tag:theconversation.com,2011:/id/topics/fuel-security-54087/articlesFuel security – The Conversation2020-02-12T03:34:35Ztag:theconversation.com,2011:article/1316582020-02-12T03:34:35Z2020-02-12T03:34:35ZChief Scientist: we need to transform our world into a sustainable ‘electric planet’<p>I want you to imagine a highway exclusively devoted to delivering the world’s energy.</p>
<p>Each lane is restricted to trucks that carry one of the world’s seven large-scale sources of primary energy: coal, oil, natural gas, nuclear, hydro, solar and wind.</p>
<p>Our current energy security comes at a price, the carbon dioxide emissions from the trucks in the three busiest lanes: the ones for coal, oil and natural gas.</p>
<p>We can’t just put up roadblocks overnight to stop these trucks; they are carrying the overwhelming majority of the world’s energy supply.</p>
<p>But what if we expand clean electricity production carried by the trucks in the solar and wind lanes — three or four times over — into an economically efficient clean energy future?</p>
<p>Think electric cars instead of petrol cars. Think electric factories instead of oil-burning factories. Cleaner and cheaper to run. A technology-driven orderly transition. Problems wrought by technology, solved by technology.</p>
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Read more:
<a href="https://theconversation.com/how-to-transition-from-coal-4-lessons-for-australia-from-around-the-world-115558">How to transition from coal: 4 lessons for Australia from around the world</a>
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<p>Make no mistake, this will be the biggest engineering challenge ever undertaken. The energy system is huge, and even with an internationally committed and focused effort the transition will take many decades.</p>
<p>It will also require respectful planning and retraining to ensure affected individuals and communities, who have fuelled our energy progress for generations, are supported throughout the transition.</p>
<p>As Tony, a worker from a Gippsland coal-fired power station, noted from the audience on <a href="https://www.abc.net.au/qanda/2020-10-02/11933296">this week’s Q+A program</a>: </p>
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<p>The workforce is highly innovative, we are up for the challenge, we will adapt to whatever is put in front of us and we have proven that in the past.</p>
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<p>This is a reminder that if governments, industry, communities and individuals share a vision, a positive transition can be achieved.</p>
<p>The stunning technology advances I have witnessed in the past ten years make me optimistic.</p>
<p>Renewable energy is booming worldwide, and is now being delivered at a markedly lower cost than ever before.</p>
<p>In Australia, the cost of producing electricity from wind and solar is now around <a href="https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/Inputs-Assumptions-Methodologies/2019/CSIRO-GenCost2019-20_DraftforReview.pdf">A$50 per megawatt-hour</a>.</p>
<p>Even when the variability is firmed with storage, the <a href="http://re100.eng.anu.edu.au/publications/assets/100renewables.pdf">price of solar and wind electricity</a> is lower than existing gas-fired electricity generation and similar to new-build coal-fired electricity generation.</p>
<p>This has resulted in substantial solar and wind electricity uptake in Australia and, most importantly, projections of a <a href="https://www.environment.gov.au/system/files/resources/4aa038fc-b9ee-4694-99d0-c5346afb5bfb/files/australias-emissions-projections-2019-report.pdf">33% cut in emissions in the electricity sector by 2030</a>, when compared to 2005 levels.</p>
<p>And this pricing trend will only continue, with a recent United Nations report noting that, in the last decade alone, the cost of solar electricity <a href="https://www.unenvironment.org/news-and-stories/press-release/decade-renewable-energy-investment-%20led-solar-tops-usd-25-trillion">fell by 80%</a>, and is set to drop even further.</p>
<p>So we’re on our way. We can do this. Time and again we have demonstrated that no challenge to humanity is beyond humanity.</p>
<p>Ultimately, we will need to complement solar and wind with a range of technologies such as high levels of storage, long-distance transmission, and much better efficiency in the way we use energy.</p>
<p>But while these technologies are being scaled up, we need an energy companion today that can react rapidly to changes in solar and wind output. An energy companion that is itself relatively low in emissions, and that only operates when needed.</p>
<p>In the short term, as Prime Minister Scott Morrison and energy minister Angus Taylor have <a href="https://www.abc.net.au/news/2020-01-31/nsw-strikes-landmark-energy-deal-with-federal-government/11916314">previously stated</a>, natural gas will play that critical role.</p>
