Review of the Liquid Fuel Vulnerability Assessment
ACIL Tasman was engaged by the Department of Resources, Energy and Tourism to review and update aspects of the previous Liquid Fuel Vulnerability Assessment (LFVA) undertaken in 2008. This review was to focus on:
- Australia’s vulnerability to a large scale supply disruption
- current affordability of liquid fuels in Australia
- any emerging energy security issues or risks arising in the face of growing liquid fuel imports.
The review was to include modelling of the impacts of an oil shock scenario to be included in the 2011 National Energy Security Assessment.
Key findings of the review
A summary of the key findings of the report is as follows:
- There has been no significant change in Australia's liquid fuels vulnerability since the 2008 review. Adequacy in terms of suppliers being able to keep up with demand has been maintained. This is likely to continue, over the medium term and potentially to 2035 according to the 2011 IEA World Energy Outlook.
- The need to develop more remote oil resources or unconventional sources of oil is likely to place upward pressure on global prices over the longer term.
- Australia’s growing dependency on oil and petroleum product imports will have limited affordability, reliability and security implications for liquid fuels supply.
- The market would respond and readjust the supply lines to replace supplies lost in the event of a disruption. Prices would rise and there would be a cost to the economy. However, the impact could be reduced in size and duration in the event of a coordinated response by IEA members designed to increase available supply.
- Ongoing investment in adequate importing capacity and storage will continue to be important in the future. However, there is sufficient clear evidence of significant recent and planned investments in import capacity to provide confidence that Australia will continue to be able to meet its growing domestic demand for liquid fuels.
- There are also measures which could improve the monitoring and decision-making surrounding liquid fuels supply, and also contribute to meeting Australia’s international stock obligations (see recommendations).
How the vulnerability assessment will be used
The vulnerability assessment will be utilised by the Australian Government to inform future policy developments in regards to Australia’s broader energy security considerations. It has directly contributed to the Australian Government’s National Energy Security Assessment (NESA) in respect to matters relating to liquid fuels.
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