Melbourne, Australia – A multimillion-dollar advertising campaign encouraging Australians to save fuel for “our trucks” is one of the ways the government is attempting to address the shortage caused by the war on Iran.
Since the beginning of March, the Strait of Hormuz, through which 20 percent of the world’s oil and liquefied natural gas (LNG) is supplied during peacetime, has been effectively closed and shipping traffic has declined by 95 percent.
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Australia’s heavy dependence on oil refined in Southeast Asian countries, which, in turn, import crude through the Strait of Hormuz, has led the government to turn to “fuel diplomacy” and cut fuel taxes to limit price shocks.
But experts told Al Jazeera such measures are little more than a “China hit” that will do nothing to address the long-term problems associated with Australia’s heavy reliance on fossil fuels.
‘No plans’
Australia imports about 80 per cent of its refined fuel needs, much of it from “regional refining hubs such as Singapore, South Korea and Malaysia, which are dependent on crude oil imports from the Middle East”, said Hussein Dia, professor of transport technology and sustainability at Swinburne University of Technology in Melbourne.
“While some Asian economies may face more immediate risks, Australia remains structurally vulnerable due to its reliance on imported refined fuels and stretched supply chains,” Dia told Al Jazeera.
To bridge the gap, Australia’s Prime Minister Anthony Albanese has turned to “fuel diplomacy,” Dia said, with recent visits to Singapore, Malaysia and Brunei, where he is trying to increase supplies of fuel and fertilizer.
As a major exporter of LNG and coal, Australia has some leverage in these negotiations, said Tim Buckley, director of think tank Climate Energy Finance (CEF).
But, he said, it is notable that Australia’s situation is very different from that of its historical ally, the US, which is not as dependent on oil exported through the Strait of Hormuz.
“We don’t get any of our oil from the United States,” Buckley told Al Jazeera.
“I would not rely at all on our historic alliance with the United States to help Australia recover from this crisis,” he said.
“America started the war. America had no plan.”
‘Sugar’s hit’
Domestically, the Albany government has tried to ease the burden of rising gasoline prices on consumers by halving the federal tax on fuel.
Yet while many Australians view the broader consequences of the regional war primarily through the lens of prices at the petrol pump, experts told Al Jazeera that cutting fuel taxes would not solve the long-term issue of Australia’s dependence on imported refined oil.
Ketan Joshi, a freelance writer and senior research fellow at the Australia Institute, said the policy is a “sugar hit” that could prove “counterproductive”.
“Subsidizing fossil fuels during a crisis, where fossil fuels are getting expensive, has a very perverse effect, where you increase dependence on the thing that is causing the most pain in society.”
Elected in the wake of the devastating bushfires in 2019–2020, the Albanese Labor government promised to make Australia a “renewable energy superpower” after years of conservative governments digging in their heels on fossil fuels.
Yet, according to Dia, electric vehicle (EV) sales in Australia have been relatively low at around 10 per cent in recent years, “compared to the much higher share in countries like China”.
“While EV adoption is on the rise, the transportation system is highly dependent on liquid fuels,” Dia said.
To try to reduce petrol demand, the Australian states of Victoria and Tasmania offered free public transport from the beginning of April, with Queensland already offering low-cost fares of 50 cents ($0.36).
New South Wales this week announced plans to invest $100 million in EV chargers.
This week’s fire at the vital Geelong oil refinery in Victoria has reminded policymakers that Australia’s domestic supply of refined oil is provided by just two facilities, both more than 50 years old. Geelong is the largest, producing 120,000 barrels of refined oil per day; The other is the Ampol Lytton Refinery in Brisbane, Queensland.
‘Australian Sun’
The fire, which burned for several hours in Geelong – coupled with the energy crisis – prompted Australian Energy and Climate Minister Chris Bowen to cancel next week’s trip to the world’s first conference on phasing out fossil fuels in Santa Marta, Colombia.
Bowen recently told reporters in Canberra that, unlike oil, “the Australian sun can’t be disrupted by war or anything else”.
“Solar energy has to travel 150 million kilometers from the Sun. It doesn’t have to travel 150 kilometers across the Strait of Hormuz.”
While France announced last week it would spend 10 billion euros ($12 billion) a year to electrify its economy, and Australia’s neighbor, Indonesia, which is still reeling from recent floods, has pledged to increase solar power production by 100 gigawatts, Bowen has not announced any new investments in renewable energy recently.
This reflects Australia’s long history where relatively high use of solar energy has been driven primarily not by central government policy, but by homeowners installing solar panels on their roofs, often with subsidies from state governments.
One in three Australian homes now has rooftop solar panels, with four of Australia’s six states announcing homes will soon get three hours of free electricity a day.
Although not directly linked to the war-related price shocks, Joshi says the timing of these announcements is “incredible.”
Joshi said, “Increasing the integration of solar energy into the power grid is directly leading to a significant reduction in gas use in Australia,” a commodity which saw a significant price increase in Australia due to Russia’s invasion of Ukraine in 2022.
“Combined with batteries, solar energy deployment in Australia is significantly reducing gas burning, and is also driving long-term systemic change when the “next crisis” comes,” Joshi said.
Following the lead of smaller neighbors
Bowen’s decision not to attend the Santa Marta conference comes despite his role as chair of negotiations at this year’s top climate change conference, COP31.
Australia had lobbied to host COP31 to try to improve relations with its Pacific island neighbours, who have long said uncontrolled climate change poses an existential threat.
Like many other developing countries, Pacific Islanders face serious consequences from rising oil and fertilizer prices, potentially worse than those suffered by Australians. This includes the island nation of Tuvalu, which spends 25 percent of its gross domestic product (GDP) on fuel, and has declared a state of emergency.
Christiaan de Beuckelaer, senior lecturer in culture and climate at the University of Melbourne, told Al Jazeera that the oil price increase is “severely affecting our Pacific neighbours, whose biggest concern now is ensuring sufficient supply to keep basic services running”.
“Australia will make significant efforts to reduce fuel demand by choosing alternatives whenever and wherever they are available,” de Beukeleyer said.
