Election Time in the Land of Oz

This is a guest post by Matt Mushalik in Sydney. Matt is a member of ASPO Australia.

When voting for a party and a candidate it is important to know what they know about peak oil and how they are going to deal with it.

I start by defining what should be done in the context of peak oil and global warming and then continue by comparing that task list with what one can find in the party policy platforms. I conclude with a light rail example as a solution to urban transport problems.

(A) Summary:

I believe crude oil production peaked in 2005. The major parties have not discovered (or do not want to acknowledge) this event which will impact the transport sector in particular and the economy in general. Neither the Coalition nor Labor have appropriate plans to deal with this looming crisis, which is arriving at the same time we realise that global warming is turning into a planetary emergency. The double challenge of peak oil and climate change is so severe that - if not properly managed - our very civilization is in danger. The Greens and Democrats seem to be the only parties which have understood AND have the courage to publicly address these issues.


(B) Defining the task

Let us define the task against which we compare the parties. We simply cannot afford to maintain, let alone expand, our present day carbon based economy. We are close to a climate tipping point as explained in an interview Kerry O'Brien from ABC TV had with NASA climatologist James Hansen:

Scientist predicts disastrous sea level rise

The growth we should aim for is in the renewable energy industry.

Overall objective: Immediate, consistent and continuous war time like effort to de-carbonize our economy and to re-industrialize Australia on the basis of renewable energies.

Here is a to-do list:

(1) Stop doing business as usual; immediate moratorium on new freeways, tollways, car dependent shopping centres and sub divisions, airport extensions, coal fired power plants and other projects which increase CO2 emissions; reduction of immigration as water supplies and other resources for cities dwindle.

(2) Set aside oil and gas fields for the sole purpose of serving as an energy input for all projects required to mitigate the impact of peak oil and to reduce CO2 emissions; scale down coal exports until geo-sequestration is physically in place; LNG export contracts must contain clauses that coal fired power plants in the importing country are de-commissioned at capacities equivalent to the energy content in the natural gas; reduction in oil and LPG exports and adjustments to our refineries to cope with our light oils and condensate.

(3) Establish a Strategic Oil Reserve

(4) Establish light rail on all tollways and main roads in capital cities; encourage car pooling; change the tax regime with the objective to minimize fuel consumption

(5) Encourage the use of compressed natural gas (CNG) for the mining, agricultural and transport sectors

(6) Initiate a replacement program for all coal fired power plants

(7) Encourage energy efficiency

(8) Encourage interstate rail development and electrification (both passenger and freight); coastal shipping

(9) Encourage biofuels for running farming machinery and transport of agricultural produce

(10) Initiate an educational campaign to the public to promote why (1) to (9) should be done

(C) Peak oil facts and projections

There is now sufficient statistical evidence from the EIA (Energy Information Administration, DoE) that global crude oil production has peaked in 2005. Read my article in The Oil Drum which I prepared together with Gail the Actuary in Atlanta, Georgia:

"Did Katrina Hide the Real Peak in World Oil Production? And Other Oil Supply Insights"
http://www.theoildrum.com/node/3052 (http://sydneypeakoil.com/downloads/KatrinaAndPeakOil2005.pdf)

While the current decline rate is very modest at around 1% this will accelerate to 4% pa once a group of countries which is still at least partially offsetting decline elsewhere can no longer increase production. The International Energy Agency (IEA, Paris, the OECD adviser in energy matters), after many years of optimistic outlooks, now warns in its July 2007 Medium Term Oil Market Report:

”Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with OPEC's spare capacity declining to minimal levels by 2012"

This is diplomatic language for oil shortages. The time is now very short. The latest projection for oil supplies in the next 2 decades comes from the German based Energy Watch Group. Global production maybe down 30% by 2020 and 50% by 2030:

Proven reserves are 850 Gb and not 1200 Gb as stated in the BP Statistical Review. This is mainly due to OPEC's reserves being overstated. Australian oil production will also decline in the next decade, requiring increasing imports while global oil export volumes decrease dramatically.

(D) Coalition

The energy white paper which was published in June 2004 - before the last election - is totally flawed in relation to peak oil as it contains following unsubstantiated statement:

Despite increasing demand for oil, there are sufficient reserves to supply world demand for around 40 years.
http://www.pmc.gov.au/publications/energy_future/chapter7/4_transport.htm

A graph is attached showing the simple R/P calculation which is behind it. The whole coalition policy is based on this false assessment.

