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End oil imports

Summary:
One of the consequences of the pandemic has been the realization that reliance on the ready availability of imported goods may be a problem in a crisis. This isn’t new, particularly in relation to oil, which plays an outsized role in geopolitics. The supposed need to protect sea lanes, and particularly oil supplies against disruption has been a major part of the rationale for naval defence spending. And we have repeatedly been criticised for failing to maintain stocks of refined petrol. I’ve been underwhelmed by some of these arguments, but it seems as if it’s time to take them seriously, particularly in relation to oil. If we are to decarbonize the economy, we need to reduce our consumption of oil, ultimately to zero. The obvious place to start is by reducing imports of oil,

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One of the consequences of the pandemic has been the realization that reliance on the ready availability of imported goods may be a problem in a crisis. This isn’t new, particularly in relation to oil, which plays an outsized role in geopolitics. The supposed need to protect sea lanes, and particularly oil supplies against disruption has been a major part of the rationale for naval defence spending. And we have repeatedly been criticised for failing to maintain stocks of refined petrol.


I’ve been underwhelmed by some of these arguments, but it seems as if it’s time to take them seriously, particularly in relation to oil. If we are to decarbonize the economy, we need to reduce our consumption of oil, ultimately to zero. The obvious place to start is by reducing imports of oil, with a medium-term goal of self-sufficiency.

Australia currently produces about 40 per cent of the oil we consume. Under business as usual, that’s likely to decrease, due to a combination of increasing consumption and decreasing domestic production. To reverse this trend, we need a rapid shift to electric vehicles along with requirements for greatly increased fuel efficiency for new internal combustion engine vehicles.

As with the decarbonization of electricity supply, the technology is all there. Replacing the existing car fleet will take a long time, so its unlikely that we could achieve oil self-sufficiency before 2030, or a completely decarbonized transport system before 2040. But that’s not a reason for delaying action, quite the opposite

The ‘range anxiety’ problem for electric vehicles is anachronistic. Ranges in excess of 400km are commonplace and the network of charging stations on major highways is expanding fast. As for internal combustion engine vehicles, Australia currently has the worst fuel efficiency in the world, so there is plenty of room for improvement.

We don’t have a domestic car industry any more, so there is no immediate problem with an employment transition. Electric vehicles generally require less maintenance than those with internal combustion engines, so there will be a slow decline in work for car mechanics. But it seems hard to make the case that we should keep servicing costs high in order to create make-work.


Among the obstacles to a rapid reduction in our reliance on imported oil are the entrenched attitudes of car dealers, who are comfortable with their existing business model, and the fact that our existing refineries produce dirty high sulphur fuels which wreck fuel-efficient cars.

The biggest problem, however, is the position of culture warriors in the government and media, reflexively opposed to any action to mitigate climate change. Their positions are increasingly self-contradictory. Most favor an aggressive foreign policy based on perceptions of a dangerous global and regional environment. But, as with increasing reliance on Chinese finance for the coal industry, maintaining a carbon-based economy implies a reduction in national security, putting it in the hands of dictators like the current ruler of Saudi Arabia, and vulnerable to random disruption by shocks like the pandemic.


Self-sufficiency in oil would be good for our security and good for the global environment.

John Quiggin
He is an Australian economist, a Professor and an Australian Research Council Laureate Fellow at the University of Queensland, and a former member of the Board of the Climate Change Authority of the Australian Government.

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