Australia imports almost all of its oil, and there are pitfalls all over the globe



File 20180523 51105 7k0ca3.jpeg?ixlib=rb 1.1
An oil tanker leaves Sydney Harbour.
Saberwyn/Wikimedia Commons, CC BY-SA

Anthony Richardson, RMIT University

Australia’s fuel security is far more precarious than we might realise. Not only do we not have the internationally mandated 90-day stockpile, but the ongoing closure of Australia’s refineries means we are on track to be 100% reliant on imported petroleum by 2030.




Read more:
Australia’s fuel stockpile is perilously low, and it may be too late for a refill


Australian refineries import roughly 83% of the crude oil they process from more than 17 countries, mainly in Asia (40%), but also Africa (18%) and the Middle East (17%). We are a significant oil producer, but export 75% of our crude production, with the largest recipients being Indonesia and Singapore.

At the same time, the importance of importing refined petroleum from overseas is only increasing as our local production declines.

Australia’s imports and production of refinery products.
Dept Environment and Energy/Dept Industry, Innovation and Science

Currently, 51-53% of our imported refined petrol comes from Singapore’s refineries, with 18% from South Korea, 12% from Japan and the rest from a range of other countries. Asian refineries in particular are extremely competitive in terms of production and transport costs.

Australia’s fuel supply routes.
NRMA

The consequences of disruption

Without significant fuel reserves, Australia could face serious consequences in the event of disruption to these imports. In any complex system, even temporary disruptions can cause “cascading failures” across other parts of the system, and these effects don’t stop the moment the supply is restored.

Maintaining our oil supply is not just about keeping our cars on the road. Any serious disruption would have consequences within days for our food supplies, medication stocks, and military capacity.

Australia’s liquid fuel reserves compare poorly with stockpiles of other goods.
NRMA

If a complex system is to be resilient, it needs redundancy. This means that it has backup processes that enable the overall system to continue to function even when some part of it breaks down.

Unfortunately, such backup systems are not efficient, because the system is doubling up on resources. Efficiency is therefore one of the enemies of system resilience – this is best demonstrated by the concept of “just in time” supply chains, in which stock arrives when it is needed, minimising the costs of holding excess inventory in stock. Such an approach is certainly efficient, but it is also fragile. This is a pretty good description of Australia’s current oil supply chains.

The 90-day oil reserve recommended by the International Energy Agency is a textbook example of system redundancy, as are local oil refineries. They provide onsite reserves (5-12 days) and local refining capacity. But in the interests of economic efficiency we have chosen not to invest in this redundancy.

Possible causes of disruption

Australia’s geographically dispersed oil supply chains mean that there are several places around the world where they can potentially be disrupted.

More than 40% of the world’s oil passes through the Strait of Hormuz, the only sea passage out of the Persian Gulf. Controlling the strait remains a clear (and possibly achievable) aim of Iran in any military confrontation.

This has arguably been made more likely by the US administration’s decision to reimpose economic sanctions on Iran. At the same time, the recent shale gas revolution in the United States has weakened the traditional US strategic imperative to keep the strait open.

The ongoing tensions in the South China Sea also threaten Australia’s other major supply route for oil, not least because of our difficult geopolitical position in the middle of the heavyweight rivalry between the US and China.

Finally, the apparent defeat of the Islamic State group in Iraq and Syria has led to concerns that radicalised Indonesians are returning home to continue the fight. The vulnerability of our supply lines through Indonesia has already been recognised.

Trading places

Oil is often described as a “fungible commodity”. This means that oil from different suppliers is interchangeable, so if supply is disrupted we can just buy it from somewhere else.

But it is not as straightforward as that. First, the point in the system at which supply is disrupted is crucially important. For example, Australia’s fuel ports represent particularly problematic junctions, as a 2013 fuel security review for the National Roads and Motorists Association pointed out:

For example, the primary fuel port in South Australia is at Port Adelaide; a single, narrow, shipping channel services the port. A blockage of that channel, as the result of a shipping accident/incident, could result in significant and prolonged disruption to fuel supplies for Adelaide and a large part of the state … given the inability to transport sufficient fuel stocks overland to South Australia.

What’s more, while it is generally true that oil is fungible within an open global market, not all suppliers necessarily share this assumption. Thus China, faced with rising domestic consumption, is planning to outbid Western oil companies for contracts, or else buy the entire companies outright.

