National Security and DEI
by David Archibald
12 May 2025
Australia consumes about one million barrels per day of diesel and petrol. It produces a third of that as crude oil. Most of that oil production comes from offshore oilfields, which would be easily destroyed by Chinese cruise missiles or torpedoes. We have no fuel stocks to speak of. China has stockpiled 1,200 million barrels of oil for their coming war. Ideally, we would have synthetic fuel production well inland where it would be less susceptible to drones launched from submersibles.
Effectively we are in the same position as Spain in the leadup to WW2. Spain was neutral in WW2 despite its ideological closeness to Germany. It took only two tanker loads of oil to keep Spain out of the war. From the book “The Economic Weapon” by Nicholas Mulder:
Spain’s monthly fuel demand of fifty thousand tons could be supplied by just ten tanker ships. When two tankers bound for Santander and Bilbao were detained in the port of Houston, the effect on the Spanish fuel stock was immediate and substantial. The American embargo — which was more a slowdown than a total blockade — terrified Francoist officials. U.S. companies supplied Spain’s total oil supply, and domestic stocks covered no more than one month, after which the transport system, the fishing fleet, and agricultural production would grind to a halt.
Germany could spare neither oil nor wheat. Franco understood that if he joined the war on Hitler’s side, no additional support would be forthcoming. Moreover, the U.S. oil embargo implied a threat of further sanctions on food and other vital goods. After three years of civil war that had devastated Spanish society, these prospects were daunting. Franco let the opportunity to join the axis pass. On 7th September, restrictions were lifted as quickly as they had been imposed, and U.S. oil shipments to Spain resumed their normal rate. Oil sanctions thus prevented Francoist Spain from giving in to what its historians have called “the temptation” of joining the war and expanding its empire.
On top of declining oil production due to resource exhaustion, Australia has some self-inflicted wounds. The Dorado oilfield of 200 million barrels off Western Australia was discovered in July 2018. Oil production from that field would be followed by an equal economic value of gas production. The discovery of the Pavo oilfield of 100 million barrels followed in 2022. Neither of these oilfields have been developed. The Dorado field has the complication of a lot of associated gas, which would have to be reinjected to maintain reservoir pressure before the gas production phase of the project begins. By comparison, the development of the Pavo oilfield would be as easy as could be, with a payback period of three months or so. Yet it remains undeveloped, and we are all poorer for that. Why is this so?
The operator of the permits holding these oilfields is Santos. After the Pavo well, Santos set out to drill a well on the Barossa gasfield in offshore waters north of Darwin. They were held up by a case brought on by the Environmental Defenders Office, alleging that the well would affect Aboriginal spiritual concerns. While the legal dispute went on, Santos kept the rig onsite, doing nothing, at a cost of $500 million. A large part of the funding of the Environmental Defenders Office comes from the Federal Government. $500 million is also about what it would cost to develop the Pavo oilfield.
From the NT News
Beyond the economic cost of the confected Barossa dispute, the Santos management were emotionally scarred by it. This has affected their judgement. And beyond that is the influence of Santos’ major shareholders, the larger super funds. Diversity, Equity and Inclusion (DEI) is their overarching concern, and they project that onto the companies they are invested in. This explains why the ASX recently wanted listed companies to provide details on the sexual orientation of their directors. This would have been followed by a requirement to have a quota of not-heterosexual board members to remain listed.
The same sort of influence operates on the more susceptible oil companies. In the world of DEI, gas production is less bad than oil production and Santos won’t develop the Pavo oilfield because it would lessen its appearance of an orientation towards gas. Suspend disbelief; the inexplicable is explained — why a perfectly good, uncomplicated, highly profitable, large oilfield sits out in the ocean undeveloped. This is the cost of having luxury beliefs. The cost may eventually be as much as the continued existence of the entire country, because, as Spain feared in WW2, the economy will grind to a halt once the shuttle of tankers to our shores is interrupted.
David Archibald is the author of The Anticancer Garden in Australia