WEBVTT - Covid-level crisis? How Australia ignored fuel warnings

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<v Speaker 1>I'd say i'd put it at least at the same

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<v Speaker 1>level as COVID. You're not going to have the sort

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<v Speaker 1>of death rates and the risk we had there, but

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<v Speaker 1>the effect on our society is going to be fundamental,

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<v Speaker 1>and the follow on effects will probably last longer because

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<v Speaker 1>we haven't learned from our COVID experience.

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<v Speaker 2>John Blackburn spent four decades in the Air Force, rising

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<v Speaker 2>to Deputy chief. For years he's been warning that Australia

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<v Speaker 2>is too reliant on imported fuel, too thin on reserves,

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<v Speaker 2>and too exposed if a global crisis like this one

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<v Speaker 2>disrupts supply.

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<v Speaker 1>In both sides of politics, despite repeated warnings and engagements,

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<v Speaker 1>have failed to get it.

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<v Speaker 2>Now, as more than one hundred petrol stations run dry

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<v Speaker 2>and a Trump ultimatum over the Iran war looms, threatening

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<v Speaker 2>to make the fuel crisis even worse, the government's accused

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<v Speaker 2>of failing the country by failing to prepare. I'm Nicole

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<v Speaker 2>Johnston and you're listening to seven am today, Chair of

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<v Speaker 2>the Institute of Economic Research Australia, John Blackburn on where

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<v Speaker 2>the country's emergency fuel plan falls short and is it

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<v Speaker 2>too late to fix it. It's Tuesday, March twenty four, John,

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<v Speaker 2>You've been wargaming a situation like this for over a decade,

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<v Speaker 2>and now that it's here. What is it that you're

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<v Speaker 2>worried about most? Is it price shocks or is it

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<v Speaker 2>that we face an actual shortage?

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<v Speaker 1>Oh, we'll face an actual shortage, has no doubt about that.

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<v Speaker 1>What I'm worried about the flower effects. It's far more

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<v Speaker 1>than fuel. We're reacting to the fuel issue because the

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<v Speaker 1>prices are hitting at us and we can see a

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<v Speaker 1>problem coming. It's much more than that. When you think

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<v Speaker 1>about the experts out of that particular part of the world,

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<v Speaker 1>through the Strait of Homers. We're already seeing the effect

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<v Speaker 1>on fertilizer prices. But it goes way beyond that, and

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<v Speaker 1>which is why I've been saying, in addition to the

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<v Speaker 1>fuel task Force, they've set up, good step, we need

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<v Speaker 1>to have a non fuel task will set up because

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<v Speaker 1>these other shortages will impact the global market. So we

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<v Speaker 1>have two things react to the current problem. What can

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<v Speaker 1>we do as it starts to actually impact us because

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<v Speaker 1>it hasn't impacted our supply chain yet, all the impact

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<v Speaker 1>in our societies because of how we've reacted. So that's

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<v Speaker 1>the next stage. But we've got to look beyond fuel.

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<v Speaker 2>So when you say we have to look beyond fuel,

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<v Speaker 2>what is it you're talking about? What other products could

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<v Speaker 2>we end up being short of?

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<v Speaker 1>Okay, so right now, about twenty percent of the world's

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<v Speaker 1>oil goes through the stratuhornmals and about twenty five percent

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<v Speaker 1>of liquid natural gas. That's going to have a huge effect.

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<v Speaker 1>But there's the refined pratorium products and condensate. So here's

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<v Speaker 1>a couple of things, sulfur and sulfuric acid, big supply.

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<v Speaker 1>It's going to affect a lot of things in production

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<v Speaker 1>and industry, high purity gases, specialty chemicals, chlorine, and caustic soda.

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<v Speaker 1>About thirty something percent of the world's helium's coming out

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<v Speaker 1>of there. Try and do an MRI without helium. There's

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<v Speaker 1>a lot of other things. This will flow through to

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<v Speaker 1>effects on the mining industry of how cop from cobalter

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<v Speaker 1>process to minium, ammonia, urea and nitrogen that's going to

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<v Speaker 1>be affected. We've seen a thirty seven percent price increase

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<v Speaker 1>in fertilizers, so this is much bigger than fuel.

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<v Speaker 2>So what do you think of how the government's handled

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<v Speaker 2>it so far? Is it being clear about the scale,

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<v Speaker 2>the nature of the risk, or do you think it

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<v Speaker 2>should be much stronger so that people really know what

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<v Speaker 2>this country's facing.