<p>In fact, natural gas is already making it possible for nations to transition to a reliable, and relatively low-emissions, electricity supply.</p>
<p>Look at Britain, where coal-fired electricity generation has <a href="https://www.nationalgrid.com/britain-hits-historic-clean-energy-milestone-zero-carbon-electricity-outstrips-fossil-fuels-2019">plummeted</a> from 75% in 1990 to just 2% in 2019.</p>
<p>Driving this has been an increase in solar, wind, and hydro electricity, up from 2% to 27%. At the same time, and this is key to the delivery of a reliable electricity supply, electricity from natural gas increased from virtually zero in 1990 to more than 38% in 2019.</p>
<p>I am aware that building new natural gas generators may be <a href="https://theconversation.com/scott-morrisons-gas-transition-plan-is-a-dangerous-road-to-nowhere-130951">seen as problematic</a>, but for now let’s assume that with solar, wind and natural gas, we will achieve a reliable, low-emissions electricity supply.</p>
<p>Is this enough? Not really.</p>
<p>We still need a high-density source of transportable fuel for long-distance, heavy-duty trucks.</p>
<p>We still need an alternative chemical feedstock to make the ammonia used to produce fertilisers.</p>
<p>We still need a means to carry clean energy from one continent to another.</p>
<p>Enter the hero: hydrogen.</p>
<p>Hydrogen is abundant. In fact, it’s the most abundant element in the Universe. The only problem is that there is nowhere on Earth that you can drill a well and find hydrogen gas.</p>
<p>Don’t panic. Fortunately, hydrogen is bound up in other substances. One we all know: water, the H in H₂O.</p>
<p>We have two viable ways to extract hydrogen, with near-zero emissions.</p>
<p>First, we can split water in a process called electrolysis, using renewable electricity.</p>
<p>Second, we can use coal and natural gas to split the water, and capture and permanently bury the carbon dioxide emitted along the way.</p>
<p>I know some may be sceptical, because carbon capture and permanent storage has not been commercially viable in the electricity generation industry.</p>
<p>But the process for hydrogen production is significantly more cost-effective, for two crucial reasons.</p>
<p>First, since carbon dioxide is left behind as a residual part of the hydrogen production process, there is no additional step, and little added cost, for its extraction.</p>
<p>And second, because the process operates at much higher pressure, the extraction of the carbon dioxide is more energy-efficient and it is easier to store.</p>
<p>Returning to the electrolysis production route, we must also recognise that if hydrogen is produced exclusively from solar and wind electricity, we will exacerbate the load on the renewable lanes of our energy highway.</p>
<p>Think for a moment of the vast amounts of steel, aluminium and concrete needed to support, build and service solar and wind structures. And the copper and rare earth metals needed for the wires and motors. And the lithium, nickel, cobalt, manganese and other battery materials needed to stabilise the system.</p>
<p>It would be prudent, therefore, to safeguard against any potential resource limitations with another energy source.</p>
<p>Well, by producing hydrogen from natural gas or coal, using carbon capture and permanent storage, we can add back two more lanes to our energy highway, ensuring we have four primary energy sources to meet the needs of the future: solar, wind, hydrogen from natural gas, and hydrogen from coal.</p>
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Read more:
<a href="https://theconversation.com/145-years-after-jules-verne-dreamed-up-a-hydrogen-future-it-has-arrived-127701">145 years after Jules Verne dreamed up a hydrogen future, it has arrived</a>
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<p>Furthermore, once extracted, hydrogen provides unique solutions to the remaining challenges we face in our future electric planet.</p>
<p>First, in the transport sector, Australia’s largest end-user of energy.</p>
<p>Because <a href="https://www.industry.gov.au/data-and-publications/australias-national-hydrogen-strategy">hydrogen fuel</a> carries much more energy than the equivalent weight of batteries, it provides a viable, longer-range alternative for powering long-haul buses, B-double trucks, trains that travel from mines in central Australia to coastal ports, and ships that carry passengers and goods around the world.</p>
<p>Second, in industry, where hydrogen can help solve some of the largest emissions challenges. </p>
<p>Take steel manufacturing. In today’s world, the use of coal in steel manufacturing is responsible for a staggering <a href="https://www.worldsteel.org/publications/position-papers/steel-s-contribution-to-a-low-carbon-%20future.html">7% of carbon dioxide emissions</a>.</p>
