Pat McGrath reported this story on Monday, February 24, 2014 12:50:00

ELEANOR HALL: Australia's biggest motoring lobby is warning that the nation's reliance on imported petrol leaves our entire transport network vulnerable to a global oil supply crunch.



The NRMA is calling for governments to cap liquefied natural gas exports. The group says Australia needs to be more self-sufficient if it is to survive a fuel crisis.



Business reporter Pat McGrath has more.



PAT MCGRATH: Today's report from the NRMA estimates Australia now imports about 90 per cent of its crude oil and refined petrol. That's compared with 60 per cent 14 years ago.



Among the major importers and distributors is Caltex, which reported a 28 per cent fall in its annual profit this morning. During today's media teleconference, the company's managing director for Australia Julian Segal focused on the health of the fuel import market.



JULIAN SEGAL: I think the industry has proven that it is very resilient, and the supply chain into Australia is very good.



PAT MCGRATH: It's so good that last year Caltex announced plans to close its Kurnell oil refinery in Sydney, and convert it into a fuel import terminal. That decision came after Shell closed its Sydney refinery.



Australia now has only has only five operating refineries, and a question lingers over the future of Shell's operation at Geelong, which was bought by global oil supplier Vitol last week.



NRMA director Graham Blight believes the loss of the refineries and the increase of imports makes Australia vulnerable to sudden and drastic disruptions in the global oil supply.



GRAHAM BLIGHT: Within three days, we would have no fuel in petrol stations, and there would be an obvious panic, what have you. There would be a lot of the fuel used up in security forces and essential services.



We would… in three days, we wouldn't have any hospital pharmacy supplies, because it's just-in-time management. In seven days, retail pharmacy supplies would be gone. Seven days, chilled and frozen food stocks would be gone. Nine days of dried good stocks.



Now, that's just on that side. The social disruption - how do people get to work? And then you've got to ask the question, well, if it went on for any length of time, what work?



PAT MCGRATH: Today's report says Australia is the only member of the International Energy Agency that fails to meet the required 90 day stock holding. Last year, the country held an average of 60 days worth of oil in reserve.



The NRMA wants the issue to be examined in the Government's up-coming energy white paper. Among the solutions it's proposing is increased use of rail for freight, as well as improvements in public transport.



It's also suggesting that the huge reserves of liquefied natural gas that Australia's developing for export could be used domestically.



GRAHAM BLIGHT: We could be exporting all our gas out of this country, and there mightn't be any left here for us to use in Australia. Now, I just think that's crazy, because there are plenty of ways that we can use gas in our mobility fleet. For example, LNG gas can be used in the transport system, the heavy transport system, but you've got to have a system of supplying the gas up and down the main trucking routes.



PAT MCGRATH: Energy analyst Vlado Vivoda from Griffith University says the reliance on imported fuel could also have serious consequences for Australia's economy. He says it's worsening Australia's trade deficit, and combined with the falling Australian dollar, could lead to an acceleration in inflation.



He's calling for government intervention.



VLADO VIVODA: It's not just evident in the approach to oil, but also, you know, with gas, where we refuse to reserve a percentage of our gas production for domestic usage and just think about and worry about export markets, although our gas prices domestically are rising and are very high by international standards.



I think this complacency is the result of the broader, you know, general complacency in Australia about, you know, energy situation. People, you know, an average Australian in the street, if you asked them is Australia importing any fuel, they would say, no, we are an energy superpower; we export so much coal, we export so much LNG, we export so many other commodities.



People don't realise that we actually are becoming a growing oil importer.



ELEANOR HALL: Energy analyst Vlado Vivoda from Griffith University ending that report from Pat McGrath.