The fuel crisis has hit the Pacific hard. The region is responding – but tough choices lie ahead

The past five years have not been easy for the people of the Pacific. COVID restrictions disrupted tourism and upended supply chains, while global fuel shocks raised prices and hit island economies hard.

The region relies on expensive imports of fossil fuels, as domestic sources are largely lacking. Some nations spend up to 25% of their GDP on securing fuel, even before this year’s price spikes.

In recent months, authorities in the Marshall Islands and Tuvalu announced emergency measures to conserve fuel. Fiji’s main energy provider has warned electricity rationing is now a possibility, and the Samoan government is considering school closures to save fuel.

News of a peace deal between the United States and Iran has been welcomed. But even if the deal holds, it’s unlikely to lead to quick relief.

In May, the region’s leaders took a rare collective step by invoking the Biketawa Declaration by consensus. It means governments are united in their response to the ongoing fuel crisis.

Why is this significant?

Pacific leaders formalised this declaration in 2000 at the Biketawa Islet in Kiribati as a way to collectively respond to major regional challenges such as conflict.

The declaration paved the way for the long-running Regional Assistance Mission to Solomon Islands (2003–17) during a period of conflict, and the Pacific Regional Assistance Mission to Nauru (2006–09) during an economic crisis.

Over time, it has been drawn on to manage the region’s security more broadly, including environmental and social threats.

Most recently, the declaration enabled a regional response to the COVID pandemic, allowing transport of vaccines and other medical equipment to Pacific countries during lockdown periods.

This year’s fuel crisis has affected the entire region. As Pacific Islands Forum Secretary General Baron Waqa recently warned, the region is “highly exposed to external shocks”. He said the fuel crisis is:

beginning to intersect across Pacific economies, with direct implications on essential services, connectivity, economic resilience and the livelihoods of our people

The first step has been to establish a regional response mechanism to the fuel crisis, encouraging better coordination between nations.

An unequal crisis

The fuel crisis poses a bigger challenge to Pacific Island countries than many other nations. Almost all the region’s fuel is imported from a handful of East Asian countries, where it is refined. These countries were in turn highly reliant on oil from the Middle East – 80% of the crude oil processed in refineries was transported via the Strait of Hormuz.

The full impact of the Iran war has not yet washed through. Tankers in transit before the Hormuz closure have continued to make deliveries, while support from donors such as Australia has helped some countries manage what has, so far, mostly been a price shock.

Nations such as Fiji had healthy fuel reserves before this year’s fuel crisis.

But others had very little buffer, from about a month’s supply (Tonga, Cook Islands and Tuvalu) to even less (Kiribati).

Maintaining fuel storage facilities in difficult environmental conditions is an ongoing challenge for many nations.

What now?

It’s an uncertain time for the Pacific. The Iran peace deal — if it holds — may mean more oil products can flow. But damage to energy infrastructure will take time to repair. Insurance premiums and food prices may stay high for some time.

Pacific foreign ministers have left open the possibility of more direct measures if fuel security isn’t assured. These haven’t been determined, but joint purchases of fuel could be on the table if political and practical challenges can be overcome.

Australia has indicated its priority is to monitor the situation in the Pacific and engage with Pacific partners. In a recent round of “fuel diplomacy” in Asian markets, Australia called for continued attention to the Pacific’s unique energy security needs.

But difficult choices lie ahead.

Access to affordable, reliable energy is one of the world’s sustainable development goals, and Pacific communities deserve no less.

The region and its partners will need to find a way to respond to the immediate crisis without worsening the longer-term and much larger threat posed by climate change.

Before this year’s crisis, many leaders were focused on reducing fossil fuel imports and boosting energy self-reliance through renewables. The goal was to be the first region to run on 100% renewables.

Fuel security is the most pressing problem today. But the broader goal is still clear. Pacific energy ministers recently reaffirmed the goal of a 100% renewable energy future and agreed to accelerate the rollout.

The world’s continued reliance on fossil fuels created the conditions for both crises. Only reducing the world’s reliance on fossil fuels will solve them.

Hugo Temby has received funding from the Australian Government Research Training Program. He is also vice president of the Canberra Environment Centre.

Joel Nilon was previously the Pacific Regionalism Adviser at the Pacific Islands Forum Secretariat, where he worked on regional policy frameworks.