Are Australia’s petroleum stocks too low?

Last week Shell announced that its Corio refinery at Geelong is up for sale. he likelihood is that the refinery will close. If this happens Australia will be down to four refineries from eight in 2002, with one in Melbourne, two in Brisbane and one in Perth. Australia consumes twice as much oil as it produces, so we are heavily reliant on imports. Furthermore, most of the crude oil Australia does produce is exported while most of the crude oil refined in Australia is imported. Closing a refinery does not directly affect energy security. It just means that Australia imports more refined products like petrol and diesel and less crude oil. However the high level of imports does mean that Australia is vulnerable to any glitches in the supply chain, particularly from Singapore,the main source of refined products. The best way to mitigate this risk is through maintaining adequate local stocks of crude oil, petrol, diesel, aviation fuel and other products. Members of the International Energy Agency, of which Australia is one, are required to hold stocks equivalent to 90 day’s of consumption. However, according to Federal Government statistics, Australian stocks are only around half this level.