Petrol prices soar and climate change looms
By Gavin Gatenby & David Bell
Prime Minister Kevin Rudd said it at the close of the 2020 Summit: “We must take command of the future, or let the future take command of us” and the future is about to unleash two horrific problems on the world — peak oil and climate change.
In 2000, Australian oil production peaked at about 700,000 barrels per day. To make up the shortfall between domestic production and consumption, we imported around 20 per cent of consumption. By 2007, imports grew to 40 per cent. On current trends this will increase to 60 per cent by 2012 and 80 per cent by 2020.
As a result of the decline in domestic production, Australia’s petrol and diesel import bill is growing fast. To put this in perspective, in 2007, $24 billion was spent on oil imports while $21 billion was earned from coal exports. This is one of the reasons why Australia has started to run a large trade deficit despite the minerals boom.
Australia is not the only country where oil production has peaked and is now in decline. Of the 80 or so oil producing nations throughout the world, oil production has peaked in just over 50, and like Australia, many face a growing reliance on imports. In the meantime, discovery rates for new reserves have reached an all time low — the world is currently consuming oil five times faster than new reserves are discovered.
In response to this emerging crisis, Federal Energy Minister Martin Ferguson said we must urgently find new oil fields within Australia. But the reality is that most territory has already been explored and we would need to find three new fields the size of Bass Strait just to keep Australia out of immediate economic danger. Governing on the assumption that significant new discoveries can be made is highly risky and puts off real action to protect the economy.
In the meantime, the threat of climate change has become frightening. Last year, the rate of Arctic ice melt was 10 per cent greater than the worst-case scenarios developed by the UN’s Intergovernmental Panel on Climate Change. The need to dramatically cut greenhouse gas emissions is both real and urgent.
So what are the alternatives? Many industry types have voiced the view that business will carry on as usual – we’ll still drive lots of cars and use the expensive tollways that dominate Sydney transport policy. But what will fuel these cars when oil is running out and the need to cut greenhouse gas emissions is taken seriously? Lets look at the viability of alternate energy sources for motor vehicles.
Biofuels? Biofuels like ethanol, are often touted as a substitute for petrol. While small amounts of ethanol can be produced from agricultural waste, if ethanol production was used to replace petrol and diesel entirely, the necessary crops would compete with land needed for food production. This problem is already sending global food prices through the roof and causing food riots in developing countries like Haiti, Bangladesh, Mexico and Africa.
Oil from coal or shale? Australia has big coal and shale reserves, but conversion of these to synthetic oil uses up almost as much energy as the end fuel is able to put out. If we go down this path, we’ll find ourselves in a situation where we begin to cannibalise our own economy. The same problem arises with hydrogen.
Natural gas? Like oil, it’s a finite resource and also likely to peak soon. While Australia has large gas reserves, most of these have been earmarked for sale to China. It’s also where we get our fertilizers. If we use it all to drive cars, agricultural production will be hard hit.
Electric cars? There’s no doubt electric road vehicles will be part of the solution, but the electricity has to come from somewhere. Besides, Sydney has a fleet of 1.8 million cars that can’t be replaced overnight even if substitutes were available. Any widespread move to replace the current fleet with electric cars would create a huge surge in demand for electricity. We’d need a lot of new coal-fired power stations – ending any hope of lowering greenhouse emissions. And nuclear is too expensive and would take too long to implement even if it was economically viable.
Assuming we maintain fuel supplies to agriculture, industry and essential services, by 2020, Australian capital city motorists will have only one fifth of current fuel supplies.
If the state government had paid attention ten years ago, when the peak oil threat became very obvious, we would now be well advanced on the single most important step we could take to meet the crisis – extension of electric rail and light rail systems to service all parts of Sydney. We would also be extending our bus system (as a stop-gap measure) organizing car-pooling, and reorganizing our roads for cycling.
Delegates to the 2020 Summit declared that public transport had to be favoured over further development of other modes like motorways for car travel. But will the NSW Government make the right decision for our long term future? Will the public thank the government for an M4 East that costs $12 billion as petrol rises above $2 a litre?
All governments need to acknowledge that more of the same will not work. Wherever possible, our urban transport systems need to run on electricity generated from renewable sources. This will not only help to immunise our economy against the economic consequences of peak oil, but will also help reduce greenhouse gas emissions responsible for climate change.
This is the reality the Iemma Government desperately needs to accept and act upon.
FOR MORE on peak oil visit the website of the Association for the Study of Peak Oil and Gas, Australia (ASPO):
www.aspo–australia.org.au