Qantas boss John Mullen warns business about | Australian Markets

Australia’s means of life might evaporate within a month within the occasion of a large-scale worldwide disaster, a main company determine has warned, as fuel shares dwindle to zero and petrol stations run dry.

Qantas chairman John Mullen sketched the confronting state of affairs in a speech to the Australian Institute of Firm Administrators this week, stressing the nation’s fuel security and primary means to operate was now at risk in an period of escalating geopolitical uncertainty.

“There have always been local conflicts, but today for the first time, boards need to start to form a view of the risks to production facilities, supply chains and customer markets in the event of a serious escalation of global tensions,” he mentioned.

“As an example, did you know that Australia today only carries around 27 days of petrol reserves and 32 days of diesel

“Even a regional conflict could choke this off overnight and Australia would simply stop.

“Imagine how your business would function if there was a blockade of fuel imports.”

THE THREAT

Although Mr Mullen flags reserves at concerning the 30-day mark, Australian Petroleum Statistics knowledge, printed on the Power Division’s web site, suggests Australia’s vulnerability to an exterior disaster could possibly be even more acute.

For the December quarter, the nation held simply 23 days’ value of diesel protection, 25 days of petrol and 21 days of jet fuel.

Furthermore, the Worldwide Power Company units a benchmark for member nations to carry oil shares equal to not less than 90 days’ value of web oil imports, or whole imports minus exports, however Australia held simply 49 days as of December.

Japan, in contrast, held stock ranges equal to 199 days of web imports for the quarter, whereas Germany held 129.

There are a host of different info that convey into sharp aid the parlous state of Australia’s fuel security.

The nation relies on imports for some 90 per cent of its fuel consumption, in line with a 2022 Australia Institute report.

Australia doesn’t have a US-style strategic petroleum reserve and lacks any worldwide maritime transport energy.

The nation’s capability to refine oil has disintegrated over the previous decade.

In 2012, the nation had 12 refineries. Now it has two: Viva Power’s Geelong refinery and Ampol’s Lytton refinery in Brisbane.

Some 30 per cent of imported refined jet fuel comes from China, a communist state that final month despatched naval boats to circle the Australian shoreline.

DONALD TRUMP AND GEOPOLITICS

This dependency now intersects with an ominous geopolitical environmental typified by aggressive nationalism and growing disdain for rules-based worldwide trade, embodied by US President Donald Trump’s resolution to launch a international trade battle.

Retired air vice-marshal John Blackburn AO advised NewsWire that senior former defence officers he had spoken with up to now week in contrast President Trump’s second administration to a new “Singapore moment” for Australia, referencing the autumn of Singapore in World Struggle Two when policymakers realised the British Empire wouldn’t come to Australia’s rescue.

“When Singapore fell, it was just like an absolute shock to the system,” he mentioned.

“Thankfully, the Americans were in the Pacific and we worked very hard to get the US to sign the ANZUS agreement in 1951.

“Since that date we’ve held up ANZUS as this mateship going together, we’re always with you guys and that’s our security blanket.

“But ANZUS is an 800-word document that only agrees to consult. It’s not NATO. There’s no commitment from the Americans.”

HOW COULD IT HAPPEN?

There are a number of situations that might choke off Australia’s entry to fuel and propel us into the disaster sketched out by Mr Mullen.

Along with a battle that disrupts international transport, a catastrophic pandemic would merely kill off the people who would ordinarily refine and ship fuel to Australia, Mr Blackburn mentioned.

Financial shocks might additionally cripple the transport industry.

“Think about the maritime trade,” Mr Blackburn mentioned.

“The ships are bought on credit, the bunkering fuels are bought on credit and the goods being shipped are bought on credit.

“There was a case a few years ago where one shipping line ran into credit problems and their ships were arrested in port by the creditors.

“If we had a failure of credit on a global scale, the analysis that I’ve read said you would have to have very rapid movement within two weeks probably of all the major economies to stabilise it so we do not have an economic collapse.

“Can you imagine the major economies today getting together within two weeks and taking a whole bunch of steps to stabilise it?”

Within the occasion of an emergency, it’s anticipated the federal government would declare a national liquid fuel emergency, outlined within the 1984 Liquid Gas Emergency Act, and seize control of industry-held crude oil and liquid fuels and manufacturing at Australian refineries.

WHAT HAVE WE DONE ABOUT IT?

Each Labor and Liberal governments have taken restricted steps to handle the issue.

The 2021 Gas Safety Act launched a “minimum stockholding obligation” (MSO), which mandates the ground quantity of reserve fuel Australia should maintain.

The MSO units a baseline stock stage of 27 days for petrol and jet fuel and 32 days for diesel fuel.

In keeping with the Division of Power, whole shares held by industry for the December quarter have been on average 54 per cent above the minimal requirement for petrol, 33 per cent greater for jet fuel and 15 per cent above the baseline for diesel.

For the MSO, the division contains each completed stock on land in Australia and likewise stock held in home and coastal waters in addition to completed product stock close to shore in Australia’s unique financial zone.

When combining onshore and offshore measures, Australia holds enough petrol for 37 days, enough jet fuel for 30 days and enough diesel for 31 days.

In 2020, then vitality minister Angus Taylor allotted some $200m to construct an extra 780ML of onshore diesel storage.

Mr Taylor additionally delivered manufacturing funds to buttress Australia’s struggling refineries.

In March this yr, Power Minister Chris Bowen introduced a $250m investment to speed up the development of low carbon liquid fuels, that are fuels produced from waste, biomass and renewable hydrogen.

A spokeswoman for Mr Bowen advised NewsWire the Coalition “stood by” because the nation’s refineries collapsed.

“While the Coalition stood by and watched refinery after refinery close, we are investing in a future made in Australia, including making liquid fuel here, from Australian renewables and Australian feedstock,” the spokesman mentioned.

Opposition vitality spokesman Ted O’Brien didn’t reply to questions by the time this text was printed.

POLITICAL WILL

Mr Blackburn, who has campaigned to raise awareness round fuel security risk for more than a decade, argued either side of politics had didn’t correctly fortify Australia and the central drawback was one of “political will”.

Mr Blackburn prompt stress from the suitable and left factions of politics had mixed to stop governments from investing in any sovereign refining capability.

“You’ve got the problem of dealing with the far-right that just wants to have coal forever,” he mentioned.

“On the far-left they say ‘no more fuel from tomorrow’ because of climate change.”

Decrease emissions by inexperienced tech, transferring freight from roads to rail and the electrification of transportation have been all long-term proposals to scale back fuel dependency, Mr Blackburn mentioned, however the menace was speedy and growing.

“We need to be able to use our own oil, including light crude, to give us a baseline security of fuel for the next couple of decades at least while we go through a very slow and complicated energy transition,” he mentioned.

“If you get the largest scale refinery then you can do it more economically with the latest technologies.

“You can handle the pollution issues to a degree.”

He additionally prompt politicians may concern the public’s response in the event that they have been too blunt and sincere about Australia’s place.

“Can you imagine if you stood up and said, ‘Right, we’ve done this assessment. We’ve got some serious problems here. Our import dependence has got out of control. We don’t have any ships that can move oil or fuel … so we’re completely dependent on this foreign stuff and we think we need to do something about it’.

“Well, the next thing is that everyone goes, ‘What the heck you’re going to do about it?’

“And the answer is we don’t know. That’s the political problem we’ve got.”