For the sake of future generations, Australia must not give away its birthright for a mess of pottage.
I wrote the following after a long on-line discussion. It was the culmination of a larger debate about the real cost of renewable energy. I have tidied up a few phrases for clarity.
Thank you for your considered replies. I am in my eighties. My profession is agriculture from farming to science to agribusiness.
I have watched this country change substantially over the last 50 years or so. That we have largely lost our ability to be self-sufficient in some of the vital parts of our economy concerns me greatly.
Manufacturing jobs have been exported, it started way back when, when it was to Japan because their labour was cheaper than ours. Then there were others others like Taiwan, Singapore, Korea and Russia for wool. Now we have China.
Fifty years ago , even twenty years ago we were self sufficient in oil, now our position is strategically fragile because the majority of our oil has to make two trips through the South China Sea and there is tension on that sea as China builds artificial islands.
There was a time we were self sufficient in food, now we rely heavily on imports, our food processing and manufacturing industry has fled due, in the main, to high power costs, much of it has gone to NZ, where they now process Chinese produce and then send it here — we eat frozen Chinese fruit and vegetables.
If we are to reclaim any control over our destiny then we can only do that from a strong competitive cost base, integral to that base is power, electricity.
I may not be around to see the changes promised, but I would like to be assured that change will be affordable and will be beneficial to this nation in what is becoming an increasingly competitive world where it seems to me we currently have a strategically fragile position due to our reliance on digging stuff up and sending it away to countries who burn fossil fuel and then we buy back what they produce. Never mind China, have a look at the number of Korean and Japanese cars on our roads.
If you are interested in more detail on our reliance on imports especially from China they are all on my web site at www.globalfarmer.com.au
The position with regard to our fuel oil security has worsened recently with one of the biggest fuel companies in the world, BP, announcing that they will close their oil refinery in Western Australia.
Australia imports over 90% of its oil and fuel needs. Most in finished products, petrol, diesel and Avgas.
The other operators of oil refineries in Australia followed BP and reported that refineries in Geelong and Queensland are also uneconomic and could/will also close.
The announcement from some of the biggest multi-national oil companies in the world that they had decided, unilaterally, to close their oil refineries in Australia within a few years and so force this country to become totally reliant on petrol, diesel and Avgas, provided by them, and principally refined in their refineries in Singapore, Japan and Korea, apparently came like a bolt out of the blue to the Australian Federal Government in general and The Hon Angus Taylor, Minister for Energy and Emissions Reduction, in particular.
This declaration, had a pungency of multi-national self- serving arrogance about it. A smell of hubris that all too often seeps and swirls from under the doors of the boardrooms of the powerful. It’s all about about telling us who really rules us and the world.
It is well known that in spite of all the political blather, the federal government is still running the country on empty or at least it was early last year. Having less that thirty days supply of petrol, diesel and Avgas in the country in February 2020 was a story kept away from the general public by the scare of the covid19 pandemic. That thirty days supply included what was available to the ADF.
That’s right — we spend about 2% of GDP or or nearly $39 billion on Defence every year and yet we have less than thirty days fuel in store to keep our air force in the sky and our army mobile and our navy on the high seas and all of them, if necessary, fighting.
In December 2020, the Australian Government offered a 1 cent per litre subsidy to BP and its mates for every litre of fuel produced in Australian refineries — all in an effort to keep them operating.
Given that the government has no money of its own, this means that the people of Australia, you and I, are going to pay the oil companies another one cent per litre on top of the price gouging that goes on at present. The cost of a litre petrol went up 20¢ just before the Australia Day weekend in WA.
There are no reports that the fuel companies have accepted the federal government’s offer of a subsidy, there are no reports that they have rejected it.
Have we given our birthright away?
We are now being forced to contemplate the decisions this country has taken over the last forty to fifty years and consider whether those decisions have caused us to give away our birthright ‘for a mess of pottage?’
In the seventies we were largely self sufficient in oil and almost everything else we needed to maintain one of the highest standards of living in the world — that was our birthright — together with generations that had gone before us we harnessed the natural resources of the country. We built a manufacturing industry that provided almost all we needed. We produced the cleanest and best food available anywhere in the world and we exported that high quality food, to the world.
Our life in Australia was the envy of the world.
So why did we change and become what we are today, a country so reliant on others, on imports, for vital supplies? We have lost our manufacturing base and we are importing more and more food every year. Why are we importing food to feed just 30 million people? It does not make sense when there is nothing we cannot produce in Australia.
We are still a country with a high standard of living , number 4 in the world, but now we have an agricultural balance sheet, which is seriously dependent on us continuing to export beef, lobster, wine and barley to China. But they have now, in effect, cancelled our trade with them on all those products.
The national balance sheet is highly dependent on China continuing to buy our iron ore, natural gas and coal. China in the June quarter of 2020 bought nearly 49% of our total exports .
So far iron ore has escaped China’s wrath, in fact the price has gone up because of covid19 problems in Brazil. But on the other side of the steel making equation, hundreds of thousands of tonnes of Australian coal ordered by China was for months denied access to ports in China and then forced to find other markets around the world, which it did.
The cost to the Australian coal industry was substantial.
