Speaker 1: I'd say i'd put it at least at the same
Speaker 1: level as COVID. You're not going to have the sort
Speaker 1: of death rates and the risk we had there, but
Speaker 1: the effect on our society is going to be fundamental,
Speaker 1: and the follow on effects will probably last longer because
Speaker 1: we haven't learned from our COVID experience.
Speaker 2: John Blackburn spent four decades in the Air Force, rising
Speaker 2: to Deputy chief. For years he's been warning that Australia
Speaker 2: is too reliant on imported fuel, too thin on reserves,
Speaker 2: and too exposed if a global crisis like this one
Speaker 2: disrupts supply.
Speaker 1: In both sides of politics, despite repeated warnings and engagements,
Speaker 1: have failed to get it.
Speaker 2: Now, as more than one hundred petrol stations run dry
Speaker 2: and a Trump ultimatum over the Iran war looms, threatening
Speaker 2: to make the fuel crisis even worse, the government's accused
Speaker 2: of failing the country by failing to prepare. I'm Nicole
Speaker 2: Johnston and you're listening to seven am today, Chair of
Speaker 2: the Institute of Economic Research Australia, John Blackburn on where
Speaker 2: the country's emergency fuel plan falls short and is it
Speaker 2: too late to fix it. It's Tuesday, March twenty four, John,
Speaker 2: You've been wargaming a situation like this for over a decade,
Speaker 2: and now that it's here. What is it that you're
Speaker 2: worried about most? Is it price shocks or is it
Speaker 2: that we face an actual shortage?
Speaker 1: Oh, we'll face an actual shortage, has no doubt about that.
Speaker 1: What I'm worried about the flower effects. It's far more
Speaker 1: than fuel. We're reacting to the fuel issue because the
Speaker 1: prices are hitting at us and we can see a
Speaker 1: problem coming. It's much more than that. When you think
Speaker 1: about the experts out of that particular part of the world,
Speaker 1: through the Strait of Homers. We're already seeing the effect
Speaker 1: on fertilizer prices. But it goes way beyond that, and
Speaker 1: which is why I've been saying, in addition to the
Speaker 1: fuel task Force, they've set up, good step, we need
Speaker 1: to have a non fuel task will set up because
Speaker 1: these other shortages will impact the global market. So we
Speaker 1: have two things react to the current problem. What can
Speaker 1: we do as it starts to actually impact us because
Speaker 1: it hasn't impacted our supply chain yet, all the impact
Speaker 1: in our societies because of how we've reacted. So that's
Speaker 1: the next stage. But we've got to look beyond fuel.
Speaker 2: So when you say we have to look beyond fuel,
Speaker 2: what is it you're talking about? What other products could
Speaker 2: we end up being short of?
Speaker 1: Okay, so right now, about twenty percent of the world's
Speaker 1: oil goes through the stratuhornmals and about twenty five percent
Speaker 1: of liquid natural gas. That's going to have a huge effect.
Speaker 1: But there's the refined pratorium products and condensate. So here's
Speaker 1: a couple of things, sulfur and sulfuric acid, big supply.
Speaker 1: It's going to affect a lot of things in production
Speaker 1: and industry, high purity gases, specialty chemicals, chlorine, and caustic soda.
Speaker 1: About thirty something percent of the world's helium's coming out
Speaker 1: of there. Try and do an MRI without helium. There's
Speaker 1: a lot of other things. This will flow through to
Speaker 1: effects on the mining industry of how cop from cobalter
Speaker 1: process to minium, ammonia, urea and nitrogen that's going to
Speaker 1: be affected. We've seen a thirty seven percent price increase
Speaker 1: in fertilizers, so this is much bigger than fuel.
Speaker 2: So what do you think of how the government's handled
Speaker 2: it so far? Is it being clear about the scale,
Speaker 2: the nature of the risk, or do you think it
Speaker 2: should be much stronger so that people really know what
Speaker 2: this country's facing.
Speaker 1: I mean to me, it almost echoes the Liberal government's
Speaker 1: response to COVID unclear, quite confused, and so where we
Speaker 1: are right now. The messaging is poor. It started to
Speaker 1: say we've got the most fuel we've had for fifteen years,
Speaker 1: as if we were taking credit for us.
Speaker 3: Simply say, mister speaker, we entered this crisis with thirty
Speaker 3: six days worth of petrol, which is more than previous
Speaker 3: minister said was necessary in a worst case scenario.
Speaker 1: I might return to that later. This Energy minister did
Speaker 1: not initiate the fuel stocks that was done with Angus Taylor.