Just like the US, China sees oil more as a national security concern than as a fungible global commodity. Access to even a share of the global oil supply can be a tool of political or economic influence, as the OPEC embargo in the 1970s infamously showed.




Read more:
Four decades later, has America finally got over the oil crisis?


The ConversationIn the end, while other countries move to secure their national fuel supplies, we continue in our misguided faith in an unfettered global oil market being able (or willing) to supply our needs in situations of crisis. Hopefully the proposed Fuel Security review will mean these challenges are finally taken seriously.

Anthony Richardson, Research Fellow, Future Social Service Institute, RMIT University

This article was originally published on The Conversation. Read the original article.

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Imposing GST on low-value imports doesn’t level the playing field


Kathrin Bain, UNSW

The government wants to extend GST to imported online goods under A$1000, effective from 1 July 2017, with Treasurer Scott Morrison stating it will “establish a level playing field for our domestic retailers”. But the proposed legislation doesn’t do this. Rather, it unfairly imposes GST on goods purchased from overseas sellers, that wouldn’t be subject to GST if purchased from an Australian seller. The Conversation

The government also hasn’t cleared up how the collection will be adequately enforced. Without appropriate enforcement, collecting more revenue from this tax seems unlikely.

Currently, low-value imports (those with a customs value of A$1,000 or less) are exempt from GST. If the legislation is passed, overseas vendors who sell more than A$75,000 of low-value goods to Australian consumers would be required to register for GST, and collect and remit GST on low-value goods to the ATO.

Those imports will continue to be stopped at the border with any GST, customs duty, and associated fees paid to Australian Border Force by the importer before the goods are released.

For sellers of low-value goods it will mean that an overseas supplier of both low and high value goods will be subject to two separate tax regimes. The requirement to collect GST will apply only to low-value goods.

Online marketplaces and mail forwarding services

The new law will also apply to online marketplaces such as eBay and “redeliverers” – businesses that forward goods to Australia from overseas companies. For goods purchased through an online marketplace, the marketplace rather than the seller will be treated as the supplier. Similarly, if low-value goods are delivered to Australia by a redeliverer, they will be considered to be the supplier for GST purposes.

While extending the GST to these goods is meant to level the playing field between overseas and Australian vendors, treating the online marketplace or mail forwarder as the supplier of goods is inconsistent with the treatment of domestic transactions.

As eBay has stated in their submission to the Senate Committee: “eBay is not a seller. eBay is a third-party online marketplace that simply connects buyers and sellers”.

For Australian vendors who sell items on eBay, it’s the individual seller who is responsible for collecting and remitting GST on products they sell (if they are required to be registered). A seller who uses eBay, but isn’t carrying on an enterprise or does not meet the A$75,000 turnover threshold, isn’t required to be registered and would not be required to collect GST on their sales.

However, the proposed legislation does not treat overseas vendors in this way, by treating online marketplaces and mail forwarding services as the supplier of goods. The Treasurer stated that:

Including online marketplaces ensures that only a limited number of entities need to collect the GST, rather than the multitude of small, individual vendors making supplies through these online marketplaces that compete with Australian retailers here in Australia.

With all due respect to Scott Morrison, he seems to have missed the point that small, individual vendors should not (if their turnover of low-value goods into Australia is less than A$75,000) be required to collect GST merely because they use an online marketplace.

EBay has gone as far as stating in their submission that: “Regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers”. This is because they would not be able to comply with the requirements imposed under the new legislation.

Compliance concerns

Despite the legislation being intended to come into effect on 1 July of this year, it is still unclear how the new system will be adequately enforced.

At the moment, information displayed on international mail declarations doesn’t indicate whether the overseas supplier is registered (or required to be registered) for GST. It also doesnt say whether GST has been collected, and whether it is being correctly remitted to the ATO. Even if this information was readily available, it’s not clear how the ATO would deal with non-compliant entities.

If it was determined that GST had not been charged and collected by the overseas supplier of the low-value goods, there is nothing in the proposed legislation that would allow the GST to be collected from the importer (instead of the supplier) when the goods enter Australia. However, attempting to enforce an Australian tax debt against a non-compliant overseas vendor would be a complex, costly, and likely fruitless endeavour.

Consumer advocate group Choice has expressed concern that the government would use powers under the Telecommunications Act to block the websites of non-compliant entities. However, Scott Morrison has indicated that the government has no intention of using this power.

Concerns regarding enforcement have been echoed in a number of submissions, including the Taxation Institute of Australia and Amazon. Both highlight the fact that lack of enforcement may simply encourage Australian consumers to purchase goods from non-compliant overseas entities that are not charging GST.