<p>Persisting with this form of steel production will result in this percentage growing frustratingly higher as we make progress decarbonising other sectors of the economy.</p>
<p>Fortunately, clean hydrogen can not only provide the energy that is needed to heat the blast furnaces, it can also replace the carbon in coal used to reduce iron oxide to the pure iron from which steel is made. And with hydrogen as the reducing agent the only byproduct is water vapour.</p>
<p>This would have a revolutionary impact on cutting global emissions.</p>
<p>Third, hydrogen can store energy, not only for a rainy day, but also to ship sunshine from our shores, where it is abundant, to countries where it is needed.</p>
<p>Let me illustrate this point. In December last year, I was privileged to witness the launch of the world’s first liquefied hydrogen carrier ship in Japan.</p>
<p>As the vessel slipped into the water I saw it not only as the launch of the first ship of its type to ever be built, but as the launch of a new era in which clean energy will be routinely transported between the continents. Shipping sunshine.</p>
<p>And, finally, because hydrogen operates in a similar way to natural gas, our natural gas generators can be reconfigured in the future to run on hydrogen — neatly turning a potential legacy into an added bonus.</p>
<h2>Hydrogen-powered economy</h2>
<p>We truly are at the dawn of a new, thriving industry.</p>
<p>There’s a nearly <a href="https://hydrogencouncil.com/wp-content/uploads/2017/11/Hydrogen-scaling-up-Hydrogen-Council.pdf">A$2 trillion global market</a> for hydrogen come 2050, assuming that we can drive the price of producing hydrogen to substantially lower than A$2 per kilogram.</p>
<p>In Australia, we’ve got the available land, the natural resources, the technology smarts, the global networks, and the industry expertise.</p>
<p>And we now have the commitment, with the <a href="https://www.industry.gov.au/data-and-publications/australias-national-hydrogen-strategy">National Hydrogen Strategy</a> unanimously adopted at a meeting by the Commonwealth, state and territory governments late last year.</p>
<p>Indeed, as I reflect upon my term as Chief Scientist, in this my last year, chairing the development of this strategy has been one of my proudest achievements.</p>
<p>The full results will not be seen overnight, but it has sown the seeds, and if we continue to tend to them, they will grow into a whole new realm of practical applications and unimagined possibilities.</p>
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<p><em>This is an edited extract of a <a href="https://www.npc.org.au/speaker/2020/597-dr-alan-finkel">speech</a> to the National Press Club of Australia on February 12, 2020. The full speech is available <a href="https://www.chiefscientist.gov.au/news-and-media/national-press-club-address-orderly-transition-electric-planet">here</a>.</em></p><img src="https://counter.theconversation.com/content/131658/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Finkel is the Chair of the COAG Hydrogen Strategy Working Group that developed the national hydrogen strategy.</span></em></p>The world runs on energy, so finding low-emission alternatives to fossil fuels is crucial. Wind and solar are cheap and abundant but can’t do everything. But hydrogen fuel could complete the picture.Alan Finkel, Australia’s Chief Scientist, Office of the Chief ScientistLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1111182019-02-26T14:09:46Z2019-02-26T14:09:46ZMexico is being held to ransom by oil thieves and systemic corruption<p>The equivalent of 1,145 truckloads of <a href="https://www.gob.mx/presidencia/prensa/presidente-lopez-obrador-presenta-plan-conjunto-de-atencion-a-instalaciones-estrategicas-de-pemex-no-habra-tolerancia-para-nadie?idiom=es">oil is stolen in Mexico</a> per day from PEMEX – the state-owned petroleum company. That’s <a href="https://www.cbc.ca/news/world/mexico-oil-theft-shortages-motorists-1.4967883">146 billion Mexican Pesos</a> (USD$7.4 billion) in lost revenue since 2016 – a significant hit for a country where <a href="https://www.theglobaleconomy.com/Mexico/Oil_revenue/">3.8% of GDP comes from oil exports</a>.</p>
<p>President Andrés Manuel López Obrador has introduced reforms to tackle the problem, including <a href="https://www.gob.mx/presidencia/prensa/robo-de-combustible-sera-delito-grave-presidente-lopez-obrador-exhorta-a-familias-mexicanas-a-orientar-a-jovenes?idiom=es">defining oil theft as a serious felony</a> and releasing a new national strategy for oil production.</p>
