Queensland Government report: End of the Oil Age is near
IT’S not Doomsday yet, but if we don’t act now it soon will be.
That’s the message from mounting evidence about the looming oil crisis confronting Australia.
The bottom line is that the world’s oil production is close to peaking, with demand for the product soon to outstrip supply.
The latest study on the problem, the McNamara report commissioned by the Queensland Government, follows such research as the landmark report by US energy analyst Robert Hirsch.
His 2005 report concluded that “as peaking is approached, liquid fuel prices and price volatility will increase dramatically and, without timely mitigation, the economic, social, and political costs will be unprecedented”.
When this peak is expected to occur is a matter of debate, with some analysts arguing we have already reached that point (their argument bolstered by oil reaching $US80 a barrel overnight). Others suggest it may not occur until as late as 2025.
Regardless, it is coming and it will mean a dramatic change of life as we know it, as cheap fuel becomes a distant memory and supply of what is available is hotly contested.
Recent economic modelling from Griffith University identified areas in southeast Queensland which will be hit particularly hard by rising oil prices – which feed into just about everything from transport costs to interest rates and the price of bread.
They identified outer urban areas and growth corridors such as Caboolture, Capalaba, Ipswich and Beenleigh as being particularly vulnerable.
The report’s co-author Jago Dodson said this week: “There’s a double whammy. As the price of fuel flows through the whole economy, pushing up transport prices, food prices and everything else, it pushes up inflation, which leads to higher interest rates.”
“‘You can already see the impact in western Sydney (one of the areas identified as most vulnerable to peak oil) in terms of rising mortgage repossessions.”
He argues government planners must “’stop making things worse” with car-dependent suburbs, and start embarking on a “‘massive investment in outer suburban public transport services”.
Australian Association for the Study of Peak Oil and Gas Brisbane spokesman Stuart McCarthy warns that we are going to have to take some “tough (and expensive) decisions” to avoid a serious economic hit.
“What we’d like to see come out of the McNamara report is a big repositioning of funding for public transport,” Mr McCarthy said.
He also warns that bio-fuels such as ethanol and bio-diesel, while useful, are no substitute for oil.
As the new Queensland Minister for Sustainability Andrew McNamara said: “The (viable) alternative energy options are in the 20-year range. The problem is in the five-year range.”
The McNamara report warns that industries such as tourism could be devastated by high fuel prices as inbound visitors stay away because of rising air fares while domestic travellers decide long car journeys are too expensive.
As well as the transport sector, similar stresses apply to energy intensive industries such as farming and mining, both of which count liquid fuel as one of their major costs.
As fuel costs rise, so does the price of feedstock for basic foodstuffs, as bio-fuel producers compete with food companies for raw materials.
As Mr McCarthy puts it: “The energy and food markets are merging as the bio-fuel industry competes for food.”
The key now, according to most commentators, is informed public debate.
“It’s not too late,” Mr McCarthy. “We can do something. The first step is to inform people of the problem and make them understand it’s real.”
He also questions the viability of State Government schemes such as the fuel subsidy, arguing that such artificial price mechanisms ultimately contribute to the problem, “and perhaps we have to rethink that paradigm”.
Mr McNamara puts it: “In the end the unpalatable pill will be that we will have to confront the reality that the society we have been used to living in is going to have to change dramatically and that is going to take a whole-of-government approach.
Source: Couriermail.com.au
