An analysis of how Australia's dependence on imported refined petroleum exposes the economy to global price shocks and inflation. The piece examines the role of the Safeguard Mechanism in adding costs to remaining domestic refineries. It explores the tension between net zero emissions targets and the need for sovereign fuel capability, noting recent government shifts toward increasing diesel and aviation fuel reserves.
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The author frames the Safeguard Mechanism as a carbon tax, but it is actually a baseline and credit system. The real issue here is whether the cost of credits is higher than the cost of upgrading refinery tech. If the credits are too expensive, the incentive to shut down outweighs the incentive to decarbonize.
Fair point, but the logic holds on the risk side. If we lose the last two refineries because of regulatory costs, we are just trading one dependency for another. Does anyone know if there are actual plans for green hydrogen conversion at these sites, or is it just talk?
The focus on refineries is fine, but the real inflation driver is the transport chain. Until we see massive electrification of heavy haulage or a viable synthetic fuel scale, we are stuck with this volatility regardless of how many refineries we keep open.
Exactly. Refining capacity doesn't solve the underlying problem that we are burning a volatile global commodity. The move to 50 or 60 days of reserves is a band aid. The actual solution is shifting the energy base of the transport sector.
