Australia's $94M boost to fuel reserves raises key question
Australia is taking advantage of historically low fuel prices around the world by spending $94 million to establish a strategic fuel reserve, but there's a catch - it won't be stored in Australia.
Energy Minister Angus Taylor told reporters on Wednesday that the price of fuel has dropped to "very, very low" levels as a result of the global pandemic.
"I can announce today the Australian Government has made an initial allocation of $94 million to begin building a strategic fuel reserve," he said.
"Initially, that reserve will be held in the United States, where there is spare storage. We have full storages here in Australia. But in time, we are exploring opportunities with the industry to establish local storage.
"We are moving with the storage we can access, which right now is in the United States.
He said that "in the event there is a global disruption that slows fuel supplies moving around the world, we will get access to the fuel we need to keep our country going".
But reporters quizzed the minister on the logistics.
"How long do you anticipate the supply will be kept in the US?," Mr Taylor was asked.
"It is going to take time for us to increase our storage capacity in Australia," he said.
"So, those discussions are on going with the industry. We know that that is a priority. That's an important piece of work that needs to be concluded as soon as it possibly can."
Another reporter asked what might happen if Australia went to war and needed fuel urgently.
"How do you get the fuel here, though, if there is an enemy submarine … Don't laugh! This is a serious question," the reporter said.
"If you want to strangle the country's fuel supply you put a submarine off Botany Bay and target nearby. How do you manage the issue of getting the fuel here when it's not in the country in the time of a potential conflict?"
Mr Taylor did not respond to the question directly.
"The point I have been making all along is now is the time to start building the reserve, because we can do that is a way … we can do that in a way which is attractive to taxpayers," he said.
"That's the point. Now, over time, do we want more of that to be onshore? Of course we do. Of course we do. It is better to have it located in Australia than anywhere else in the world. But let's take the opportunity as it arises. That's exactly what we are doing.
"Right here and now. And, of course, there are many, many scenarios - many possible disruptions - where having fuel in your supply chain will help enormously. There are some extreme scenarios you have described where it's important to have enough fuel locally as well. "And we're conscious of that, which is why those discussions with the refiners, with the local industry to make sure we have enough storage here in Australia are an important part of the work we're doing right now."
Mr Taylor said Australia had between 20 and 30 days worth of fuel on home soil.