<p>The new strategy includes <a href="https://www.gob.mx/presidencia/prensa/en-ciudad-del-carmen-presidente-lopez-obrador-presenta-plan-nacional-para-la-produccion-de-hidrocarburos?idiom=es">shutting off several major pipelines</a> and working at reduced capacity until appropriate measures can be taken to protect them. While flow through the pipelines is halted, oil remains inside at a constant pressure. Theft causes pressure differences that actually help pipeline operators to detect where thieves are taking oil, but the stationary fuel has tempted more and more people to take risks. </p>
<p>A <a href="https://www.reuters.com/article/us-mexico-fuel-theft-blast/at-least-20-killed-in-pipeline-explosion-in-central-mexico-idUSKCN1PD033">pipeline exploded recently</a> after it was tapped by people trying to fill containers with oil. A spark ignited the fuel and killed more than 70 people. A few days later, on January 28, <a href="https://cnnespanol.cnn.com/video/huachicoleo-robo-combustible-amlo-pemex-toma-clandestina-hidalgo-vo-sot-grafico-perspectivas-mexico/">another pipeline exploded</a> although, thankfully, without casualties. The government has since enlisted the military to patrol pipelines.</p>
<p><a href="https://www.bbc.co.uk/news/world-latin-america-46939165">Fuel shortages have gripped several areas of the country</a>, but illegal tapping by ordinary people can only be blamed for about <a href="https://www.gob.mx/presidencia/prensa/presidente-lopez-obrador-presenta-plan-conjunto-de-atencion-a-instalaciones-estrategicas-de-pemex-no-habra-tolerancia-para-nadie?idiom=es">20% of total theft</a>. Corruption within the oil industry and organised crime make up the majority of the problem.</p>
<p>PEMEX has already fired 100 workers for <a href="https://www.businessinsider.com/cartels-mexico-oil-theft-pemex-2018-4?r=US&IR=T">complicity in fuel theft schemes</a> and many more are under investigation for their ties to organised crime and for sharing information about the location of pipelines. </p>
<p><a href="http://structura.com.mx/energea/">A study from EnergeA</a>, a consultancy hired by the Mexican Energy Regulation Commission, looked at the hydrocarbon sector’s security and found that drug cartels, militias, petrol stations, PEMEX staff and police have all been implicated as profiteers from bribes or the direct illegal sale of oil. </p>
<p>Many sell the oil to petrol stations at lower prices than official distributors. Their activities go beyond tapping and include the theft of barrels at PEMEX facilities, before distributing it for sale to the black market.</p>
<h2>War on the black market</h2>
<p>People in Mexico have been <a href="https://www.forbes.com.mx/mexicanos-apoyan-amlo-contra-huachicol/">generally supportive</a> of the president’s measures to prevent theft, despite widespread shortages and explosions at pipelines where oil has stopped and tapping has occurred. However, political adversaries have tried to take advantage of the situation, such as former presidents <a href="https://www.proceso.com.mx/566798/calderon-sale-al-paso-ante-criticas-y-asegura-que-combatio-con-firmeza-el-huachicoleo">Felipe Calderon</a> and <a href="https://www.elsoldemexico.com.mx/mexico/politica/callate-chachalaca-vicente-fox-responde-a-amlo-presidente-ante-acusaciones-de-huachicoleo-twitter-2930324.html">Vicente Fox</a>, by demanding López Obrador change course.</p>
<p>The president’s enduring <a href="https://www.forbes.com.mx/mexicanos-apoyan-amlo-contra-huachicol/">public approval ratings of 57%</a> suggest many citizens support a hard line on halting the supply of oil and making oil theft a felony. But to tackle thieves throughout the oil supply chain, Mexican authorities can learn from India, where <a href="https://www.researchgate.net/profile/Prasanta_Dey3/publication/3076803_Decision_Support_System_for_Inspection_and_Maintenance_A_Case_Study_of_Oil_Pipelines/links/559d781f08ae76bed0bb3bae/Decision-Support-System-for-Inspection-and-Maintenance-A-Case-Study-of-Oil-Pipelines.pdf">theft has been substantially reduced</a>. </p>
<p>Pipelines in India are routinely patrolled to monitor unusual activities and new technologies have been developed which allow engineers to detect even small signs of theft. New pipelines are also routed near highways or railway tracks to keep pipelines under close vigilance and ensure emergencies can be quickly addressed. </p>
<p>One gadget used in India is a handheld system which identifies leaks and illicit tapping to pinpoint the location of a theft, allowing pipeline operators to coordinate with local police to catch thieves in the act. Portable data loggers can be deployed and installed on pipelines where leaks or thefts are suspected. </p>
<p>Thieves learn to counter traps quickly, so innovative approaches which combine technology and an understanding of why and how people are stealing oil could bring permanent solutions in Mexico.</p>
