I rise today to speak to the Liquid Fuel Emergency Amendment Bill 2017. This bill is part 2 of the government's reform package to the way that we collect information on our liquid fuel holdings and maintain our compliance with our obligations under the International Energy Agency. Part of these obligations is that Australia hold on to, at minimum, 90 days of liquid fuel stocks. In the Senate Rural and Regional Affairs and Transport References Committee's inquiry, which I was part of, we heard how that requirement for us to hold on to 90 days of liquid fuel stocks had not been met for a very long time.
There's a good reason as to why that is an appropriate thing for Australia to have. According to data released by the Organization of Petroleum Exporting Countries, or OPEC, in 2016, OPEC currently controls 81.5 per cent of the existing world oil reserves and accounts for 60 per cent of exports. Since the OPEC crises of the 1970s, when the OPEC nation-states limited the export of oil and prices quadrupled in major oil-importing countries, there has been an understanding that the oil and petroleum supply chain is one of the most, if not the most, precarious supply chains in the world. It makes sense for countries like Australia to have a supply of fuel so that we are not affected by disruptions to that supply chain. Our Senate committee heard that 95 per cent of our transport currently runs on petroleum products, including the petrol that you know of, gasoline, diesel, jet fuel, LPG, bunker fuel and other oil products. In the event of a disruption in the oil supply chain and if we as a major importer don't have that 90-day supply, the price shock from increases in fuel costs would ripple across the economy. It's basically a really important measure to maintain some stability and evenness in our supply.
In the worst-case scenario—if there was a disruption from those OPEC-producing countries and a genuine shortage of supply eventuated—we would be at a standstill. We would have trucks and ships unable to move produce from the regions to the city and a breakdown of the usual functioning of our economy, so there are really good reasons as to why this 90 days of supply is a sensible measure. But Australia hasn't been compliant with that. It's been over five years since Australia has held 90 days of liquid-fuel stocks and, as of April this year, Australia only holds 51 days of liquid-fuel reserves. This didn't used to be a big issue for us. We used to produce much more of our oil products ourselves, but we are now in a situation where we are largely an oil product importer.
The government's proposed way of procuring these liquid-fuel stockholdings is by purchasing tickets so we actually don't have to have the 90 days of supply here physically in the country. We've got tickets on it, so there's oil supply somewhere else in the world that's identified as belonging to Australia. This was identified by the department during our inquiry as the least-cost option to bring Australia into IEA compliance. Under this ticketing contract, the seller agrees to reserve, on behalf of the buyer, a predetermined amount of oil in return for an agreed fee. During the contractual period, the buyer—in this case, Australia—has the option to purchase all or part of the reserved oil stock. The price is determined by a market-based rate under the contract. If we don't want it in that period of time, we can release the stock back into the global oil market. The entity who's going to be selling these tickets is optioned to buy and could either be a public or a private owner of oil stocks.
This is the second-best option. There are merits to requiring actual real oil supplies. Obviously that sort of ticket system could break down in a global emergency as well, but we do note that there are substantially increased costs that would be required if we were going to maintain those 90 days of oil supply physically in Australia. So the Greens support the government in using this proposed ticket system and these ticketing contracts to secure sufficient reserves as a mechanism to bring us back into IEA compliance. Like Senator Xenophon has noted, we will wait to see whether this ticketing system is a useful and viable enough measure in order to be able to do this.
But, of course, this is only one half of the story. If you are talking about maintaining security of liquid-fuel supplies, there are other ways of going about it rather than presuming that we are going to continue to be in the situation where 95 per cent of our fuels are coming from oil-based products. There's another way of moving to give ourselves fuel security. The other key way is reducing our dependence on these oil fuels, these fossil fuels and these liquid hydrocarbons in the first place. We know that, in terms of needing this oil supply, the key driver of it is our transport sector, so, if we're going to shift from having this reliance on foreign oil supplies, we've got to work to make sure that we can shift the fuels being used by our transport sector to renewable fuels. That's because the transport sector accounts for three-quarters of our liquid fuel demand. That means that, if we are serious about fuel security and serious about our compliance with our stockholding requirements, we need to decrease the use of oil in our transport sector. Not only would this reduce our reliance on oil; it would have very many other benefits as well.