The Australian Federal Government announced that it will take advantage of the historically low oil prices to bolster the nation’s strategic fuel reserves. Energy Minister Angus Taylor noted that a ‘global disruption’, such as the coronavirus crisis, “slows fuel supplies”. This has forced Australia to draw up a contingency plan.
Under the plan, Australia will spend $59 million to buy oil to store in the US Strategic Petroleum Reserve as Australia doesn’t have the “storage space […] right now”. Taylor explained, “Initially, that reserve will be held in the United States, where there is spare storage. We have full storages here in Australia. But in time, we are exploring opportunities with the industry to establish local storage.”
The speculative move guards against a continued disruption caused by the ongoing COVID-19 outbreak, which could see a second wave of infections that further disrupts the already reeling global economy and supply chain. However, it is also designed to protect against future global disruptions. The Energy Minister said that Australia currently has roughly one month’s worth of fuel on its shores.
In fact, Australia began discussions with the US last year in order to gain access to the US’ emergency fuel supply as it would be cheaper than “establishing a physical reserve at a very high cost in Australia”, Taylor said at the time. Australia’s four oil refineries produce roughly half of the country’s transport needs, with the other half being supplemented by shipments from the Middle East and Asia. At the same time, such a deal would bring Australia closer to meeting international agreements that stipulate that a country must hold a minimum of 90 days of fuel reserves.
Critics of such plans, such as the Maritime Union of Australia (MUA) secretary, Paddy Crumlin, argue that it is a “stop-gap solution” as Australia does not have a “strategic fleet of tankers to bring that fuel to Australia”.
Australia to Stockpile $59 Million of Fuel in US Amid Record-Low Prices
Energy Minister Angus Taylor noted that Australia doesn’t have the storage space.
April 22, 2020
IMAGE SOURCE: AAPAustralian Energy Minister Angus Taylor