Australia is critically exposed to geopolitical risk due to an overwhelming dependence on imported liquid fuels. Liquid fuels are critical to Australia’s national security. 

The recent Iran war and disruption through the Strait of Hormuz have shown how quickly overseas conflicts can translate into price spikes, physical shortages and emergency planning in Australia. A major war in Asia could cut off far more supply almost overnight, and this is no longer a contingency Australia can afford to ignore. Current policy positions have failed to confront the seriousness of this exposure, and have left us without a sufficient response. This paper proposes that domestic production is the only viable strategy that delivers genuine security.

Report structure

• Part I outlines the current liquid fuel insecurity in Australia, grounded in the growing threat of a major war in its region.
• Part II shows that Australia has realistic and cost-effective options for fuel security. It recommends a strategy of domestic production as the only way to achieve genuine security, and highlights that there are very promising opportunities that may have little net cost to achieve high levels of domestic production.
• Part III discusses the rationale for paying an insurance premium to secure Australia's fuel supply. Besides the direct national security benefit, there are other benefits of a strategy of domestic production which have significant value.