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Preparedness for fuel supply disruptions

This article is in response to last month’s article by Kathy Leotta and her colleagues, Observations on local governments’ preparedness for fuel supply disruptions.

First, I congratulate Kathy on her earlier research and thank her for reviving this neglected topic in her most recent paper. The purpose of my submission is to support and supplement various observations made by the Leotta team.

Liquid Fuel Emergency (LFE)
In the interest of brevity and consistency, I will use the Australian term, liquid fuel emergency (LFE) to describe fuel supply disruptions, oil supply shocks, etc. I will not attempt a definition of what might constitute a LFE as this would involve a multitude of dimensions: volume of shortfall, geographical scale (from local to global), duration, pricing/affordability vs physical unavailability, vulnerability of specific sectors, threat to social order, etc.

The literature on LFEs is considerable, dating back to rationing during World War Two. The Government Accountability Office (GAO) in the USA did some exceptional work for two decades (1975- 1994). Unfortunately, there have been relatively few studies during the past 15 years, with the notable exceptions of the comprehensive analysis by Alan Smart for the Government of Australia and Kathy’s research in the USA. An annotated bibliography of some of the LFE literature has been posted by Energy Bulletin here.

UK: Empowering local authorities
In their section titled Why Care? the Leotta team summarized key points which arose from the UK fuel blockade in September, 2000, during which panic buying of fuel and food greatly compounded the problem. The UK government subsequently revised both its emergency legislation and its emergency response structure, with a focus on empowering local authorities via Local Resiliency Forums (LRFs). The UK also has a list of almost 700 Designated Filling Stations (DFSs) for the exclusive use of essential services during an emergency. This author has found no evidence of similar proactive steps here in North America.

Free market and private industry
A major barrier to local response capability during a LFE is the fact that in virtually all jurisdictions, the refining, distribution, storage and retailing of liquid fuels is done my a multitude of private companies. Furthermore, these companies are in varying degrees of competition with each other. Governments at all levels will be understandably reluctant to intrude into the long-established right of companies (and their share-holders) to profit from an increased demand for their product. Similarly, citizens expect that when they pull up to a fuel pump, they are entitled to buy all the fuel they wish (providing they comply with container requirements). Consequently, under such free-market dynamics, there is little to prevent the panic buying/hoarding (and possible improper storage) of fuel. The unhappy result is that local supplies (which could otherwise last close to a week) can be depleted in 24-48 hours.

Just-in-time delivery
Over the past decades, our world has moved increasingly to the “just-in-time” supply chain model, and local inventories have been reduced in the interest of efficiency. However, the inherent risks of this model are obvious: there are many factors which can impede the timely flow of essential goods, not the least of which is the availability of affordable fuel. Furthermore, the fuel supply chain has itself moved toward the just-in-time model, and essential services (which once carried significant fuel inventories) have discontinued the practice.

Given the increasing warnings about peak oil, export decline and a near-term oil supply crunch, business continuity plans should be re-examined accordingly. This applies particularly to the food supply chain, regarding which special mention should be made of this thorough analysis by Helen Peck for the UK government.

LFE planning is not a priority
As the Leotta team points out, “preparedness for oil/fuel disruptions isn’t one of those [most pressing] issues” for local and state government agencies. Furthermore, it’s not a priority at the federal level, either. Examination of the priority lists at Public Safety Canada and DHS give no indication of concern over future oil supply, nor of any attention to LFE planning. To their credit, both agencies have a clear focus on the protection of critical infrastructure, but there is no comparable concern over what’s inside the pipelines: the supply of oil and gas itself.

Another reason why LFE planning is not on the radar of emergency planners is the widespread unawareness of the evidence regarding oil supply. It is still rare to encounter an emergency planner (at any level) who is already familiar with the term, “peak oil” or the literature on oil supply security (eg. the Hirsch Report, warnings regarding export capacity and a near-term supply crunch, the Oil Shockwave exercise, military analyses of peak oil, recent statements from the International Energy Agency, etc.).

“All hands on deck”
Both Alan Smart in Australia and Kathy Leotta in her earlier study have stressed the importance of pre-planning for an LFE, as did the GAO in its analyses. The Leotta team is correct in stating, “It will be ‘all hands on deck’ when a crisis occurs or is imminent” and in warning that “some period of confusion and scrambling” appears likely. The supply of affordable fuel is so essential to our economy and our security that a major LFE could present emergency planners and civic leaders with a problem of unprecedented complexity, scale and risk to social order. The Oil Shockwave exercise (June, 2005) concluded that a 4% reduction in global oil supply could lead to a near-tripling of oil prices, and that effective government responses were very limited. Shockwave participant Robert Gates warned, “The threat is real and urgent, requiring immediate and sustained attention at the highest levels of government.”

Half a decade later, Gates’ warning remains largely unobserved despite the mounting evidence of impending oil supply difficulties. Here in North America, we have instead sustained inattention at all levels of government, a situation which in turn is sustained by the unwillingness of mainstream media to examine the evidence and present it to citizens.

What do you think? Leave a comment below.

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