Add Category
Updated
The Federal Government will spend $94 million on a fuel reserve to bolster the national stockpile.
Key points:
- Federal Government plans to move the fuel it buys in the US to Australia eventually, but must first increase domestic storage capacity
- Reserves will be for future emergencies caused by "global disruptions"
- Australia currently has around 30 days of fuel stores, far below the minimum requirement of 90 days
Federal Energy Minister Angus Taylor said the Government would take advantage of historically low fuel prices to build a "strategic fuel reserve", to be held initially in the United States.
"We have full storages here in Australia, but in time we are exploring opportunities with the industry to establish local storage," he said.
"Now is the time to buy fuel, and we are doing that."
Mr Taylor said the reserve was to ensure Australia had enough fuel in case of future "global disruptions".
The Energy Minister said there was about a month's worth of fuel on Australian soil currently, but the Government wanted a much larger reserve.
"I signed an agreement with the United States to access their reserves, simply because we don't have the storage space here in Australia right now," Mr Taylor said.
He said moving the storage reserve to Australia was a "priority" and that work to begin expanding domestic capacity would be done as soon as possible.
The Government began talks with the United States to access its reserve last year to increase supplies to meet the 90-day minimum required under international agreements.
At the time, before the coronavirus pandemic saw prices plummet, Mr Taylor said building a storage facility in Australia would be too high a cost.
"The opportunity to buy and establish a fuel reserve is an extraordinary one now with these historically low fuel prices," he said.
"The storage costs are small compared to the fuel cost."
What the experts are saying about coronavirus:
Current crisis a 'wake-up call', Maritime Union says
Earlier on Wednesday, before the announcement, the Maritime Union of Australia (MUA) renewed calls for the Government to develop its own storage capability, instead of rely on the United States' own reserve.
In a statement, the MUA said the coronavirus pandemic was a "wake-up call" and demonstrated how quickly global supply chains could break down and how volatile global markets could become.
The MUA's assistant national secretary, Ian Bray, said the crisis presented an "unprecedented" opportunity for the Government.
"More than 90 per cent of our liquid fuel comes from overseas … yet without fuel, our economy would grind to a halt," he said.
"The Morrison Government should take advantage of the unprecedented collapse in oil prices to build our own domestic fuel stockpile.
"The Government should also commence the process of developing a strategic fleet that includes Australian-owned oil tankers, ensuring supplies can keep flowing during times of crisis."
Some Australian farmers have been taking the same course of action, taking advantage of dropping diesel prices and stockpiling supplies.
What you need to know about coronavirus:
Topics: government-and-politics, infectious-diseases-other, business-economics-and-finance, federal-government, health, respiratory-diseases, covid-19, community-and-society, australia
First posted