The government has introduced an alternative fuels conversion programme but these are just trials and the energy white paper says "there is currently no case for the government to accelerate the uptake of these fuels on energy security grounds." Alternative fuels are not likely to be pursued vigorously.

The Coalition also proposes to build 25 nuclear power plants, but they are stacked on top of the existing coal fired power plants instead of REPLACING them, therefore NOT reducing emissions.

The Prime Minster, the Treasurer and the Nationals leader just announced massive spending programs on roads without having checked on the oil supply situation:

http://abc.net.au/news/stories/2007/11/04/2081195.htm?section=australia

(E) Labor

Labor's policy on peak oil comes from the campaign office and this is an extract:

Peak Oil: Federal Labor believes that better information is required regarding future oil supplies to inform prudent planning.

For that reason Labor endorsed the first recommendation of the report of the Senate Rural and Regional Affairs and Transport Committee: Australia’s future oil supply and alternative transport fuels.

That Report recognised that there are concerns that we will soon reach ‘peak oil’ and recommended that Geoscience Australia, ABARE and Treasury to assess the official estimates of future oil supply and the 'peak oil' arguments and report to the Government on the probabilities and risks involved, comparing early mitigation scenarios with business as usual

A copy of the Senate report, released on 7 February 2007, is available online at:
www.aph.gov.au/Senate/committee/rrat_ctte/oil_supply/report/index.htm

If we take their promise at face value, a Rudd Labor Government would carry out this assessment, allowing it to properly plan to secure our future fuel supplies. In addition, a Rudd Labor Government will include projections of future liquid fuel supply and demand in a regular National Energy Security Assessment to better inform industry and the community of the nation’s future energy outlook.

At a national level Australia is facing a profound shift in the source of our liquid fuels. Unless significant new oil fields are found, Australian domestic oil production could represent as little as 20 per cent of our consumption by 2015. Importing such large amounts of oil could leave Australia's economy heavily exposed to international oil supply disruptions.

A Rudd Labor Government will encourage increased domestic oil exploration, the development of gas-to-liquids projects that can convert some of our gas resources into liquid fuels and coal to liquids technologies that can produce synthetic diesel. Coal to liquids technologies can include the capture and storage of carbon to minimise the emission of greenhouse gases in the production of fuels.

Labor will also support the research and development of new biofuel technologies, including the production of ethanol from cellulose.

Labor considers energy security crucial to continued prosperity. Having a diverse range of liquid fuels will help secure our economic future."

Labor also proposes half a billion dollar for a Green Car Innovation Fund: http://www.alp.org.au/media/0307/riloo160.php

Federal Labor seems to be in conflict with some of the State Labor Governments. In NSW, for example, Roads Minister Roozendaal is unconcerned about oil prices as demonstrated during the budget estimate hearings:

Dr JOHN KAYE: Minister, can I ask you whether the Roads and Traffic Authority monitors factors that affect long-term oil prices?

The Hon. ERIC ROOZENDAAL: No.

Mr WIELINGA [RTA]: What we do is monitor the expected prices of bitumen, which affects the roads, and that is affected by oil prices. It is not our role to monitor oil prices per se.

http://www.parliament.nsw.gov.au/prod/PARLMENT/Committee.nsf/0/5BD5E5BCD...

(F) Greens

The Greens initiated the Senate Inquiry on oil supplies in October 2005. The final report came out in February 2007, but the Coalition Government has not responded yet.

The Green's policy is best summed up in this quote:

If you really want sound economic management, look to the Greens who want to invest the surplus not in tax cuts but in public transport, alternative fuels and fuel efficient vehicle manufacturing, making it mandatory for governments to use procurement of hybrids to upgrade the whole transport fleet over time. These investments, as well as abolishing the fringe benefits tax concession for motor vehicles and the GST on public transport, shifting tax to the carbon content of fuels, is really what needs to be done to protect the community from higher petrol prices.

http://greensblog.org/2007/10/22/populism-or-planning-on-petrol-prices/

In the same blog, Senator Milne says:

The only way to effectively deal with increased prices is to reduce demand by shifting people out of petrol guzzlers into public transport and more efficient cars. Attempting to cushion the blow by artificially reducing the price makes matter worse by locking low income earners into inefficient cars in suburbs without public transport. It means higher costs of living and higher emissions.