<p>Given the scale of the problem and how ingrained the “shadow supply” of oil is within Mexican society, focusing on social change is necessary too. The president has appealed to businesses, oil distributors and citizens to <a href="https://www.gob.mx/presidencia/prensa/presidente-lopez-obrador-presenta-plan-conjunto-de-atencion-a-instalaciones-estrategicas-de-pemex-no-habra-tolerancia-para-nadie?idiom=es">boycott the black market in stolen fuel</a>, but transforming social practices will be challenging. </p>
<p><a href="https://www.gob.mx/presidencia/prensa/robo-de-combustible-sera-delito-grave-presidente-lopez-obrador-exhorta-a-familias-mexicanas-a-orientar-a-jovenes?idiom=es">Young people</a> could be educated about the negative effects of oil theft for society and the economy. These include fluctuations in the price of fuel, the operational costs for a public utility and the significant personal risk to thieves. </p>
<p>All of this will need support from strong, credible and transparent institutions, as corruption currently limits the authority of state organisations and the police and excuses the participation of private businesses and citizens, such as petrol station owners.</p>
<p>There are many fixes for plugging leaks in the supply chain but stopping oil theft won’t happen without reliable governmental bodies. This includes regulators responsible for monitoring fuel production and organisations enforcing the legal supply of fuels to service stations.</p>
<p>Without transparency and accountability in organisations such as PEMEX, their role as enablers of a shadow supply chain will continue. This demands rethinking corruption as a systemic problem within Mexico, one that is costing lives and goes far beyond oil. Introducing mechanisms which can help identify and report corruption could be a step towards broader social change.</p><img src="https://counter.theconversation.com/content/111118/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Recent pipeline explosions have brought the problem of Mexico’s black market for oil into tragic relief.Prasanta Kumar Dey, Professor of Operations Management, Aston UniversityOscar Rodriguez-Espindola, Lecturer in Operations and Supply Chain Management, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/970702018-05-23T19:57:19Z2018-05-23T19:57:19ZAustralia imports almost all of its oil, and there are pitfalls all over the globe<figure><img src="https://images.theconversation.com/files/220059/original/file-20180523-51105-7k0ca3.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An oil tanker leaves Sydney Harbour.</span> <span class="attribution"><span class="source">Saberwyn/Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Australia’s fuel security is far more precarious than we might realise. Not only do we not have the <a href="https://theconversation.com/australias-fuel-stockpile-is-perilously-low-and-it-may-be-too-late-for-a-refill-96271">internationally mandated 90-day stockpile</a>, but the ongoing closure of Australia’s refineries means we are on track to be <a href="https://www.aph.gov.au/DocumentStore.ashx?id=86e8dfbc-1467-47fe-ad1e-bc635407ecf8&subId=301736">100% reliant on imported petroleum by 2030</a>.</p>
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Read more:
<a href="https://theconversation.com/australias-fuel-stockpile-is-perilously-low-and-it-may-be-too-late-for-a-refill-96271">Australia's fuel stockpile is perilously low, and it may be too late for a refill</a>
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<p>Australian refineries import <a href="https://industry.gov.au/Office-of-the-Chief-Economist/Publications/ResourcesandEnergyQuarterlySeptember2017/documents/Resources-and-Energy-Quarterly-September-2017-Oil.pdf">roughly 83%</a> of the crude oil they process from <a href="https://www.aip.com.au/sites/default/files/download-files/2017-09/Maintaining_Supply_Security_and_Reliability_for_Liquid_Fuels_in_Australia_0.pdf">more than 17 countries</a>, mainly in Asia (40%), but also Africa (18%) and the Middle East (17%). We are a significant oil producer, but export 75% of our crude production, with <a href="https://industry.gov.au/Office-of-the-Chief-Economist/Publications/ResourcesandEnergyQuarterlyDecember2017/documents/Resources-and-Energy-Quarterly-December-2017-Oil.pdf">the largest recipients being Indonesia and Singapore</a>.</p>
<p>At the same time, the importance of importing refined petroleum from overseas is only increasing as <a href="https://industry.gov.au/Office-of-the-Chief-Economist/Publications/ResourcesandEnergyQuarterlySeptember2017/documents/Resources-and-Energy-Quarterly-September-2017-Oil.pdf">our local production declines</a>.</p>
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<span class="caption">Australia’s imports and production of refinery products.</span>
