• Aug8

    WA’s Strategic Fuel Risk and a Part Possible Solution

    By Cam Dumesny

    WARTA is extremely concerned at the strategic vulnerability to the state of its fuel reserves.  The WA road freight network carries the bulk of the distribution task to service the community and economy.  To do this, the road freight industry needs fuel.

    Fuel supply to WA is predominantly supplied through Kwinana. This is a combination of both processed crude and imported refinery stocks from Chennai (15 days sailing) and Singapore (9 days sailing).

    Anecdotal advice received is that at the low point of the fuel resupply cycle from overseas, WA may have as little as a few days fuel in both the refinery and retail site tanks.

    Industry analysis has identified that if the WA supply lines are cut for whatever reason, then rail resupply from Adelaide can only deliver 5% of WA’s needs, assuming a consumption rate of 17 m

    Defence and NRMA identifies fuel security as an real concern – link

    For security reasons Australia is meant to hold 90 days stocks according to its obligations with the International Energy Agency.

    As an IEA member and signatory to the IEP Treaty, Australia is required to hold oil stocks equivalent to at least 90 days of the previous year’s average daily net oil imports. (source)

    Increasing numbers of WA transport operators are using self-bunded fuel storage tanks on their sites.  These tanks can range from 10,000 to 110,000 litres.

    If 1000 of the 7000 registered transport operators in WA each held 30,000 litres, then WA could have an additional 30,000,000 litres.  It may add a week or two of additional capacity.  But even this modest amount will add significantly to current almost negligible reserve capacity.

    The figures above are only guides meant to provoke the conversation.

    WARTA believes that consideration should be given to including such tanks in the national obligation to meet the IEA agreements as well as mitigating WA’s fuel risk.

    In return the Government should provide a financial incentive to transport industry operators to hold the fuel.  This could be done as a discount off the diesel fuel excise.

    Recommendation

    In its submission to the national freight and supply chain strategy, WARTA recommended that:

    1. Consideration be given to evaluating the strategic value of transport operators holding fuel in order to mitigate supply risks, and
    2. Examine the cost-benefit of introducing an incentive to transport operators to encourage the use of such tanks to meet our International obligations.