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<v Speaker 1>I mean to me, it almost echoes the Liberal government's

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<v Speaker 1>response to COVID unclear, quite confused, and so where we

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<v Speaker 1>are right now. The messaging is poor. It started to

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<v Speaker 1>say we've got the most fuel we've had for fifteen years,

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<v Speaker 1>as if we were taking credit for us.

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<v Speaker 3>Simply say, mister speaker, we entered this crisis with thirty

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<v Speaker 3>six days worth of petrol, which is more than previous

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<v Speaker 3>minister said was necessary in a worst case scenario.

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<v Speaker 1>I might return to that later. This Energy minister did

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<v Speaker 1>not initiate the fuel stocks that was done with Angus Taylor.

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<v Speaker 1>They've implemented it. So we start talking about I've got

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<v Speaker 1>fifteen years not to worry about things under control. He

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<v Speaker 1>didn't emphasize that eighty percent of the world's supply chain

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<v Speaker 1>is still there. We're not going to run out. We're

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<v Speaker 1>going to have some shortages and issues eventually. But because

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<v Speaker 1>the messaging has been so poor, people are getting really concerned.

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<v Speaker 1>They understandably start to panic, and we've driven up our

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<v Speaker 1>consumption to about one hundred and fifty percent of what

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<v Speaker 1>it was. Now the supply chain is not designed for that.

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<v Speaker 1>It's designed for the normal load.

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<v Speaker 3>Now, mister speaker, it is the case that demand has doubled,

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<v Speaker 3>use has not.

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<v Speaker 1>Use has not.

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<v Speaker 3>Demand has doubled.

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<v Speaker 1>But we've got a bunch of children at the moment

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<v Speaker 1>arguing of each other. So just listen to question time.

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<v Speaker 1>It is absolutely pathetic. It's mostly these males trying to

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<v Speaker 1>point score, sort of smirking about it.

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<v Speaker 4>And now the Minister for Energy has been caught unprepared

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<v Speaker 4>for Australia's energy shortages, further punishing Australian households at the

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<v Speaker 4>bowser and at the supermarket.

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<v Speaker 3>The leader of the Opposition appears to want to just

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<v Speaker 3>completely dismiss the.

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<v Speaker 1>Fact that there is a war going on.

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<v Speaker 4>The Minister is providing information to the House on an

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<v Speaker 4>important issue.

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<v Speaker 1>So I'm asking for everyone's assistance, show respect, show restrain

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<v Speaker 1>the ministastical. I even watch Taining a plumba Secret. I

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<v Speaker 1>think it's been set up by the Labor Party go

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<v Speaker 1>head to head with Barnaby on seven's Breakfast Television. It

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<v Speaker 1>was just stunning to watch.

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<v Speaker 5>The most helpful thing people could do is just by

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<v Speaker 5>the fuel they need and know more. That's the most

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<v Speaker 5>helpful thing people could do. And there is the same

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<v Speaker 5>amount of still coming as we've previously had. Honestly, has

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<v Speaker 5>grown up for a change, grown up.

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<v Speaker 1>So what instead of saying we've got a problem, lets

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<v Speaker 1>both sides of politics works together. It's being used by

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<v Speaker 1>both sides to point scool. This is absolute madness and

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<v Speaker 1>it's a failure of leadership.

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<v Speaker 3>Would you urge businesses, for example, to be more flexible

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<v Speaker 3>on work from home let people stay home? Well, I

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<v Speaker 3>think that's a sensible thing to do in any environment. Really,

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<v Speaker 3>you know, work from home has become an important part

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<v Speaker 3>of it.

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<v Speaker 1>But in this Australian oil crisis.

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<v Speaker 3>My Australian working life, and again I think some people

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<v Speaker 3>would already be doing that. There are other people for

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<v Speaker 3>who and that's not an option.

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<v Speaker 2>The government's now saying Australian should consider working from home

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<v Speaker 2>if it's an option to save fuel or to catch

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<v Speaker 2>public transport, if they can do you think that's a

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<v Speaker 2>good idea. And could we even get to a point

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<v Speaker 2>where there's not enough fuel or it's become so expensive

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<v Speaker 2>that there is no other option than for a lot

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<v Speaker 2>of people to work from home.

