Closure of BP refinery at Bulwer Island in Brisbane a sign of times for industry

THE closure of BP’s refinery in Brisbane is a blow to staff — but the reality is that Australia is no longer a place to refine crude oil, writes Jessica Irvine.

Australians have already said goodbye to Aussie made cars. It’s time to also bid farewell to the Aussie made fuel we put in them.

The announcement of the closure of oil giant BP’s refinery at Bulwer Island in Brisbane mid next year is just the latest in a string of refinery closures.

Shell closed its doors at its Sydney refinery in Clyde in September 2012 and Caltex recently ceased production at its Sydney Kurnell refinery earlier this year.

The closure of Bulwer will leave Australia with just four domestic refineries: BP’s remaining refinery at Kwinana in Western Australia, Shell’s facility in Geelong, Mobil’s refinery in the Melbourne suburb of Altona and Caltex’s facility in Lytton in Brisbane.

Combined, these four facilities will employ less than 2000 full time employees, albeit with almost as many contractors.

The Bulwer closure will be a blow to the 380 staff and hundreds of contractors working there.

But the hard truth is that Australia is just not the place to refine crude oil anymore.

We just can’t compete on price with the new mega-refineries that are opening in Asia.

Australia has higher labour costs, an expensive exchange rate and ageing facilities. It takes a long time and expense to transport crude oil to our refineries. Our ports have shallow berths that don’t suit the larger crude carriers on the seas.

BP's Bulwer Island facility ... not competitive with mega-refiners in Asia, according to a parliamentary inquiry into Australia’s oil industry.

A parliamentary inquiry held after the Kurnell and Clyde closures correctly diagnosed the problem:

“Evidence shows that Australian refineries are not competitive when compared to the new and expanding mega refineries in Asia.”

The inquiry found that any reduction in refining capacity would have no impact on the prices Australians pay at the pump because they are already linked to the global price.

Already, half of the petrol in our bowsers is imported. That will grow in coming years.

For those worried about energy security, the fact is that Australia is not self-sufficient today on petrol. We have some crude oil and some refining capacity, but far from enough to feed our petrol guzzling cars.

The argument often heard that we need a domestic oil refining industry is similar to the argument that we need a domestic car manufacturing industry.

The fact is, consumers benefit from being able to buy cheaper imported petrol, just as they benefit from the cheaper imported cars they increasing choose to drive.