Speaker 1: They've implemented it. So we start talking about I've got
Speaker 1: fifteen years not to worry about things under control. He
Speaker 1: didn't emphasize that eighty percent of the world's supply chain
Speaker 1: is still there. We're not going to run out. We're
Speaker 1: going to have some shortages and issues eventually. But because
Speaker 1: the messaging has been so poor, people are getting really concerned.
Speaker 1: They understandably start to panic, and we've driven up our
Speaker 1: consumption to about one hundred and fifty percent of what
Speaker 1: it was. Now the supply chain is not designed for that.
Speaker 1: It's designed for the normal load.
Speaker 3: Now, mister speaker, it is the case that demand has doubled,
Speaker 3: use has not.
Speaker 1: Use has not.
Speaker 3: Demand has doubled.
Speaker 1: But we've got a bunch of children at the moment
Speaker 1: arguing of each other. So just listen to question time.
Speaker 1: It is absolutely pathetic. It's mostly these males trying to
Speaker 1: point score, sort of smirking about it.
Speaker 4: And now the Minister for Energy has been caught unprepared
Speaker 4: for Australia's energy shortages, further punishing Australian households at the
Speaker 4: bowser and at the supermarket.
Speaker 3: The leader of the Opposition appears to want to just
Speaker 3: completely dismiss the.
Speaker 1: Fact that there is a war going on.
Speaker 4: The Minister is providing information to the House on an
Speaker 4: important issue.
Speaker 1: So I'm asking for everyone's assistance, show respect, show restrain
Speaker 1: the ministastical. I even watch Taining a plumba Secret. I
Speaker 1: think it's been set up by the Labor Party go
Speaker 1: head to head with Barnaby on seven's Breakfast Television. It
Speaker 1: was just stunning to watch.
Speaker 5: The most helpful thing people could do is just by
Speaker 5: the fuel they need and know more. That's the most
Speaker 5: helpful thing people could do. And there is the same
Speaker 5: amount of still coming as we've previously had. Honestly, has
Speaker 5: grown up for a change, grown up.
Speaker 1: So what instead of saying we've got a problem, lets
Speaker 1: both sides of politics works together. It's being used by
Speaker 1: both sides to point scool. This is absolute madness and
Speaker 1: it's a failure of leadership.
Speaker 3: Would you urge businesses, for example, to be more flexible
Speaker 3: on work from home let people stay home? Well, I
Speaker 3: think that's a sensible thing to do in any environment. Really,
Speaker 3: you know, work from home has become an important part
Speaker 3: of it.
Speaker 1: But in this Australian oil crisis.
Speaker 3: My Australian working life, and again I think some people
Speaker 3: would already be doing that. There are other people for
Speaker 3: who and that's not an option.
Speaker 2: The government's now saying Australian should consider working from home
Speaker 2: if it's an option to save fuel or to catch
Speaker 2: public transport, if they can do you think that's a
Speaker 2: good idea. And could we even get to a point
Speaker 2: where there's not enough fuel or it's become so expensive
Speaker 2: that there is no other option than for a lot
Speaker 2: of people to work from home.
Speaker 1: Oh, absolutely, So we should be saying to Australians, look
Speaker 1: in order to make sure those reserves we've got are
Speaker 1: as much as possible to deal with what's coming at us. Yeah,
Speaker 1: let's work from home. Don't panic, but let's see how
Speaker 1: we can reduce our consumption. And for heaven, it's like,
Speaker 1: please don't go out and buy more than you absolutely
Speaker 1: have to have. That's just common sense. But I think
Speaker 1: the issue is because their messaging is confused. I don't
Speaker 1: think they've got the legislative authority at the federal level
Speaker 1: to actually start to control the market. And the reason
Speaker 1: I say that is that one of the reports that
Speaker 1: came out in twenty nineteen said the Liquid Fuel Emergency
Speaker 1: Act is not fit for purpose. It takes so long
Speaker 1: to go through the various stages and then eventually to
Speaker 1: have the Governor General sign off a proclamation of an emergency.
Speaker 1: It won't work. So I really have this gut feel
Speaker 1: that they haven't changed the Act enough to actually allow
Speaker 1: a very rapid movement to hang on. We've got to
Speaker 1: do something and take control. I really suspect he hasn't
Speaker 1: got the tool set.
Speaker 2: John other countries they're starting to prioritize their own oil
Speaker 2: and gas supply, and we've seen that especially in Asia,
Speaker 2: they're capping petrol prices, banning the export of refined products.
Speaker 2: But what is it that we can do here in Australia.
Speaker 2: Do we have levers to pull or can we negotiate
Speaker 2: better or even just pay more than everybody else.
Speaker 1: It'll be a combination of things. So every year we
Speaker 1: export mostly to engineers, your single and Japan with guess,
Speaker 1: we export the equivalent to thirty one percent of our
Speaker 1: total transport fuel consumption in a year. We're actually an
Speaker 1: energy fossil fuel energy provider to the region. So what
Speaker 1: we need to say is we understand what you're doing.
