Yahoo Finance Australia has less than a month of fuel in reserves: Are we heading to fuel rationing?
Australia could be heading into a period of fuel rationing as reserves drop dangerously low, with less than a month in supplies.
Australia has just 28 days’ worth of fuel in supplies, significantly less than the 90-day minimum required by the International Energy Agency.
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And while the Australian government is considering an agreement with the US which would see Australia gain access to the United States’ huge 700-day strong fuel reserve, associated unions are warning the agreement will not be enough.
“Even in the best case scenario, where the US agrees to provide us access to their Strategic Petroleum Reserve, the fuel needed in a crisis would be sitting halfway around the world,” the national secretary of the Maritime Union of Australia, Paddy Cremlin said.
The Maritime Union of Australia has long called for an increase to Australia’s strategic fuel reserves, claiming the government has failed to build up enough fuel supplies in the case of an emergency.
“There is no longer a single Australian-owned oil tanker, so the Morrison Government would have no way to transport fuel from the US in the event that a global crisis disrupted fuel supplies,” Cremlin added.
“The International Energy Agency imposes a 90-day fuel stockholding obligation because having adequate supplies available within the country’s borders is essential to ensure services can continue to operate through a worst-case scenario,” he said.
“Trying to game the system by negotiating access to another country’s fuel reserves — yet having no strategic fleet of tankers to bring that fuel to Australia — is nothing more than a stop-gap solution that has the illusion of taking action while leaving the country no better off.”
Why are we asking the US for help?
The Minister for Defence, Linda Reynolds has confirmed that the Australian government is in negotiations with the USA, and said the issue with Australia’s fuel supply lies in the Persian Gulf.
“This issue is why Australia remains so concerned about what is happening in the Straits of Hormuz, and this is why we're so engaged with our allies to try and ease tensions in the Gulf. As you know, Australia is reliant on traffic through the Strait of Hormuz for a percentage of our oil supply. So we're doing everything that we can to be a good government and to be prudent, to make sure that we get a continuity of supply,” she told the ABC’s Radio National Breakfast program.
Energy Minister Angus Taylor said the government was asking for help from the US to prevent any changes in the price of fuel should continued disruption to the oil supply chain occur.
“Based on the early findings, we've decided to begin negotiations with the United States to ensure that we have a strategic reserve in place for circumstances that could emerge, for scenarios that are unfavourable to Australia. This is a sensible, low cost way of going about this,” Taylor told reporters.
He said accessing the US’ reserves would be cheaper than building up reserves in Australia.
Taylor also argued this was a better policy than the one Labor took to the federal election, which was to build up Australia’s on-shore reserves. Taylor said this policy would only result in more expensive petrol for Australians.
Where has the crisis come from?
In the last month three oil tankers have been detained in the Straits of Hormuz, the stretch of water between the UAE and Iran.
According to maritime intelligence firm, Dryad Global, the seizures are warning shots to the western world of Iran’s power.
“This is likely to be another relatively low key interception designed to signal to the west that Iran maintains the capability and intent to exercise its influence in the Persian Gulf and to exert continued pressure,” the firm said on Twitter.
The US last year decided to withdraw from an agreement which saw Iran limit its nuclear activity in exchange for relief from heavy economic sanctions imposed by the US, EY and UN. The US’ exit from the agreement from the deal saw it impose the sanctions.
Nearly a year later, tensions in the Gulf have escalated with the US now increasing its military presence in the region amid a number of attacks by Yemen’s Houthi rebels on Saudi Arabia, some of which impacted a major oil pipeline.
Saudi Arabia went on to claim that Iran was behind the attack.
Since May, six oil tankers have been attacked or detained in the region, with the US also blaming Iran.
Here’s what it means for Australia
Now, Australia could be at risk of a period of petrol rationing, the head of the Australian Strategic Policy Institute, Peter Jennings told the ABC.
“If we found a situation where there are disruptions in supplies through the Persian Gulf region or from North Asia, that could very quickly escalate into a situation where we would have to consider rationing.”
The International Energy Agency established its 90-day fuel stocks requirement after the 1973 oil crisis which saw petrol rationing take place in Australia.
Jennings said the only way to protect against fuel rationing is to increase the on-shore supplies of fuel.
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