Energy Minister Chris Bowen suggests that the recent energy crisis in Australia is largely down to you.
Following a crisis conference of key stakeholders, the government said that the primary reason of shortages that are beginning to affect the regional sectors of agriculture and fisheries is panic buying of fuel, particularly diesel.
Energy Minister Chris Bowen has directed his department to provide him with daily reports on fuel reserves instead of the customary quarterly briefings, despite his insistence that Australia has no supply issues.
How reassuring.
The real problem here is the lack of foresight in constructing the IEA’s recommended 90 days of fuel storage, instead of our paltry 33 days.
Blame cannot be put down to one government for this, but Chris Bowen has had four years to fix it and hasn’t, despite the growing concerns about energy security and the need for a robust fuel storage strategy.
Even our offshore storage in the US is only 1.5m/b, compared to a possible 25m/b.
Senior strategists have repeatedly warned against neglecting this profound national interest.
The negligence worsens when we consider how diesel-dependent our economy is.
Historically, Australia’s energy intensity per unit of GDP was about 66% higher than the OECD average.
Even today, the country remains more energy-intensive than most service-heavy economies.
This is because our economy is heavily dependent on heavy machinery in mining, construction, and transport to overcome the tyranny of distance.
Yet despite this much higher diesel intensity of GDP, our storage is far below the per capita levels of the US and Japan, for instance, which have over a billion barrels of reserves.
| Economy | Diesel / distillate demand | GDP (USD) | Diesel per $1T GDP |
|---|---|---|---|
| Australia | ~0.45–0.50 mb/d | ~$1.7T | ~260–290 kb/d |
| United States | ~3.8–4.0 mb/d | ~$27T | ~140–150 kb/d |
| EU | ~6.0–6.5 mb/d | ~$17T | ~360–380 kb/d |
| Japan | ~0.8 mb/d | ~$4.2T | ~190 kb/d |
(mb/d = million barrels per day)
Sources: EIA, IEA and global diesel consumption statistics.
As rationing accelerates across the regions, only a week after a butterfly flapped its wings on the other side of the planet, this neglect by Minister Bowen looks more and more like treasonous indifference.
It doesn’t affect house prices, so who cares, I guess.
Except, soon enough, it might, as cash rate futures predict three more rate hikes just as the oil shock smashes into households.
Yippee-ki-yay, Minister Bowen
