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