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<v Speaker 1>Oh, absolutely, So we should be saying to Australians, look

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<v Speaker 1>in order to make sure those reserves we've got are

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<v Speaker 1>as much as possible to deal with what's coming at us. Yeah,

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<v Speaker 1>let's work from home. Don't panic, but let's see how

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<v Speaker 1>we can reduce our consumption. And for heaven, it's like,

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<v Speaker 1>please don't go out and buy more than you absolutely

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<v Speaker 1>have to have. That's just common sense. But I think

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<v Speaker 1>the issue is because their messaging is confused. I don't

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<v Speaker 1>think they've got the legislative authority at the federal level

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<v Speaker 1>to actually start to control the market. And the reason

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<v Speaker 1>I say that is that one of the reports that

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<v Speaker 1>came out in twenty nineteen said the Liquid Fuel Emergency

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<v Speaker 1>Act is not fit for purpose. It takes so long

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<v Speaker 1>to go through the various stages and then eventually to

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<v Speaker 1>have the Governor General sign off a proclamation of an emergency.

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<v Speaker 1>It won't work. So I really have this gut feel

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<v Speaker 1>that they haven't changed the Act enough to actually allow

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<v Speaker 1>a very rapid movement to hang on. We've got to

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<v Speaker 1>do something and take control. I really suspect he hasn't

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<v Speaker 1>got the tool set.

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<v Speaker 2>John other countries they're starting to prioritize their own oil

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<v Speaker 2>and gas supply, and we've seen that especially in Asia,

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<v Speaker 2>they're capping petrol prices, banning the export of refined products.

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<v Speaker 2>But what is it that we can do here in Australia.

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<v Speaker 2>Do we have levers to pull or can we negotiate

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<v Speaker 2>better or even just pay more than everybody else.

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<v Speaker 1>It'll be a combination of things. So every year we

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<v Speaker 1>export mostly to engineers, your single and Japan with guess,

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<v Speaker 1>we export the equivalent to thirty one percent of our

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<v Speaker 1>total transport fuel consumption in a year. We're actually an

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<v Speaker 1>energy fossil fuel energy provider to the region. So what

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<v Speaker 1>we need to say is we understand what you're doing.

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<v Speaker 1>But with this energy we're exporting, let's work out how

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<v Speaker 1>we can do a bilateral deal with each separate country.

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<v Speaker 1>If we send this much either crude, all or condisate

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<v Speaker 1>energy to you, we want you in return to take

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<v Speaker 1>part of that, refine that and send that back to us.

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<v Speaker 1>And we're paying each other to do this because we

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<v Speaker 1>also need to look after our people. If they say no,

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<v Speaker 1>we're not going to do it, then we should be

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<v Speaker 1>looking at Okay, who do we sell it to? And

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<v Speaker 1>now people start saying, oh, but we've got contracts. This

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<v Speaker 1>is not peacetime. We are in a war, but we

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<v Speaker 1>are talking in public as if it's not a war.

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<v Speaker 1>And that's a really big problem because people, well, it's

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<v Speaker 1>just life as normal, going to a couple of erykaans

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<v Speaker 1>and I'll do them. I think, No, we're in a

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<v Speaker 1>war circumstance. It's going to have an effect on us.

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<v Speaker 1>Things are not blowing up down here, but we will

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<v Speaker 1>have a major effect on our energy security and other things.

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<v Speaker 1>So we have to change our mentality.

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<v Speaker 2>Coming up failing to game plan a rogue. President, John,

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<v Speaker 2>you've been warning about our fuel reserves for over a

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<v Speaker 2>decade now, and you wrote a report back in twenty

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<v Speaker 2>thirteen you said Australia only had enough emergency stock to

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<v Speaker 2>cover three days worth of pharmacy supplies, a week of

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<v Speaker 2>chilled and frozen food, and three days worth of fuel

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<v Speaker 2>to petrol stations. Has our situation improved much since then?

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<v Speaker 1>Well, no, funamentally. So I wrote a series of three

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<v Speaker 1>reports and then we went on a whole campaign after that.

