October 5th 2019


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Articles from this issue:

COVER STORY Oil disruption could mean a sticky patch for Australia

EDITORIAL Gladys Liu controversy ignores reality of China's interference

CANBERRA OBSERVED Water emergency intensifies in Murray-Darling Basin

VICTORIAN AFFAIRS Tolerance Bill aims to 'eliminate' vilification

FUEL SECURITY As Canberra sleeps, all is well ... well ... well

EUTHANASIA An open letter from WA Faith Community Leaders to the Premier and Members of the West Australian Parliament

EUTHANASIA Unsung heroes of the last moments

YOUTH AFFAIRS Tumbler: Where vulnerable youth self-diagnose as autistic and transgender

NATIONAL AFFAIRS Inquiry into the Family Law Act: that misnamed source of misery

PHILOSOPHY The element of justice in economic practice, Part 1 of two parts

CINEMA EXTRA Unplanned: The movie they don't want you to see

OBITUARY A giant of a man has fallen: Hal G.P. Colebatch, 1945-2019

MUSIC Words as music: Bypassing the intellect, straight to the emotions

CLASSIC CINEMA The Wicker Man: Horror by reversal of expectations

BOOK REVIEW David Brooks' search for meaning

BOOK REVIEW Stabbing us in the back

BOOK REVIEW Admired historian dares his memory

LETTERS

POETRY

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COVER STORY
Oil disruption could mean a sticky patch for Australia


by Chris McCormack

News Weekly, October 5, 2019

 

  • Saudi oil facility attacks expose Australia’s reliance on imported oil
  • Australia still does not have 90 days of fuel stocks in reserve
  • Experts agree that Australia would be crippled if a serious disruption to oil imports occurred

Despite asinine assurances from Federal Energy Minister Angus Taylor that our fuel security is sound, the drone attacks which disabled half of Saudi Arabia’s crude oil output should be a wake-up call to the Federal Government to remedy its indifferent approach to Australia’s vulnerability in relying on imported fuel stockpiles.

Australia’s “IEA (International Energy Agency) days of net import coverage” or “End of month stocks of petroleum” measured 58 days as of the latest figures available in July 2019, an increase of four days coverage since July 2018 but still well below the IEA requirement of 90 days coverage.

When stocks onboard vessels at sea destined for Australia and stocks overseas and waiting delivery to Australia are added, our coverage increases to 82 days. But if the fraught geopolitical climate of the Persian Gulf, the South China Sea and elsewhere deteriorates, there is no guarantee that these stocks will ever make it to our shores.

The September 14 drone attacks upon the Abqaiq and Khurais oil facilities in Saudi Arabia rendered 5 per cent of global oil output incapacitated. Saudi Aramco describes its Abqaiq facility as “the largest crude oil stabilisation plant in the world”. Houthi rebels claimed responsibility for the attacks and threatened further attacks. But U.S. Secretary of State Mike Pompeo tweeted on September 15: “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen.”

Other U.S. Administration members, including Energy Secretary Rick Perry, have also blamed Iran.

Taking a more cautious approach to attributing blame, President Donald Trump told media: “As soon as we find out definitively, we’ll let you know.”

Britain has so far held fire over who to blame for the attacks, while France and the United Nations are sending investigators to the Saudi Kingdom and Japan has said there is “a high possibility” the Houthis are indeed responsible.

Saudi officials have claimed that Iranian weapons were used but have stopped short of blaming Iran directly for the attacks. A Saudi Defence Ministry spokesman said: “The attack … was unquestionably sponsored by Iran.” The Saudi Foreign Ministry has called for an international response to the threat to “global energy supplies”.

The September 15 drone strikes were the latest in a line of attacks by Houthis retaliating against the Saudi-backed coal­ition fighting the Houthis in the Yemeni civil war since 2015. In May, an armed drone attacked oil pumping stations west of Riyadh and, in June, another attacked Abha airport, leaving 26 people wounded. Saudi officials claim to have intercepted more than 100 ballistic missiles fired from Houthi territory.

In the five days since the attacks, crude oil prices rose sharply. Brent crude rose 15.3 per cent to $US69.44 a barrel, WTI crude jumped 15.1 per cent to $US63.14 and Tapis crude rose 7.33 per cent to $US67.93.

Without massive petroleum production from vast U.S. shale reserves (the United States is now the largest petroleum producer in the world) the price rises conceivably would have been much worse as petroleum demand quickly outstripped supply. The U.S. is now sheltered from international oil shortages as it is self-sufficient and became a net oil exporter for the first time in 75 years last December.

Saudi Arabia has indicated the oil facilities will be back online within a month, but reporters have claimed that it will be the end of the year before the facilities return to full operation.

Some U.S. Republicans are calling for a military strike against Iran, which could plunge the Middle East into war and majorly disrupt global oil supplies.

Retired RAAF Air Vice Marshal John Blackburn told the ABC that Australia could be brought to its knees in a week if a major interruption to fuel supplies occurred. Two-thirds of the oil used in the five countries’ refineries from which we import 90 per cent of our fuel is derived from the Middle East. Blackburn said meeting the IEA regulation of 90 days fuel stockpiles by purchasing holdings in the U.S. would not help our domestic security. The U.S. estimates its fuel reserves would last six months with rationing.

Geoff Crouch, chairman of the Australian Trucking Association, told the ABC: “If we are going to have sufficient to meet the Australian demands at a local level at a time of crisis, we need those reserves on Australian soil, not U.S. soil.”

Grattan Institute energy program director Tony Wood told ABC Radio that Australia is “more dependent on long-distance road freight than just about any other country” and that we would run out of food very quickly if our fuel supplies were interrupted and that there is no contingency plan in place.

Wood maintains that successive governments have believed that the risks are acceptable and the costs to secure our fuel security comprehensively are prohibitive and so nothing should be done.

Blackburn warned: “We have very low resilience in this country to a supply chain interruption. … Think of everything that relies on diesel: food production, food distribution, warehousing. You’re going to see basically our whole infrastructure start to get under a lot of stress … They’d probably have six or seven days of supply [of medicines], something similar to supermarkets [if nobody panics].”

Blackburn said that the Government was “not taking this seriously” and under current provisions, if there was a large-scale fuel supply disruption, “there’s effectively nothing the Government could do”.

He summed it up best: “We’ve been asleep at the wheel. I don’t know how many wake-up calls we need?”




























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