Greens announce Better Cars policy:
http://www.christinemilne.org.au/600_media_sub.php?deptItemID=428

Oil proofing and electrification of transport:
http://www.christinemilne.org.au/600_media_sub.php?deptItemID=426

[Update: The Democrats were not considered in the original analysis but made the following submission - what is being said of the Greens in this post equally applies to the Democrats]
(G) The Democrats

The Democrats have commented by referring to following links:

Is Australia's auto industry imperilled by ignoring climate change and peak oil?

The future of the Australian Car Industry
Centre for Public Policy Symposium
27 Sept 2007
Senator Lyn Allison

http://www.democrats.org.au/speeches/index.htm?speech_id=2315

Democrats Action Agenda

Commonwealth and State funds pooled for all transport infrastructure and allocated on the basis of clear criteria that deliver on long term transport reform objectives and include:
- Substantial funding for integrated public transport - rail, light rail and bus networks and transit lanes on urban freeways with a priority for those metro areas where transport services are poor.
- Improved public transport frequency, amenity, safety, reliability and accessibility, particularly in outer metropolitan areas. Better scheduling and ticketing coordination.
- Rail services extended to residential developments on the city fringe and modernised and high quality sub-regional feeder and circumferential bus services provided.
- The east coast route modernised, multi-modal exchanges, rail links into ports and nationally consistent regulations, codes and communication systems provided. Fast train services extended to all major airports and regional centres and linking Brisbane, Sydney, Canberra, Melbourne and Adelaide for rapid, low emissions passenger ad freight travel.
- Safe off-road walking and cycling networks for commuters. Improved local access to public transport for pedestrians and cyclists.
- Substantially changed car parking practices by reducing space requirements for new and refurbished commercial development and increase parking at transport nodes, including safe cycle lockers. With the states, introduce car
parking and congestion charges in inner urban areas and reduce public transport charges by at least 10%.
- A moratorium on residential expansion on the fringes of capital cities and a shift of growth to regional centres and underutilised urban land. Transport reform objectives applied to urban planning for all land use change.
- A greenhouse trigger in Federal environment laws for major infrastructure projects.
- FBT reformed to encourage public transport, cycling and car pooling.
- Excise on alternative fuels removed until agreed targets have been met
- Tax incentives for fuel efficient and low emission vehicles, funded from higher taxes and registration fees for inefficient vehicles and the reintroduction of fuel excise indexation (abolished in 2001).
- The ban on blends of more than 10% ethanol lifted and mandatory biofuel targets of 20% of all petrol and diesel sold phased in by 2020. Ethanol petrol blend (E10 and E85) availability mandated at all outlets,
- All government vehicles switched to alternative fuels and fuel efficient vehicles on re-leasing.
- Democrats-negotiated alternative fuel vehicle conversion maintained and extended to electric and LNG vehicles of all sizes.
- Grants for compressed natural gas, liquefied natural gas, hydrogen and electricity refuelling infrastructure.
- Auto industry subsidies conditional on producing high efficiency vehicles including hybrids
- An enhanced Bass Strait Passenger Vehicle Equalisation Scheme that keeps passenger and freight costs as close as possible to those of rail and road over the same distance.
- Implement recommendations from the Government’s own House of Representatives’ Sustainable Cities inquiry.

http://www.democrats.org.au/docs/ActionPlans/Transport_LandTransport_200...

(H) Conclusion

The Coalition is in FULL DENIAL MODE of the double challenge of peak oil and global warming. We can expect business as usual until the first petrol and diesel shortages arrive at the filling stations which will happen in the next term. Environment Minister Malcolm Turnbull might have understood some of the aspects of global warming, but not peak oil. In any event, he is outnumbered by peak oil (and also global warming) skeptics in the cabinet, as evidenced in many responses to peak oil questions in the Senate.

In case the Coalition continues in government, the electoral backlash will be enormous when the truth about oil comes out, since all the warnings on peak oil happened on the Coalition's watch, something which will be very easy to trace on the internet. The first warning was given by Irish oil-geologist Colin Campbell in 1995 (then in Petro-Consultants), but more publicly in 1999, the UK peak oil year:
Presentation to a House of Commons All-Party Committee:

THE IMMINENT PEAK OF WORLD OIL PRODUCTION
by C.J. Campbell
http://www.hubbertpeak.com/campbell/commons.htm

If the Coalition wanted nuclear power to be accepted by the electorate it would have to inform the nation about the truth of the coming oil and energy crisis instead of telling voters a prosperous future lies ahead with Australia becoming an "energy super power".