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<v Speaker 1>Now let's talk about what's happened since I wrote those reports. Well,

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<v Speaker 1>we've gone from on seven refineries we had then down

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<v Speaker 1>to two and the contracts to support them have just

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<v Speaker 1>been extended till twenty thirty, but there's no guarantee those

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<v Speaker 1>two refineries will just style to stay open, so we're

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<v Speaker 1>not thinking about what we're going to do. Then. The

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<v Speaker 1>other thing is that back in twenty thirteen we didn't

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<v Speaker 1>have any mandated stocks. That was a huge vulnerability at

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<v Speaker 1>the time. Now we were arguing to change that and

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<v Speaker 1>eventually the government lessened at the time and thankfully we

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<v Speaker 1>have mandated stocks, so that's a little improvement. Here's the

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<v Speaker 1>other problem. The ability to move the fuel around the

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<v Speaker 1>country is really a problem. We can no longer move

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<v Speaker 1>fuel around the country by rail except for a small

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<v Speaker 1>amount between Espirants and Carl Gurley. The mining systems have

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<v Speaker 1>closed rail networks, but the rest of the country you

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<v Speaker 1>either hire a ship to move it, which we don't control,

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<v Speaker 1>or you'd move in on trucks. So if you think

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<v Speaker 1>about this logistics system no ships that we control seven

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<v Speaker 1>refineries down to two no rail op think that as

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<v Speaker 1>an artery that's supplied chain, well, it's been really constricted.

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<v Speaker 1>You know, it's full of cholesterol and a bunch of

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<v Speaker 1>other stuff. It's hard to make it move Thankfully with

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<v Speaker 1>the stock mandates coming in, we've got a bit of

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<v Speaker 1>an improvement, but overall the resilience of our energy system

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<v Speaker 1>has gone downhill because of the failure of the two

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<v Speaker 1>major political parties to take this seriously.

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<v Speaker 2>We've really seen the war in the Gulf Escalator. Over

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<v Speaker 2>the last few days. We had Israel striker RAN's most

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<v Speaker 2>important gas field, South Pas.

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<v Speaker 5>The hit on Iran's South Pas gas fielder first true

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<v Speaker 5>sharp criticism from KATA given it has it shares that

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<v Speaker 5>northern end of the facility.

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<v Speaker 2>And then the Iranians they retaliated by hitting Raslafan, the

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<v Speaker 2>world's largest LNG planting.

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<v Speaker 1>Cutter, CEO of cut the Energy says that Iran's attack

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<v Speaker 1>wiped out seventeen percent of Cutter's energy capacity for up

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<v Speaker 1>to five years.

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<v Speaker 2>That is a Now Trump's issued an ultimatum. He says

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<v Speaker 2>he'll destroy a Run's power plants if they don't reopen

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<v Speaker 2>the strait of Hall moves.

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<v Speaker 3>President Donald Trump is threatening an enormous attack on Iran's

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<v Speaker 3>energy infrastructure if Tehran doesn't allow free navigation through this.

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<v Speaker 2>Surely, if he went to that level, that would only

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<v Speaker 2>make the energy crisis even worse. It seems that this

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<v Speaker 2>is a really big crunch time right now.

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<v Speaker 1>So what you've got all the scenarios we did years ago.

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<v Speaker 1>I mean in the military, I did a lot of

0:12:27.360 --> 0:12:30.440
<v Speaker 1>scenario work, but also for this work, we never once

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<v Speaker 1>contemplated that there will be a rogue US president. So

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<v Speaker 1>what's happened. He's gone in there simplistically, and it's backfiring

0:12:37.640 --> 0:12:39.760
<v Speaker 1>on him, and he's worried about the midterms, so he

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<v Speaker 1>needs to finish it quickly. That damage in Qatar, from

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<v Speaker 1>what I've been reading today, could take three to five

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<v Speaker 1>years to repair. If you start blowing up the other

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<v Speaker 1>parts of the energy system and Iran can retaliate because

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<v Speaker 1>you don't need America's firepowder to do this, then we

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<v Speaker 1>are going to have not only an interruption whilst the

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<v Speaker 1>war's on, just up for twenty percent out for a decade.

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<v Speaker 1>I think could go that long. But we're at a

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<v Speaker 1>very difficult time where if we're not careful and we

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<v Speaker 1>allowed that guide to pressure us, that will be the

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<v Speaker 1>dumbest thing that we've done in decades.

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<v Speaker 2>John, you're part of this group of nineteen former Defense

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<v Speaker 2>Force leaders, and you've all called on the government to

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<v Speaker 2>urgently roll out renewable energy, saying it's a matter of

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<v Speaker 2>national security at this point. Now, of course the government

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<v Speaker 2>it's saying that it is doing that, and it doesn't

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<v Speaker 2>happen overnight. It takes time. So what is it that

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<v Speaker 2>you actually want them to do now, because they can't

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<v Speaker 2>do it straight away.

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<v Speaker 1>So another one is recognize their role in not actually

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<v Speaker 1>having been prepared for this. That's the first important thing.

