The war in Iran and concerns about oil supplied from the Middle East through the strait of Hormuz have put the spotlight on Australia\u2019s reliance on imported petrol and diesel.<\/p>\n
As fuel prices spiked, conservatives \u2013 particularly in Queensland<\/a> \u2013 have argued the solution to a crisis tied to fossil fuels is to build more oil infrastructure such as refineries and storage.<\/p>\n What are conservatives asking for?<\/p>\n To guard against future fuel shocks, the Queensland premier, David Crisafulli, has been touting the notion that Australia needs to \u201cdrill, refine and store\u201d more of its own fuel and has flagged two ideas for the state.<\/p>\n Crisafulli has claimed there is a \u201csea of oil\u201d in the Taroom Trough, west of Brisbane, that could enhance sovereign capability.<\/p>\n But his resources department has said the actual \u201cvolume and extent\u201d of any liquid hydrocarbons in the trough \u201care not yet fully understood\u201d. Other experts have also urged caution<\/a>.<\/p>\n The federal Coalition has also suggested the country should make $800m available in government-backed loans to increase the amount of fuel stored in the country to 60 days.<\/p>\n This week Crisafulli said his government was inviting companies to submit proposals for either fuel storage or refining projects at government-owned sites at ports in Brisbane, Townsville, Mackay, Gladstone, Abbot Point and Bundaberg.<\/p>\n Where does Australia\u2019s fuel come from and how much do we use?<\/p>\n The federal government\u2019s current rules for holding fuel reserves \u2013 known as the minimum stockholding obligation \u2013 puts the onus on importers and refiners to keep stocks.<\/p>\n Refiners of petrol and jet fuel have to hold 24 days of usual demand in reserve. Importers have to hold 27 days. For diesel, refiners hold 20 days and importers have to hold 32 days.<\/p>\n The latest figures from 28 April showed Australia had 43 days of petrol, 28 days of jet fuel and 33 days of diesel in reserve.<\/p>\n Sign up for the Breaking News Australia email<\/a><\/p>\n Australia consumed the equivalent of just over 1m barrels of oil every day last year, according to government data reviewed by Kevin Morrison, an analyst at the Institute for Energy Economics and Financial Analysis.<\/p>\n Australia\u2019s production of oil though was at just 61,000 barrels a day, the lowest levels for more than half a century, Morrison says.<\/p>\n \u201cAbout 80% of the crude oil we use is imported,\u201d Morrison says.<\/p>\n \u201cWe produce only about 5% of what we consume and our two refineries are capable of making about 22%. Their combined capacity is about 230,000 barrels per day.\u201d<\/p>\n Most of the petrol and diesel used in Australia \u2013 about 90% \u2013 comes to the country already refined. Major suppliers are Singapore, Malaysia and South Korea.<\/p>\n Would building more refineries help?<\/p>\n Since 2010, five Australian refineries have closed. A reduction in the amount of oil being drilled locally and competition from mega-refineries in the Asia region were behind the closures. Only two refineries \u2013 Brisbane and Geelong \u2013 remain.<\/p>\n \u201cThere is no point in building new refineries without the crude oil to put into them. And we don\u2019t really have any,\u201d says Tony Wood, a senior fellow in climate and energy at the Grattan Institute.<\/p>\n \u201cWe know that previously having our own refineries was uneconomic. They were killed by the economies of scale of the big refineries in south-east Asia.\u201d<\/p>\n Queensland, with its long freight routes and mining, uses about a quarter of all the diesel sold in Australia, Wood says.<\/p>\n The Queensland government has been hard-selling the prospects for a \u201csea of oil\u201d<\/a> in the Taroom Trough which, despite the enthusiasm from senior ministers, remains \u201chighly speculative\u201d, Morrison says.<\/p>\n He says new refineries could take a decade to build and would not enhance Australia\u2019s fuel security \u201cbecause we would still rely on oil coming in to process\u201d.<\/p>\n Wood says: \u201cWhat Queensland has learned is that we\u2019re at the end of very long supply chains [for fuel]. Their best strategy is to break those links. Electrification [of transport] is well under way.\u201d<\/p>\n If Australia could reduce its demand for oil by using more electric cars and trucks, then \u201cthe amount of storage we need goes down as we electrify\u201d, Wood says.<\/p>\n What are the alternatives to building more oil infrastructure?<\/p>\n While Australia is behind other developed countries in terms of rolling out electric vehicles, rising fuel prices have accelerated sales in recent months. EVs accounted for about 15% of new vehicle sales in March<\/a> \u2013 about double the levels 12 months ago.<\/p>\n Much of the response from Australian conservatives to the pressure on fuel supplies from Donald Trump\u2019s war in Iran has remained focused on oil.<\/p>\n \u201cIt is jaw-dropping for that to be the long-term response to this crisis,\u201d says Francis Vierboom, the chief executive at Rewiring Australia.<\/p>\n \u201cIf you are making a plan for 10 years out and that plan is to expand oil infrastructure, then you\u2019re ignoring some pretty basic economics. It would be crazy for Australia to stand back and go \u2018the answer is oil\u2019. The answer is to electrify as fast as we can.\u201d<\/p>\n