Speaker 1: But with this energy we're exporting, let's work out how
Speaker 1: we can do a bilateral deal with each separate country.
Speaker 1: If we send this much either crude, all or condisate
Speaker 1: energy to you, we want you in return to take
Speaker 1: part of that, refine that and send that back to us.
Speaker 1: And we're paying each other to do this because we
Speaker 1: also need to look after our people. If they say no,
Speaker 1: we're not going to do it, then we should be
Speaker 1: looking at Okay, who do we sell it to? And
Speaker 1: now people start saying, oh, but we've got contracts. This
Speaker 1: is not peacetime. We are in a war, but we
Speaker 1: are talking in public as if it's not a war.
Speaker 1: And that's a really big problem because people, well, it's
Speaker 1: just life as normal, going to a couple of erykaans
Speaker 1: and I'll do them. I think, No, we're in a
Speaker 1: war circumstance. It's going to have an effect on us.
Speaker 1: Things are not blowing up down here, but we will
Speaker 1: have a major effect on our energy security and other things.
Speaker 1: So we have to change our mentality.
Speaker 2: Coming up failing to game plan a rogue. President, John,
Speaker 2: you've been warning about our fuel reserves for over a
Speaker 2: decade now, and you wrote a report back in twenty
Speaker 2: thirteen you said Australia only had enough emergency stock to
Speaker 2: cover three days worth of pharmacy supplies, a week of
Speaker 2: chilled and frozen food, and three days worth of fuel
Speaker 2: to petrol stations. Has our situation improved much since then?
Speaker 1: Well, no, funamentally. So I wrote a series of three
Speaker 1: reports and then we went on a whole campaign after that.
Speaker 1: Now let's talk about what's happened since I wrote those reports. Well,
Speaker 1: we've gone from on seven refineries we had then down
Speaker 1: to two and the contracts to support them have just
Speaker 1: been extended till twenty thirty, but there's no guarantee those
Speaker 1: two refineries will just style to stay open, so we're
Speaker 1: not thinking about what we're going to do. Then. The
Speaker 1: other thing is that back in twenty thirteen we didn't
Speaker 1: have any mandated stocks. That was a huge vulnerability at
Speaker 1: the time. Now we were arguing to change that and
Speaker 1: eventually the government lessened at the time and thankfully we
Speaker 1: have mandated stocks, so that's a little improvement. Here's the
Speaker 1: other problem. The ability to move the fuel around the
Speaker 1: country is really a problem. We can no longer move
Speaker 1: fuel around the country by rail except for a small
Speaker 1: amount between Espirants and Carl Gurley. The mining systems have
Speaker 1: closed rail networks, but the rest of the country you
Speaker 1: either hire a ship to move it, which we don't control,
Speaker 1: or you'd move in on trucks. So if you think
Speaker 1: about this logistics system no ships that we control seven
Speaker 1: refineries down to two no rail op think that as
Speaker 1: an artery that's supplied chain, well, it's been really constricted.
Speaker 1: You know, it's full of cholesterol and a bunch of
Speaker 1: other stuff. It's hard to make it move Thankfully with
Speaker 1: the stock mandates coming in, we've got a bit of
Speaker 1: an improvement, but overall the resilience of our energy system
Speaker 1: has gone downhill because of the failure of the two
Speaker 1: major political parties to take this seriously.
Speaker 2: We've really seen the war in the Gulf Escalator. Over
Speaker 2: the last few days. We had Israel striker RAN's most
Speaker 2: important gas field, South Pas.
Speaker 5: The hit on Iran's South Pas gas fielder first true
Speaker 5: sharp criticism from KATA given it has it shares that
Speaker 5: northern end of the facility.
Speaker 2: And then the Iranians they retaliated by hitting Raslafan, the
Speaker 2: world's largest LNG planting.
Speaker 1: Cutter, CEO of cut the Energy says that Iran's attack
Speaker 1: wiped out seventeen percent of Cutter's energy capacity for up
Speaker 1: to five years.
Speaker 2: That is a Now Trump's issued an ultimatum. He says
Speaker 2: he'll destroy a Run's power plants if they don't reopen
Speaker 2: the strait of Hall moves.
Speaker 3: President Donald Trump is threatening an enormous attack on Iran's
Speaker 3: energy infrastructure if Tehran doesn't allow free navigation through this.
Speaker 2: Surely, if he went to that level, that would only
Speaker 2: make the energy crisis even worse. It seems that this
Speaker 2: is a really big crunch time right now.
Speaker 1: So what you've got all the scenarios we did years ago.
