Alex M.
The Shell Geelong refinery is to be sold. The announcement was made on 4 April by a company representative and duly reported in the Geelong Advertiser, the local Murdoch owned newspaper.
The company wants to complete the sale of the refinery by the end of 2014. It seems likely that the refinery will not find a buyer and will be used instead as a storage facility for product refined in Shell’s more modern refinery at Pulau Bukom in Singapore. The refining process is more profitable in the newer more efficient refineries that multinationals like Shell have established in South-East Asia and India.
Estimates put potential direct job losses at the refinery at the 450 mark, coupled with the possibility of indirect job losses occurring amongst suppliers and contractors.
Job losses and Geelong seem to go hand in glove, especially in the manufacturing sector. The Geelong region has witnessed the decline of manufacturing since the 1970s, a process which appears to have picked up in pace in the last few years.
Ford and Alcoa, both major local employers in the past have scaled back their operations to such an extent that they employ relatively few workers now. In addition, the QANTAS maintenance base at nearby Avalon is in the process of cutting jobs; an announcement to that effect occurred in November last year.
Shell’s intent to sell the Geelong refinery looks set to continue the trend of job cuts and the decline of the manufacturing base that once was the economic heart of the city and region.
The decline of oil refining in Australia
The potential winding down of the Shell refinery in Geelong is not unique. There have been no new refineries built in Australia for decades, and there has been no recent serious investment made to upgrade existing refineries.
Writing last year in The Conversation, Griffith University researcher Vlado Vivoda pointed out the deficiencies in Australian based petrochemical production: “As well as being comparatively small, Australia’s oil refineries are old, with the last refinery built in 1965. Consequently, they require large investment for upgrade in line with evolving environmental standards.”
At present there are only four refineries in operation in Australia and these are: Shell Geelong, BP Kwinana in WA, BP Bulwer Island in Queensland and Exxon Mobil in Altona, Victoria. Compare this with 2003 when there were eight refineries. Since then some refineries have been closed and others converted to import and storage facilities.
The chief reason given by the multinational corporations for the winding down of oil refining in this country is costs. They cite such things as the small capacity of Australian based operations, which struggle to compete with the oversupply produced by the multinationals’ plants in South-East Asia and India.
Also cited are the higher wages paid to refinery workers here and the escalating costs associated with the transportation of crude oil to Australia, amongst other things. All these factors, they claim, have driven down margins. The real reason for the winding down of Australian production is profitability. Multinationals have shifted production to mega-refineries based overseas because they are driven to maximise profits.
What is also clear is that Commonwealth Ministers responsible for Resources such as the last Resources Minister, Martin Ferguson, have been content to let the decline in Australian based petrochemical production happen.
The decision taken by Shell to cease refining at its Clyde facility in Sydney in 2012 was waved away as a ‘commercial matter’ by Ferguson. There is a real concern that the reduction of Australian based production of petroleum and oil based products poses a real threat to our energy security.
The decline of Australian manufacturing, the decline of resource security and the decline of Australian independence
Despite the unconcern shown by former Minister Ferguson about the dwindling of refining capacity in this country, others view it with alarm. Vlado Vivoda’s piece quotes the former Managing Director of Caltex Australia, Des King to the effect that “[r]etaining a substantial oil refining capability is essential to Australia’s energy security”. As Vivoda points out: “ … a major disruption to Australia’s oil refining industry would have major consequences not only for the industry but also on society and the economy as a whole.
Accordingly, the government and the industry are not adequately prepared to respond to or recover from major disaster or disruption. A substantial reduction in Australia’s refining capacity will cause a major shift in Australia’s liquid fuels supply chain and may have significant security implications if supply disruptions arise.”
There is no real impetus to address matters such as energy security and the decline of manufacturing in this country, because governments at every level know that capitalist class interests are sacrosanct.
The only real way to ensure that the decline of Australian manufacturing is reversed, and energy security is maintained is for the Australian working people to take matters into their own hands.
Australian independence must be fought for and socialism built. A first step on this path could be the nationalising of the Australian oil industry.
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