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Diesel Appears as Major Vulnerability for Australia During Middle East Energy Crisis, Says IEEFA

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The impact of the global energy crisis could manifest most acutely in Australia as a diesel shortage, given its reliance on Asian imports in turn derived from Middle Eastern crude, the Institute for Energy Economics and Financial Analysis said on Thursday.

Australia's trading partners in Asia will come under mounting pressure as competition builds for their limited supplies. Diesel prices tripled in price by early April, at their peak, compared with the start of the year while crude oil and petrol roughly doubled in price, IEEFA said.

It noted that Australia is one of the world's heaviest users of diesel based on volumes consumed per dollar of GDP, using about three times as much as the US and Japan on that basis.

Nonetheless, only about 13% of Australian diesel is produced in domestic refineries, making it the world's No. 1 diesel importer, with the fuel used across commercial road vehicles, rail, agriculture and mining.

Australia could struggle to import all the diesel it needs if Asia-Pacific exporters are unable to keep shipping the required volumes, IEEFA said.

With 53% of diesel used on the road in light commercial and truck fleets, Australia could seize the opportunity to promote more efficient, slower driving to improve fuel economy and to optimize maintenance and logistics.

Eco-driving, sometimes referred to as hyper-miling, involves avoiding harsh acceleration and slowing down early to avoid unnecessary braking, shifting up gear earlier and minimizing idling.

Such techniques alone can enable the most diligent drivers to use 35% less fuel than those who ignore these techniques, IEEFA said.

Logistics giant Linfox implemented an eco-driving programme in 2012 and reduced its carbon emissions by 14%, for example. IEEFA said savings of 15% to 40% can be made in agriculture, mining and rail transport.

It said the government should take the lead in rolling out education and training for drivers in these sectors to improve fuel efficiency. That would help mitigate supply shortages and limit the financial impact of the energy crisis on businesses.

The report said that 10% of drivers cover 40% of all kilometres driven in Australia, providing "low hanging fruit" that the government can target with such an initiative. Additionally, IEEFA recommended encouraging EV adoption within this group.

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