Global shocks may have sparked Australia’s energy crisis – but our vulnerability is self-inflicted.
Energy is geopolitical currency, and nations that can produce, process and supply it hold a decisive strategic advantage.
By that measure, Australia should be strong. Instead, we are sliding into strategic weakness.
The closure of the Strait of Hormuz has seen the United States become the world’s swing supplier of oil, exporting record volumes to steady markets.
For Asia – and for Australia – that has helped secure supply and cushion price spikes. But as US exports have risen, inventories have tightened, prices have jumped around 50 per cent, and pressure is building in Washington to prioritise fuel at home.
Even a small drop in US global supply will ripple through markets. Australia, heavily reliant on imported refined fuels, is vulnerable.
“Instead of strengthening energy diplomacy, the Albanese government prioritised climate symbolism.”
For four years, the Albanese government has sent damaging signals to energy markets. At COP28, Energy Minister Chris Bowen declared “we need to end the use of fossil fuels”.
Combined with higher taxes, slower approvals and regulatory uncertainty, the result has been weaker supply and reduced confidence. And the consequences have been visible.
Until the war in Iran, Australians felt the impact of the government’s ideological energy policy in soaring household power bills. Now they see it at the bowser and the supermarket.
At the same time, Australia’s reputation as a reliable supplier of our own energy sources has been going backwards. As former Japanese ambassador Shingo Yamagami warned, Japan’s corporations have started seeing Australia as a sovereign risk.
Given we supply around 70 per cent of Japan’s coal and 40 per cent of its LNG, this should have set off alarm bells in Canberra long before this current crisis.
But instead of strengthening energy diplomacy, the Albanese government prioritised climate symbolism. Foreign Minister Penny Wong put climate initiatives – including a bid to host a future COP – at the centre of Australia’s international engagement.
Now, under pressure, the tone is shifting.
The prime minister and foreign minister have been touring Asia, talking up energy security – though it looks as much like an apology tour to repair years of mixed signalling.
They are right to engage the region on fuel security, but they have failed to deliver the long-term arrangements Australia needs.
Each new memorandum of understanding is hailed as progress. But what Australia needs are MOUs of a different kind: molecules of use.
Extra shipments via Export Finance Australia are welcome, but they are not enduring solutions.
Markets are already flashing warnings. A sustained losing streak on the ASX 200 reflects growing concern about energy instability, inflation, and the economic shock of supply disruption. Markets move early.
They are signalling what the Albanese government is yet to confront: the global energy system is entering a more contested phase and Australia must respond.
First, we need to prioritise energy diplomacy over climate symbolism. That means pursuing binding bilateral and regional fuel security agreements – especially with key Asian partners – to guarantee access in times of disruption.
Second, we should double fuel reserves to 60 days, increase storage, and bring Australian refineries back online to keep supply flowing.
Third, we should back investment in producing Australia’s oil, coal, gas and uranium – at scale.
Temporary fixes may buy time, but if the Strait of Hormuz remains shut and the United States pulls back supply, the risk of recession in Australia will rise materially.
Either way, it is a profound failure of public policy that Australia is begging abroad at the very moment our own energy endowments should be a source of strength.