By treating online marketplaces and mail forwarding services as the supplier of goods, the proposed legislation does not treat overseas vendors in the same way as domestic vendors. The tax will only be effective if the system for collecting GST on imports can be adequately enforced. Without appropriate enforcement, high levels of compliance seems unlikely. A lack of compliance will continue to leave Australian retailers at a disadvantage, with only minimal increase in GST revenue.

Kathrin Bain, Lecturer, School of Taxation & Business Law, UNSW

This article was originally published on The Conversation. Read the original article.

Seizure of 15,000 Bibles in Malaysia Stuns Christians


Imports confiscated for using “Allah,” a forbidden word for non-Muslims.

FRESNO, Calif., November 7 (CDN) — Malaysian port and customs authorities have seized at least 15,000 Bibles in recent months because the word “Allah” for God appears in them.

Some 10,000 of the Bahasa Malaysia-language Bibles, which were printed in Indonesia, are in Kuching, capital of Sarawak in East Malaysia, and another 5,000 copies are in Kelang near Kuala Lumpur.

The Christian Federation of Malaysia (CFM) on Wednesday (Nov. 4) called for the immediate release of the confiscated Bibles. At the same time, CFM Executive Secretary Tan Kong Beng told Compass that the federation is striving for amicable relations with government authorities.

“We are open to and desire further discussion with officials so that this problem can be resolved,” the CFM official said.

The CFM officially represents the three major Christian groups in the country: The Catholic Bishops’ Conference of Malaysia, the Council of Churches of Malaysia, and the National Evangelical Christian Fellowship Malaysia.

A strong Christian community in Indonesia, estimated 37 million by Operation World, has long produced large amounts of literature for export to Malaysia. In 2005 the government of Malaysia agreed to allow the use of “Allah” in non-Muslim literature, according to CFM.

“The government and CFM have exchanged letters on this matter previously,” reads the CFM statement, “and we have a written agreement in December 2005 that Bahasa Malaysia Bibles can be distributed so long as the symbol of the cross and the words ‘A Christian publication’ are printed on the front page.”

With the exception of the temporary suspension of publication of the Roman Catholic Herald newspaper in 2007 and the ongoing court battle over the weekly’s use of “Allah,” few problems were encountered in the policy. This past March, however, authorities suddenly began seizing CDs, Sunday school materials, and Bibles containing the word “Allah.”

Church leaders were stunned that no one had informed them of a change in policy. Quiet negotiations failed to resolve the situation, and several lawsuits began working their way through the court system. These suits challenge the right of the Minister of Home Affairs to restrict the use of “Allah” and to limit freedom of religion.

“To withhold the use of the Bahasa Malaysia Bibles is an infringement of Article 11 of the Federal Constitution, which gives every Malaysian the right to profess his/her faith as well as to practice it,” according to the CFM.

A government official in Malaysia was unavailable for comment. Officially, the government says only that use of the word “Allah” by non-Muslims could create “confusion” among Muslims.

The Kuala Lumpur High Court in Malaysia was scheduled to determine the legality of the word “Allah” in non-Muslim literature on July 7 but postponed the decision. The Herald newspaper had been allowed to use the term until a final court decision was to be handed down, but the Kuala Lumpur High Court on May 30 overturned that brief reprieve. 

The Rev. Lawrence Andrew, editor of the Herald, has cited examples from Malay dictionaries going back to the 17th century that use “Allah” as the vernacular translation for God. He has also noted that “Allah” is an Arabic term derived from the same roots as the Hebrew Elohim, and that the word pre-dates Muhammad, Islam’s prophet.

The Herald has a circulation of 13,000 and an estimated readership of 50,000. The newspaper is sold in Catholic churches and is not available from newsstands.

While the issue is tied up in the courts, many are hoping for a more harmonious solution to the problem. Both Indonesia and Malaysia use variations of Malay as their national languages, and all translations of the Bible in both countries used “Allah” for God until Malaysian authorities decided in the past few years that it was an Islamic term that should be used only by Muslims. In so doing, Malaysia effectively shut off the importation of Christian literature from Indonesia.

Malaysia’s population is about 60 percent Muslim, 19 percent Buddhist and 9 percent Christian. About 6 percent are Hindu, with 2.6 percent of the population adhering to Confucianism, Taoism and other traditional Chinese religions.

Report from Compass Direct News