Speaker 1: I mean in the military, I did a lot of
Speaker 1: scenario work, but also for this work, we never once
Speaker 1: contemplated that there will be a rogue US president. So
Speaker 1: what's happened. He's gone in there simplistically, and it's backfiring
Speaker 1: on him, and he's worried about the midterms, so he
Speaker 1: needs to finish it quickly. That damage in Qatar, from
Speaker 1: what I've been reading today, could take three to five
Speaker 1: years to repair. If you start blowing up the other
Speaker 1: parts of the energy system and Iran can retaliate because
Speaker 1: you don't need America's firepowder to do this, then we
Speaker 1: are going to have not only an interruption whilst the
Speaker 1: war's on, just up for twenty percent out for a decade.
Speaker 1: I think could go that long. But we're at a
Speaker 1: very difficult time where if we're not careful and we
Speaker 1: allowed that guide to pressure us, that will be the
Speaker 1: dumbest thing that we've done in decades.
Speaker 2: John, you're part of this group of nineteen former Defense
Speaker 2: Force leaders, and you've all called on the government to
Speaker 2: urgently roll out renewable energy, saying it's a matter of
Speaker 2: national security at this point. Now, of course the government
Speaker 2: it's saying that it is doing that, and it doesn't
Speaker 2: happen overnight. It takes time. So what is it that
Speaker 2: you actually want them to do now, because they can't
Speaker 2: do it straight away.
Speaker 1: So another one is recognize their role in not actually
Speaker 1: having been prepared for this. That's the first important thing.
Speaker 1: And then start to work with across the parties. That's essential.
Speaker 1: We've got enough smart people in this country to actually
Speaker 1: work out what to do. We've actually got enough resources
Speaker 1: if we stop wasting them on stupid things like nucleus
Speaker 1: submarines and august. That's not going to happen, but we'll
Speaker 1: waste a lot of money. The solution, when you think
Speaker 1: about it, let's go to a simple level, what can
Speaker 1: we replace on the supply side. Well, biofuels certainly are
Speaker 1: key part of this, not the totality, So renewable diesels,
Speaker 1: you know, sustainable aviation fuels, a bit of ethanol substitution
Speaker 1: in there. That is a very important one. But when
Speaker 1: you talk about it from the right side of politics,
Speaker 1: I'll just say right now, I don't support either side
Speaker 1: of politics, I'm a political from the right side. You'll
Speaker 1: get go you're greenees in your woke, No we're not.
Speaker 1: We need renewable fuels to substitute there to give us
Speaker 1: our energy security. That doesn't quite align with the rhetoric
Speaker 1: from the far right. But you also have to ensure
Speaker 1: that you have fossil fuels. Could be perhaps take that
Speaker 1: huge amount of crude oil we export and find a
Speaker 1: way of refining a bit of that, because when I
Speaker 1: then face the argument from the far left, no more
Speaker 1: fossil fuels ever. Yeah, okay, but we're going through an
Speaker 1: energy transition. The fossil fuels also give you key chemicals, medicines,
Speaker 1: a whole bunch of stuff we need. So on either
Speaker 1: side of politics, you've got this black and white view.
Speaker 1: We are in a mess. It's a teamed approach and
Speaker 1: we have to use a whole range of things. There
Speaker 1: is no coherent system plan in this country to look
Speaker 1: at that transition. And the last time we did a
Speaker 1: national energy security assessment which would allow us to understand
Speaker 1: our risk and vulnerabilities was two thousand and eleven. We're
Speaker 1: now running for fifteen years without a risk assessment. This
Speaker 1: is strategic stupidity on both sides of politics.
Speaker 2: John, thank you so much for joining us.
Speaker 1: You're most welcome. I hope I didn't depress you too much.
Speaker 2: Also in the news, more than seventy five percent of
Speaker 2: ABC staff will walk off the job on Wednesday, in
Speaker 2: their first strike in twenty years. Severe disruptions lasting twenty
Speaker 2: four hours are expected across the Public Broadcasters News Services
Speaker 2: Union say the ABC's offer of a ten percent pay
Speaker 2: rise over three years falls short and doesn't address concerns
Speaker 2: about conditions and penalty rates. And Kyl Sanderlans has launched
Speaker 2: legal action against his former radio network over the end
Speaker 2: of his one hundred million dollar contract. His lawyers say
Speaker 2: the termination was invalid because there was no active, serious
Speaker 2: misconduct or breach of the contract. Sandy Lands wants the
Speaker 2: remainder of his deal paid out in full, but ARN
Speaker 2: is defending its actions and will fight the shock jock
Speaker 2: in court. I'm Nicole Johnston. This is seven AM. Thanks
Speaker 2: for listening.