Yet, perversely, in spite of all the bans China has placed on Australian products, the shelves of Bunnings, K Mart, Target and many others, remain stocked with products that are ‘Made in China’. Without China their shelves would be nearly bare and their employees, jobless.
Do your own survey, have a walk around Bunnings, K Mart or Target and look at the labels. I just checked what I am wearing. My shirt, my shorts and my underpants were all made in China and my sneakers in Viet Nam, and what’s more they are all well known Australian or American brands.
China is also making a fool of Australia and showing us how naive we are when it comes to our trade with them. Recently an arrogant kiwi Trade Minister, D. O’Connor, said he would be happy to show Australia how to repair relations with China. Show some respect to China was one of his suggestions.
Of course, what he failed to mention and what the New Zealand Government and our politicians conveniently ignore or don’t know about, is that while we are being banned from sending food from Australia into China, the Chinese, are busy, with an inscrutable smile no doubt, sending Chinese food, fruit and vegetables, into Australia, through our good mates in New Zealand.
It is now apparent for all to see that China has no respect for the Free Trade Agreements it has with Australia, they have torn them up and thrown them in our face. Their arrogance is so deep that they refuse to speak or have contact with any member of the Australian Parliament from the prime minister down.
We can all now see that the Chinese are commercial bullies. They have decided to punish Australia by causing damage to many large and small agricultural and fishing businesses in Australia, businesses who in the past have viewed the Chinese as good trading partners.
China Holds the Whip Hand on Australian Fuel Supplies.
China if it wanted to, could disrupt or even stop oil supplies into this country and so doing severely fracture our national economy — it could do that by simply rattling its sabre in the South China Sea.
Remember, we have less that a months supply of fuel in Australia, a lot less, and the majority of our oil makes two trips through the South China Sea. The first as crude and the second as petrol, diesel and Avgas.
If China disrupted our oil supplies we would have to rely of President Biden and his anti oil government to help us out — would Biden do that? He has just shown, within a week of getting into the Oval Office, that he doesn’t believe in America being self sufficient in oil so he reversed a position that had taken 50 years to establish. America will now, again, rely on and import oil from the Middle East.
A free South China Sea is important. The world relies heavily on all sea routes in the Pacific remaining open, not just for oil but for the vital exports and imports from Japan, South Korea, Viet Nam, Thailand and of course the United States and South America. The Pacific is the trade route of the world.
It is estimated that one third of world shipping, worth US$3.7 trillion travels through the South China Sea each and every year. China is showing, by its actions that it is intent on controlling that sea.
If you’ve got them by the balls, their hearts and minds will follow.
– Theodore Roosevelt
(In a previous article I wrongly attributed this quote to President Nixon, apologies to Theodore)
The answer has to be yes. The motive of all oil companies, not just BP, is to make a profit for their shareholders and by and large they have shown they don’t care how they do it.
We have been shown that fuel security for our farming, road transport and that of the Australian Defence Forces, is of no importance to the board of BP and all other oil companies —why should it be?— profit rules and the rewards for those who generate the profits are eye-watering, look at this and wonder:
- BP Chief Executive Bob Dudley’s pay package slipped to $14.7 million last year (A20.8 million Ed) from $15.1 million in 2017, even though the oil and gas company’s profits doubled to a five-year high.Mar 29, 2019
- Royal Dutch Shell CEO Ben van Beurden saw his pay package more than double to 20.1 million euros (A$33 million) in 2018, mainly thanks to a bonus and an incentive plan for delivering on targets. It was the second highest pay on record for van Beurden since he became CEO in 2014.
- Total CEO Patrick Pouyanne, on the other hand, saw his proposed salary reduced to 3.1 million euros ($3.6 million) from 3.8 million in 2017.
What is insidious is that BP in Western Australia and the other oil companies in Geelong and Queensland will have built the economic life of their refineries into their strategic plans. They will have known when, without adequate repairs and maintenance and constant upgrades, their refineries would reach the end of their commercial life.
So, what they have done, quite deliberately, even with malice of forethought, is plan for their refineries to become uneconomic and they have, quite deliberately, told no one, not even the Australian Federal Government. Why have we given our autonomy away to these multi national oligarchs?
- Why, for goodness sake, was Angus Taylor not aware that almost all Australian oil refineries were scheduled to close?
- How close is the minister to the oil industry?
- What does the minister demand of the oil industry when they hold all the cards in the provision of oil and fuel to this country, especially to the ADF? Can he demand or do they hold all the cards?
- Should our ability to defend our country be dependent on the decisions made by Boards of foreign oil companies?
What is the Answer?
Petroliam Nasional Berhad (PETRONAS) is a global energy and solutions company, ranked amongst the largest corporations on Fortune Global 500®.
As I understand it they are a quasi government company, which virtually manages the energy needs of Malaysia. They are best known to many for being the main sponsors of the Mercedes F1 team.
Maybe we need an Australian version of Petronas? I know, some will say that nationalisation is a form of socialism and it is — the alternative, which we have tried, is private enterprise and they have shown that their main objective in their life is to maximise profit for their shareholders not the security of fuel and oil supplies to keep Australia secure.
It is vital that we have stocks of fuel and oil refineries in Australia with the capacity to keep this country moving, literally, for the duration any emergency.
How long that emergency will last is like asking how long is a piece of string?