Federal Labor is only marginally better in at least acknowledging there is a peak oil problem but publicly this has not entered the campaign. The immediacy of the crisis is not made clear to the electorate. The green car initiative is not enough to mitigate the impact of peak oil. The studies proposed on when peak oil might occur are unnecessary, since peak oil has happened already. Geoscience Australia has made an assessment and it is obvious that Australian oil production will decline. It is doubtful whether ABARE or BTRE can assist; 2 organisations which are full of peak oil skeptics. This proposal of further studies will just delay the urgent action which is needed.

The Greens and Democrats seem to offer the best policies although some of the points I recommended in the list above are not included. In any event, a bipartisan approach will be required but this may not happen until a real physical crisis has emerged.

Outlook

With current policies, the imminent oil crisis will come like a bolt from the blue sky. With global decline rates of 4% pa a transition to a more efficient car fleet and to alternative fuels will be too slow (recession likely with limited purchasing power for new car sales) to offset this permanent decline. Therefore, a 2nd defensive line has to be built up while carpooling and fuel/engine efficiency buffers the 1st impact of peak oil and that can only be public transport as the final solution. As an example what has to be done under item (4) in capital cities this is an image of urban rail on a major road in Frankfurt, showing one of the stations including platforms.

The 3rd lanes in each direction can be removed (no longer needed as traffic will decrease in the next decade even if population grows) and REPLACED by a surface metro system which is much cheaper and faster to build than a rail tunnel. The trains are 100m long and can carry 400 passengers, running every 2-3 minutes during peak hour and every 5-7 minutes off-peak.

It is now high time to start with these projects, including establishing a local rail manufacturing industry. Once peak oil hits as oil shortages, cities all over the world will order more trains and there will be a bottleneck in supplying rolling stock.

Matt

I would say we also need what Alan Drake defined as a Strategic Rail Car Reserve.

http://www.lightrailnow.org/features/f_lrt_2006-05a.htm

You may have seen that now its election time the car industry is saying they are at deaths door.

http://www.theage.com.au/news/National/Aussie-car-industry-denies-warnin...

What we should be doing is saying. Time's over guys and spending the money on building up the rail industry by investing this in rail infrastructure.

There also needs to be improved rail alignments. Billy Wentworth was talking about M5 alignment south of Campbelltown to Goulburn in 1991. This would take 20 minutes off travel times.

"Securing Australia's Energy Future" and all they can do is divide reserves by current demand. To not even know about production levels - energy policy written by someone who's never visited an oil well and talked to the workers there.

What next, our aviation policy written by people who don't know the Earth is round?

As I said on Friday's Bull Roarer;

With the coming election in Australia, I would encourage all AU readers writing to their local members and leaders of major political parties the urgent need to begin shifting their investment from road to rail. As well the need to increase funding of public transport and cycling.

The pollies need to understand the problem is coming up faster than they think. ie not after the next election and whoever wins will have to deal with the consequences of risng oil prices when they get control of the big house on the hill in Canberra.

We will not thank them for more roads when we have a supply crunch. The other thing is a democracy works best when we participate in it.

Matt,

You've given a very clear and compelling summary. It's unbelievable that our polititians are ignoring this issue. I think that genuine resource shortages may be just too hard for them to comprehend - or else they just don't want to be bearers of bad tidings.

The irony is that we will need all the remaining oil to build the infrastructure to wean ourselves off the stuff. The longer we wait, and the more oil we wasted, the less there will be accomplish this mammoth task.

Thanks for your commitment to this issue.
Lindsay

You talk about a replacement program for coal fired power plants. What do you propose replacing them with? In the United States, one option might be to replace them with more efficient "cogeneration" plants (also using coal)-ones where electricity is produced and the heat is also captured.

What do you have in mind when you talk about replacing the coal fired power plants?

Australia has brilliant renewable energy resources. A long wind-blown coastline, geothermal hot rocks and phenomenal solar capacity so there is definite possibility to produce all our power from these.

The problem is that Oz is such a highly urbanised society that most of these widely distributed power sources would face significant transmission losses to get to the urban centers through the current network. Wind is probably the nearest to where we live. The best geothermal and solar resources are deep in the outback. Ender had an interesting post about laying in a HVDC line across the outback to reach it.

http://stevegloor.typepad.com/sgloor/2007/06/superconductor_.html

For the time being we need to decommission our coal plants and start replacing them with gas, Can coal co-gen be retrofitted? If not I would suggest a better investment would be replacing them with gas and expanding windpower. Solar hot water should be a no-brainer and more money needs to be invesetd in solar thermal development and geothermal exploration.

