Australia’s dependence on foreign oil will remain a national security threat unless governments step up efforts to support electric vehicles and introduce tougher fuel efficiency standards, a new report has warned.

As it stands, Australia only has enough oil onshore to keep the country running for 31 days if international markets freeze.

Researchers from the progressive think tank The Australia Institute have surveyed Australia’s fuel market, finding that 91% of all oil consumed last year was imported from overseas.

This reliance on overseas suppliers means Australian motorists and industries could run out of fuel in just a month if global markets were disrupted by an international emergency, the researchers concluded.

But if a quarter of all passenger vehicles in Australia were electric, annual oil demand could fall by 8%, reducing this pressure.

Australia Institute climate and energy director Richie Merzian says research shows federal support for electric vehicles and much stricter emissions standards are the best way to solve energy insecurity in Australia.

‘Australia has a national security concern when it comes to transport fuels,’ he said.

“It is worrying that Australia is almost entirely dependent on foreign oil for its fuel consumption, making it ill-prepared to deal with international disruptions.”

Wrong approach to energy insecurity

Australians have already paid record prices for petrol this year amid rising global demand and a supply shock caused by war in Ukraine, with tanker prices hitting more than $2 a liter before the Morrison government stepped in to temporarily lower gasoline taxes.

Price increases have been particularly damaging in Australia, as we are more dependent on imported fuel than other developed economies, with only two local oil refineries still in operation.

Despite this, Australia is required by international treaty to store at least 90 days of oil consumption to alleviate shortages in the event of a crisis.

This is the main reason the federal government has agreed to release some of our limited oil reserves under a recent US-coordinated deal.

But the latest data available shows that Australia has only 68 days of oil in storage.

And the Australian Institute said even that amount is an overrun, with 31 days of oil stored locally and the rest in transit or stored overseas.

In other words, a global crisis that freezes oil markets and shipping will leave Australia with just a month’s worth of fuel before stores run out.

Source: The Australia Institute (click to enlarge)

The federal government has tried to increase storage by spending billions of dollars in subsidies for Australia’s two remaining oil refineries in recent years.

Its aim was to increase fuel supplies so that Australia would meet its 90-day stockpiling obligation by at least 2026.

Local refineries have been supported by taxpayers to build new storage and produce gasoline when market prices make them uncompetitive.

But Mr Merzian accused the government of tackling Australia’s energy insecurity problem from the wrong side, arguing taxpayer funds should instead be invested in efforts that permanently reduce demand for petrol – rather than to increase its supply.

This could include subsidies for electric vehicles, charging infrastructure and creating fuel standards that match other places like the EU.

Mr Merzian said there had been little to no funding for electric vehicles in the last two federal budgets, although Australia lag far behind other countries in adopting newer vehicles.

“The only long-term solution is to get out of oil,” he said.

“Australia is an international laggard when it comes to fuel efficiency. Low fuel standards and the lack of a national electric vehicle policy put Australia among the least fuel efficient fleets in the OECD, and far behind the rest of the world in EV adoption.

The Australia Institute estimates that Australia would need to import 8% less oil every year if 25% of all vehicles were electric.

Oil imports would drop 33% if all cars were electric vehicles, researchers say.

Source: The Australia Institute (click to enlarge).

Quality and quantity

Alexey Muraviev, an associate professor at Curtin University and a national security expert, said government efforts to improve fuel supplies were positive.

But he argued the government should be careful not to go overboard, as petroleum and diesel products spoil over time, rendering them useless to motorists and defense forces if kept in excessive quantities.

“It’s not just a question of quantity; it’s a matter of quality,” he said. DT.

Associate Professor Muraviev said taxpayer subsidies for electric vehicles and charging stations could reduce demand for fuel, forcing Australia to stockpile less to meet its international treaty obligations.

But he warned that accelerating the adoption of electric vehicles could simply shift the fuel load from oil refineries to the electric grid, which is still primarily coal-fired.

“If you increase the share of electric cars on the road, that means you have to increase coal consumption,” he said.

In other words, Australia needs to clean up its power grid as it encourages more people to switch to electric vehicles.

About The Author

Related Posts