“Diesel’s Grip on the North: Why Rising Fuel Costs Are Forcing a Rethink”
The current spike in fuel prices has a disproportionately large effect on northern producers. Most horticulture is 3000 km away from domestic markets, and only a handful of live beef exporters are close to Darwin port. Our industries are heavily exposed to the price of diesel, the only energy source used to move produce to market and to replenish supplies on station or farm. Townies might be cringing at the price to top up for their next fishing trip, but this cost is a drop in the oil tanker compared to what our farmers and pastoralists need to stay in business.
So, what is the alternative? It may be time to wean northern agriculture off its diesel addiction, but is this even possible? The transition will take time, and businesses tend to focus instead on what they can do in the next few years. On this timescale, diesel will remain essential, but look ahead a decade or two and diesel could be challenged.
The transition has already started. China is building electric freight trucks that can service a Sydney to Canberra distance, and at a stretch, all Australia’s major freight corridors. Solar / battery units are replacing diesel generators for running bores and remote homesteads. Electric light vehicles are becoming price competitive with their ICE counterparts on a lifetime cost basis.
However, the transition requires enormous investment. State investment in renewables for major population centres is ongoing, and the federal government has started building electric freight hubs. We probably won’t see electric freight traversing the Barkly Highway until it’s commonplace on the Hume. We might never see it on the Tanami, but I suspect I’ll live long enough to see that too.
We in the north should be welcoming this transition for three reasons:
1. Markets. Yes, oil price shocks may still happen but that’s only part of the story. If the world successfully moves away from fossil fuels then oil prices may actually stabilise with reduced demand, but market pressure to embed a carbon price in our commodities will only increase. Australia’s clean and green image could be tarnished by diesel fumes.
2. Reliability. Electric systems have fewer moving parts than those powered by liquid fuels. Once they are being produced at scale, they will be more reliable and require less maintenance. Everyone values reliability, but remote businesses value it more than most.
3. Decentralisation. Freight corridors will favour locally produced power. Currently, energy for freight is sourced in liquid form at ports, and power generation is still based around capital cities where most energy is consumed. Electric freight creates a market for power anywhere along the highway, and will favour inland production where land is cheap and sunshine is plentiful. Not only will energy become Australian made, it’ll be locally made, injecting money and jobs into rural economies.
Transition away from diesel is happening, though it’s very early days. It’ll be a long time before the diesel storage tanks on outback stations become rusty. However, we in the north should be welcoming this transition for the multiple benefits it’ll eventually bring to our regions.
David Gallacher - Northern Hub