Australia is Using up its Oil Reserves on back of Syria Air Strikes

The coalition missile strike on Syria on late April 14 seemed to verify market anxieties on recurring instability in the Middle East, which have triggered oil price increase and futures during the past week. Due to the escalating conflict in Syria, Australia, whose oil reserves remain low at all times and largely count on imports, could thoroughly run out of fuel by the end of May, experts warned.

• Weak Fuel Backup

Australia is a member of the International Energy Agency (IEA). But while IEA mandates that nations hold a stock in reserve “equivalent to 90 days of net imports”, Australia only stockpile 43 days worth of supply, which could be cut drastically if a global crisis cripples supply channels from places like the Middle East.

“Australia is one of the few countries in the world that does not take the energy security seriously.” said Dr. Davis, the Senior Analyst at Defence Strategy and Capability at the Australian Strategic Policy Institute. He also forecasts that Australia’s fuel reserves would last “20 days at best” if supplies were cut out.

Senator Molan has condemned the government for unpreparedness for interruptions to its fuel supply as well. He pointed out that Australia is heavily dependent on regional refineries and oil flows from the Middle East with 91% of all the transport fuels imported in this way and processed through regional refineries. But the government hasn’t had any contingency plan for the oil and fuel supply interruption, even in today’s world filled with immense tensions.

• Shrinking Hip Pocket

Relying on imported oil is not only risky, but expensive. In 2017, Australia’s net oil imports were 561 barrels per day, as per Australian Petroleum Statistics. At an average of US$52.51 a barrel for that year, the bill was US$10.75 billion, or 1.7% of Australia’s gross domestic product.

Meanwhile, the oil price could fluctuate frequently alongside the changing dynamics of the Middle East and the currently chaotic international conflicts. If President Trump has decided to coerce a more robust course of action that targets Russia’s defence presence in Syria and Russia retaliated in turn, fears hover around the fallout from Syria strikes would definitely escalate with oil prices soaring on rising geopolitical tension again.

• Real Impact

The Turnbull Government follows the basic principles of free-market economics. Such bipartisan “hands-off” approach may not serve the country’s best interest in the long term. Military strikes on Syria should be a wake-up call for Australia to do something about their low fuel reserves.

Moreover, to mitigate the side effect of Australia’s growing liquid fuels import dependency, meeting the IEA’s mandated reserve levels would be the top priority in the right direction. The government should also consider measures aimed at controlling the demand for liquid fuels and reasonably distributing the limited resources nationwide. These might include higher fuel-efficiency and vehicle mileage standards, improving public transport infrastructure, investing in carpooling, or introducing congestion charges in the CBDs of major cities.

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Posted from my blog with SteemPress : https://insights.jumoreglobal.com/australia-is-using-up-its-oil-reserves-on-back-of-syria-air-strikes/

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