It’s a rule of thumb of politics in recent years that if you use the word “security” a lot, you’ll be taken seriously and people will switch off their critical faculties. This used to only apply to national security, until other industries adopted it as well. Biosecurity. Information security. Water security. Food security. Energy security. And, of course, fuel security.
That’s why the government this morning announced a $200 million-plus investment to boost Australia’s fuel security. “Prime Minister Scott Morrison said Australia’s fuel security was essential for our national security,” according to the press release. “Fuel security underpins our entire economy.” So it has to be, well, secured.
The word, or variants of it, is used a dozen times. For good measure, “sovereign” is thrown in three times. Everyone likes something “sovereign”.
The main component is a $200 million “competitive grants program to build an additional 780ML of onshore diesel storage”. Given the attractiveness, or lack thereof, of a large flammable fuel storage facility, one wonders whether this particular grants program will suffer from the usual problem of being skewed to Coalition seats. Oil companies will also be required to increase their level of fuel holdings.
That’s to address the perceived problem in Australia’s fuel security that we don’t hold 90 days’ worth of fuel imports, an arbitrary benchmark created by the International Energy Agency (IEA). Earlier this year, we had 58 days’ worth of imports, although as a number of critics have pointed out, that doesn’t count fuel and oil on the way to Australia, which adds another 50% to that figure, lifting it over 80 days.
The IEA has long been accused of relentless optimism about the future of fossil fuels and nuclear energy, while downplaying the rise of renewable energy, and of promoting more optimistic climate change scenarios. So you can’t begin to imagine why it would want governments to buy a lot of fuel they don’t necessarily need.
After a number of reviews — Australia hasn’t “complied” with the IEA requirement since 2012 — in 2016 Australia promised to get to 90 days by 2026. Towards that, in April, Energy Minister Angus “Watergate” Taylor announced that Australia would be expanding its access to the US Strategic Petroleum Reserve, on top of increasing its spending on “ticket” contracts for access to other foreign-held reserves.
The government got no credit for that announcement, only criticism that the fuel reserve wasn’t much good if it was thousands of kilometres away in the US.
The oil isn’t much good without refining, either, which leads to the other aspect of the announcement, carefully veiled in euphemism: “Backing the refining sector by entering into a detailed market design process for a refinery production payment.”
According to the government, it “is committed to a sovereign [!] on-shore refinery capacity despite the threat to the viability of the industry. This is why we will design a market system for a production payment that recognises those fuel security benefits”.
A market system for a subsidy — makes sense. The “threat to the viability of the industry” is that Australia’s refining sector, like that in other developed countries, has been in steady decline as a surge in refinery investment has created much greater global refining capacity. That means a large new Indian refinery can now refine petroleum to a standard required for Australia at a price competitive with our four refineries, built in the 1950s and 1960s, though considerably upgraded in recent years.
How competitive a price? The government’s own media release spells out the sad truth. If all Australian refineries closed, the “hit” to consumers would be… wait for it… “around 1 cent per litre increase”.
This gets us closer to the truth of the announcement. As sceptics have argued, Australia doesn’t really have a fuel security problem and our reliance on maritime supply lines is less problematic than fuel security advocates claim. Who are those advocates? Pressure on the government to “do something” about fuel supply has come not just from the industry itself, which stands to benefit, but from unions as well.
The Maritime Union of Australia (MUA) has used the issue to argue its case for a fleet of tankers owned, managed and crewed by Australians, funded by an Australian Tanker Premium of up to 1.25 cents per litre. “Our coast. Our fuel. Our security” reads the banner held by MUA members in a picture in its report.
Unions and businesses both arguing for government intervention should alert us to what’s really going on here: old-fashioned protectionism dressed up in the new garb of “security”. In the post-COVID world, protectionism is popular again. What hasn’t changed, however, is that we all end up paying for it. Either we pay at the petrol pump, with a scheme like the MUA’s, or we pay with our taxes, as with the government’s plan. Don’t complain, it’s for our sovereign security.
The best security strategy is to remove our dependence on fossil fuels completely, by moving to renewable energy and electric vehicles as fast as possible (with the latter designed and built on-shore if viable). $200 million dollars would go a long way towards building an Australian-wide network of public electric vehicle charging stations, for example, which would help remove one of the bigger impediments to electric vehicle uptake.
But think of the money this government’s fossil fuel donors (and thus themselves) would miss out on if we did move more to renewables.
Will no-one think of the climate criminals and their paid conspirators?
Cuchie you’re on fire today! 🙂 (and being Aussie I will summarily shorten your name in the usual way!)
The government seems determined to turn its back on renewables in favour of subsidising environment destroying fossil fuels. Fair enough to build more storage and fill these with fuel purchased from the huge refineries in Singapore. If we switched to renewables ASAP, 90 days of storage based on current use would more than enough sovereign security‘ for our future needs.
It is undeniable that the coalition can always find excuses to direct taxpayer money to favoured private companies while starving the ABC and Aged Care homes which are undeniably the government’s responsibility.
The test of the world is turning to electric cars in droves. There aren’t so many available to Australians at an affordable price. A government of vision would see that there is a new industry which relies on local production of both vehicles and fuel. What a shame that the LNP sees nothing in the future but what happened in the past. It is amazing that we ever moved away from the horse and cart.
Monday – yet another announcement, with very little by way of detail, particularly about the implementation strategy for the new storage construction. I will watch with interest to see whether this announcement bears more fruit than the many other announcements made by this PM since the 2019-2020 bushfires, which thus far have yielded little if no action.
The mash-up on Insiders yesterday with Scummo announcing the announcement of announcements from the parapet to an extremely underwhelmed audience was quite on the money.
Aside from all the alternatives, didn’t Bill Shorten have an item on his list of promises at the last election that involved improving oil security? No mention from any msm, just repeats of today’s announcement with no critical analysis or history. I wish Crowe and Towell would go back to Rupert.