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<v Speaker 1>And then start to work with across the parties. That's essential.

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<v Speaker 1>We've got enough smart people in this country to actually

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<v Speaker 1>work out what to do. We've actually got enough resources

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<v Speaker 1>if we stop wasting them on stupid things like nucleus

0:13:53.240 --> 0:13:56.120
<v Speaker 1>submarines and august. That's not going to happen, but we'll

0:13:56.120 --> 0:13:58.600
<v Speaker 1>waste a lot of money. The solution, when you think

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<v Speaker 1>about it, let's go to a simple level, what can

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<v Speaker 1>we replace on the supply side. Well, biofuels certainly are

0:14:05.000 --> 0:14:08.280
<v Speaker 1>key part of this, not the totality, So renewable diesels,

0:14:08.440 --> 0:14:11.800
<v Speaker 1>you know, sustainable aviation fuels, a bit of ethanol substitution

0:14:12.000 --> 0:14:15.400
<v Speaker 1>in there. That is a very important one. But when

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<v Speaker 1>you talk about it from the right side of politics,

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<v Speaker 1>I'll just say right now, I don't support either side

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<v Speaker 1>of politics, I'm a political from the right side. You'll

0:14:22.520 --> 0:14:25.160
<v Speaker 1>get go you're greenees in your woke, No we're not.

0:14:25.520 --> 0:14:28.400
<v Speaker 1>We need renewable fuels to substitute there to give us

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<v Speaker 1>our energy security. That doesn't quite align with the rhetoric

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<v Speaker 1>from the far right. But you also have to ensure

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<v Speaker 1>that you have fossil fuels. Could be perhaps take that

0:14:43.920 --> 0:14:46.720
<v Speaker 1>huge amount of crude oil we export and find a

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<v Speaker 1>way of refining a bit of that, because when I

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<v Speaker 1>then face the argument from the far left, no more

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<v Speaker 1>fossil fuels ever. Yeah, okay, but we're going through an

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<v Speaker 1>energy transition. The fossil fuels also give you key chemicals, medicines,

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<v Speaker 1>a whole bunch of stuff we need. So on either

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<v Speaker 1>side of politics, you've got this black and white view.

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<v Speaker 1>We are in a mess. It's a teamed approach and

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<v Speaker 1>we have to use a whole range of things. There

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<v Speaker 1>is no coherent system plan in this country to look

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<v Speaker 1>at that transition. And the last time we did a

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<v Speaker 1>national energy security assessment which would allow us to understand

0:15:19.920 --> 0:15:24.280
<v Speaker 1>our risk and vulnerabilities was two thousand and eleven. We're

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<v Speaker 1>now running for fifteen years without a risk assessment. This

0:15:27.280 --> 0:15:30.880
<v Speaker 1>is strategic stupidity on both sides of politics.

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<v Speaker 2>John, thank you so much for joining us.

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<v Speaker 1>You're most welcome. I hope I didn't depress you too much.

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<v Speaker 2>Also in the news, more than seventy five percent of

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<v Speaker 2>ABC staff will walk off the job on Wednesday, in

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<v Speaker 2>their first strike in twenty years. Severe disruptions lasting twenty

0:15:58.000 --> 0:16:02.080
<v Speaker 2>four hours are expected across the Public Broadcasters News Services

0:16:02.560 --> 0:16:05.160
<v Speaker 2>Union say the ABC's offer of a ten percent pay

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<v Speaker 2>rise over three years falls short and doesn't address concerns

0:16:09.280 --> 0:16:15.480
<v Speaker 2>about conditions and penalty rates. And Kyl Sanderlans has launched

0:16:15.560 --> 0:16:18.920
<v Speaker 2>legal action against his former radio network over the end

0:16:18.960 --> 0:16:22.440
<v Speaker 2>of his one hundred million dollar contract. His lawyers say

0:16:22.480 --> 0:16:26.200
<v Speaker 2>the termination was invalid because there was no active, serious

0:16:26.280 --> 0:16:29.960
<v Speaker 2>misconduct or breach of the contract. Sandy Lands wants the

0:16:29.960 --> 0:16:32.800
<v Speaker 2>remainder of his deal paid out in full, but ARN

0:16:32.920 --> 0:16:35.680
<v Speaker 2>is defending its actions and will fight the shock jock

0:16:35.840 --> 0:16:40.200
<v Speaker 2>in court. I'm Nicole Johnston. This is seven AM. Thanks

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<v Speaker 2>for listening.