purchase of oil from the US.

Australian importers and the Government are already actively sourcing oil and fuel from America. These efforts paid off. Latest data shows the highest volume of fuel shipped from the US to Australia in a single month in more than three decades. Impressive, but not enough to make up for Trump’s pre-war shipments of oil from Asian refineries.

Supplying fuel is the first and big step, but there is another obstacle: supplying tankers. There are currently approximately 3,500 large oil tankers operating worldwide. Of these, 480 were stranded in the Persian Gulf, on the wrong side of the Strait of Hormuz. Another 300 tankers are waiting idle in the Gulf of Oman to avoid damage. This currently leaves an 800 tanker gap in world fleet numbers. Planning tankers is a complex task at the best of times. It’s much harder now.

Once a tanker is picked up, it needs to go to a port for loading; This can take weeks depending on location. It can then remain in port for an average of five to seven days. Actual pumping only takes 24 to 48 hours, but factors such as terminal capacity, pumping speeds, number of hoses and cargo type determine the exact duration. The total time between placing an order for a cargo of oil and the departure of the loaded tanker can be a month or more.

Finally the tanker can begin its journey towards Australia. Oceans are BIG. Before jet travel, emigrants to Australia took approximately 60 days to travel from England (“Ten Pound Poms”). They knew how far away Australia was. Direct flights from Perth to London now take 17 hours. Flights from Sydney to Los Angeles typically take 14 or 15 hours. It’s not important. Movies and booze.

I know how big the oceans are. In 1974, my wife and daughter and I immigrated to Australia on a nine-meter buoy. I had been fired from my position as an Assistant Professor at the University of California, Santa Barbara. Not only was I an anti-Vietnam war protester, but my class and I stopped the Chancellor’s pet highway project on a local wildlife refuge. The journey took months as we covered an average of 160 km a day. Tankers are much faster, but the journey still takes 28 to 36 days.

Until the Trump War, about 50 tankers a month were reaching Australia. Some are still coming, but they will be evacuated soon. Then who knows?

The only thing that is certain is that our lives are in radical change. All of this is easy to imagine, but difficult to live with. Panic buying is already happening and major chains are trying to do it. calm things down. CEO of Woolworths Amanda Bardwell in question, “There are no immediate fuel shortages or issues at Woolworths.”

Unfortunately, things are not that rosy. Because modern supply chains rely on diesel for shipping, shipping and agriculture, a shortage would likely lead to supermarket shelves remaining empty and the movement of goods restricted. All this will result in mass layoffs. The reduction in economic activity will lead to significant job losses, especially in the transportation, manufacturing (including deliveries) and tourism sectors. Modern agriculture is heavily dependent on oil for the production of machinery, irrigation, fertilizers and pesticides. Beyond fuel, oil is also the raw material for plastic, medicine, rubber and synthetic fabrics. Medical supplies, from syringes to essential medications, can become scarce and prohibitively expensive, reducing the quality of healthcare.

Australia and much of the world are going through difficult times. The only consolation is that the high cost of oil will make renewable energy sources more attractive. Long supply chains will likely be replaced by local production to reduce high transportation costs. But first we have to get through the next months.

The vast distances that make Australia a safe haven in a war-torn world are about to cause unimaginable hardship because of Donald Trump.

Support independent journalism Subscribe to IA.