<span class="attribution"><a class="source" href="https://industry.gov.au/Office-of-the-Chief-Economist/Publications/ResourcesandEnergyQuarterlySeptember2017/documents/Resources-and-Energy-Quarterly-September-2017.pdf">Dept Environment and Energy/Dept Industry, Innovation and Science</a></span>
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<p>Currently, <a href="https://www.aip.com.au/sites/default/files/download-files/2017-09/Maintaining_Supply_Security_and_Reliability_for_Liquid_Fuels_in_Australia_0.pdf">51-53% of our imported refined petrol comes from Singapore’s refineries, with 18% from South Korea, 12% from Japan and the rest from a range of other countries</a>. Asian refineries in particular are extremely competitive in terms of production and transport costs. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=455&fit=crop&dpr=1 600w, https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=455&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=455&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=572&fit=crop&dpr=1 754w, https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=572&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/220042/original/file-20180523-51121-1lmvkqh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=572&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australia’s fuel supply routes.</span>
<span class="attribution"><span class="source">NRMA</span></span>
</figcaption>
</figure>
<h2>The consequences of disruption</h2>
<p>Without significant fuel reserves, Australia could face serious consequences in the event of disruption to these imports. In any complex system, even temporary disruptions can cause “<a href="https://www.scientificamerican.com/article/blackouts-and-cascading-failures/">cascading failures</a>” across other parts of the system, and these effects don’t stop the moment the supply is restored. </p>
<p>Maintaining our oil supply is not just about keeping our cars on the road. Any serious disruption would have consequences within days for our food supplies, medication stocks, and military capacity.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=197&fit=crop&dpr=1 600w, https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=197&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=197&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=248&fit=crop&dpr=1 754w, https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=248&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/220044/original/file-20180523-51095-1wp43ty.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=248&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australia’s liquid fuel reserves compare poorly with stockpiles of other goods.</span>
<span class="attribution"><span class="source">NRMA</span></span>
</figcaption>
</figure>
<p>If a complex system is to be resilient, it needs <a href="https://www.learning-theories.com/backup-systems-redundancy.html">redundancy</a>. This means that it has backup processes that enable the overall system to continue to function even when some part of it breaks down. </p>
<p>Unfortunately, such backup systems are not efficient, because the system is doubling up on resources. Efficiency is therefore one of the enemies of system resilience – this is best demonstrated by the concept of “<a href="https://www.economist.com/node/13976392">just in time</a>” supply chains, in which stock arrives when it is needed, minimising the costs of holding excess inventory in stock. Such an approach is certainly efficient, but it is also fragile. This is a pretty good description of Australia’s current oil supply chains.</p>
<p>The 90-day oil reserve recommended by the International Energy Agency is a textbook example of system redundancy, as are local oil refineries. They provide onsite reserves (<a href="http://www.abc.net.au/news/2016-02-24/fuel-imports-a-risk-amid-south-china-sea-tensions-nrma-advisor/7149648">5-12 days</a>) and local refining capacity. But in the interests of economic efficiency we have chosen not to invest in this redundancy.</p>
<h2>Possible causes of disruption</h2>
<p>Australia’s geographically dispersed oil supply chains mean that there are several places around the world where they can potentially be disrupted.</p>
<p>More than <a href="https://www.reuters.com/article/us-iran-hormuz-oil/factbox-the-strait-of-hormuz-iran-and-the-risk-to-oil-idUSL0715889720080107">40% of the world’s oil</a> passes through the Strait of Hormuz, the only sea passage out of the Persian Gulf. Controlling the strait remains a clear (and <a href="https://www.csmonitor.com/World/Middle-East/2012/0126/How-Iran-could-beat-up-on-America-s-superior-military">possibly</a> <a href="http://cimsec.org/learning-curve-iranian-asymmetrical-warfare-millennium-challenge-2002-2/11640">achievable</a>) aim of Iran in any military confrontation. </p>
