There was an important article in The Conversation today, arguing that China’s sabre-rattling around Taiwan underlines the need for Australia to be prepared for conflict in the South China Sea.
This is because past over few decade all but two local refineries have closed. So even while we export crude oil, we import about 90% of refined fuels. So of particular concern is our reliance on liquid fuels imported via South China Sea shipping routes. This reliance has become more pronounced because Australia, has chosen to apply minimal regulation or government intervention in pursuit of an efficient market that delivers fuel to Australians as cheaply as possible.
There are five main options to reduce our vulnerability: diversify import sources; increase local refining capability; reduce dependence on fossil fuels; increase strategic reserves; and educate and prepare the population for possible shortages. All will require government departments planning together with various industry sectors, including fuel retailers, refineries and import terminals, manufacturing, freight transport, maritime, defence, communities and other relevant stakeholders.
Or we could just keep our fingers crossed, and hope the market will magically fix the problem, though I suggest this is a pipedream.
Once again Mr Market has the potential to crush and destroy. Yet this approach in wired into the very fiber of Government and Treasury.
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