<p>This has arguably been made more likely by the US administration’s <a href="https://theconversation.com/how-the-us-withdrawal-from-the-iran-nuclear-deal-will-affect-irans-economy-96476">decision to reimpose economic sanctions</a> on Iran. At the same time, the recent <a href="https://theconversation.com/us-fracking-boom-puts-west-african-oil-economies-at-risk-29289">shale gas revolution</a> in the United States has <a href="https://www.reuters.com/article/us-persian-gulf-commentary/commentary-the-u-s-commitment-to-the-persian-gulf-is-outdated-idUSKCN0ZN2DB">weakened the traditional US strategic imperative</a> to keep the strait open.</p>
<p>The ongoing tensions in the South China Sea also <a href="http://www.abc.net.au/news/2016-02-24/fuel-imports-a-risk-amid-south-china-sea-tensions-nrma-advisor/7149648">threaten Australia’s other major supply route for oil</a>, not least because of our difficult geopolitical position in the middle of the heavyweight rivalry between the US and China.</p>
<p>Finally, the <a href="https://theconversation.com/defeated-in-syria-and-iraq-the-islamic-state-is-rebuilding-in-countries-like-indonesia-96724">apparent defeat</a> of the Islamic State group in Iraq and Syria has led to <a href="https://theconversation.com/defeated-in-syria-and-iraq-the-islamic-state-is-rebuilding-in-countries-like-indonesia-96724">concerns</a> that radicalised Indonesians are returning home to continue the fight. The vulnerability of our supply lines through Indonesia <a href="https://www.smh.com.au/national/al-qaeda-threatens-australian-fuel-supplies-20141031-11f4t2.html">has already been recognised</a>.</p>
<h2>Trading places</h2>
<p>Oil is often described as a “<a href="https://www.strausscenter.org/energy-and-security/fungibility-oil.html">fungible commodity</a>”. This means that oil from different suppliers is interchangeable, so if supply is disrupted we can just buy it from somewhere else.</p>
<p>But it is not as straightforward as that. First, the point in the system at which supply is disrupted is crucially important. For example, Australia’s fuel ports represent particularly problematic junctions, as a <a href="https://www.aph.gov.au/DocumentStore.ashx?id=86e8dfbc-1467-47fe-ad1e-bc635407ecf8&subId=301736">2013 fuel security review</a> for the National Roads and Motorists Association pointed out:</p>
<blockquote>
<p>For example, the primary fuel port in South Australia is at Port Adelaide; a single, narrow, shipping channel services the port. A blockage of that channel, as the result of a shipping accident/incident, could result in significant and prolonged disruption to fuel supplies for Adelaide and a large part of the state … given the inability to transport sufficient fuel stocks overland to South Australia.</p>
</blockquote>
<p>What’s more, while it is generally true that oil is fungible within an open global market, not all suppliers necessarily share this assumption. Thus China, faced with rising domestic consumption, is <a href="https://www.telegraph.co.uk/finance/newsbysector/energy/4781037/China-prepares-to-buy-up-foreign-oil-companies.html">planning</a> to outbid Western oil companies for contracts, or else buy the entire companies outright. </p>
<p><a href="https://secureenergy.org/report/oil-security-2025-u-s-national-security-policy-in-an-era-of-domestic-oil-abundance/">Just like the US</a>, China sees oil more as a national security concern than as a fungible global commodity. Access to even a share of the global oil supply can be a tool of political or economic influence, as the <a href="https://theconversation.com/four-decades-later-has-america-finally-got-over-the-oil-crisis-33541">OPEC embargo in the 1970s</a> infamously showed.</p>
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Read more:
<a href="https://theconversation.com/four-decades-later-has-america-finally-got-over-the-oil-crisis-33541">Four decades later, has America finally got over the oil crisis?</a>
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<p>In the end, while other countries move to secure their national fuel supplies, we continue in our misguided faith in an unfettered global oil market being able (or willing) to supply our needs in situations of crisis. Hopefully the proposed <a href="https://www.energy.gov.au/news-media/news/fuel-security-review">Fuel Security review</a> will mean these challenges are finally taken seriously.</p><img src="https://counter.theconversation.com/content/97070/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Richardson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s recently announced review of its national fuel stockpiles is timely indeed. The country is almost totally reliant on oil being shipped through some of the world’s most contested regions.Anthony Richardson, Research Fellow, Future Social Service Institute, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.