Solar thermal has a lot of potential IMHO and I will be keeping a close eye on Cloncurry to see how their system performs.

Hi Gail,
There is a site that has been mooted for a trial hot rock pilot plant, and it near Muswellbrook, which is relatively close to coal power plants, their supporting lakes and of course the distribution system.
Politically, methinks the pilot plant would be a geothermal fox among the coal-fired chickens - hence no real progress yet, bar some preliminary bores.
http://www.greenhouse.gov.au/renewable/recp/hotdryrock/one.html

The first example and ready to go is a big wind farm near Broken Hill, proposed by a German company.

ANDREW DURRAN, EXECUTIVE DIRECTOR, EPURON: Silverton wind farm will be one of the largest in the world once it's operating, with potential for almost 1,000 megawatts of renewable energy capacity. That's enough power for about 400,000 homes in New South Wales, or about 4.5 per cent of the State's electricity needs.

But read here that the NSW Government isn't interested:

IAN MACDONALD, NSW MINISTER FOR PRIMARY INDUSTRIES: New South Wales isn't a high wind State where you could reliably guarantee, efficiently, wind power into the grid to meet both economic and target needs.

Red tape threatens proposed Broken Hill wind farm
http://www.abc.net.au/lateline/content/2007/s2054169.htm

The private energy company has certainly done its homework. So that sort of Government response really demonstrates what kind of drama is now unfolding. Peak oil knocking at the door, triggering - together with global warming - an unprecedented clean energy crisis and the Government isn't picking up on this proposal.

That's why I am saying Ministers need to first attend a training course on peak oil and global warming

Reducing Coal plants is critical to reducing CO2.

How?
1) Reduce consumption;
2) Expand alternatives: passive solar, solarPV,
geothermal, hydro (where possible), marine, wind...

3) Avoid Nuclear for obvious reasons.

Some cities already have these transportation programs.

Perth, for example, has been putting in its train lines down the center of the two main freeways.

The cities that have gone for tollways have pretty much always had public transport exclusion contracts with the tollway operators with significant penalties if they put in any public transport that competes with the tollways.

I think that you will have to wait for the tollway revenues to decrease with falling traffic to get the tollway operators to come to the table and negotiate over their closure.

Michael

I had mentioned the Transperth solution in my post:
"Did Katrina Hide the Real Peak in World Oil Production? And Other Oil Supply Insights"
http://www.theoildrum.com/node/3052

We don't need to build a strategic reserve. It's already in a reserve. Just stop pumping out of the ground.

HB

Matt's point about the Strategic Petroleum reserv is apt as Australian oil is light and should have supply disruptions its the heavier crudes we need to make diesel.

Gippsland Crude is 42 too light for making diesel.

I would read Michael Richardson's article

http://www.opinionasia.org/Dryingupdownunder

Even shipping by rail requires disesl.

Its not as easy as not pumping it out of the ground.

The strategic reserve would be needed to provide a buffer for the 1st phase of supply disruptions.

Read here about some ideas brought forward by the AIP:

Crude Oil Supply disruptions outside of Australia are likely to be of the following
types:
1. A relatively small supply shortfall driven perhaps by Iraqi production ceasing ie 2.5mbd or 3% of world output.
2. A bigger shortfall driven perhaps by Saudi production ceasing ie 9mbd or 12% of world output.
3. Supply suddenly ceasing from an Asian country with replacement crudes being further away and therefore leading to a supply shortfall until replacement crudes
arrive.

And:

Government Intervention
In circumstances where crude oil availability world wide is constrained then the refining industry is best placed to search and procure alternative supplies at the best available price. If crude oil availability was constrained to the extent that the refining industry was not able to produce enough product for the Australian market and there were no alternative supplies of product available from outside of Australia, there would be a need for Government intervention to introduce demand constraint measures.

If crude availability in Asia were suddenly constrained then Australia could possibly be exposed to a shortage because alternative supplies were further away, possibly necessitating Government intervention to constrain demand.

However, if such a circumstance arose, it is possible for Australian refineries to process indigenous crude oil and condensate. The impacts would include:
• total petroleum product production would decrease by 30% ie to just over 600,000 bpd or 170,000 bpd less than demand;
• petrol production would probably be equal to local demand;
• middle distillate (diesel and jet fuel) production may be less than demand;
• there would be virtually no production of bitumen, lubricating oils and greases;
• there would probably need to be a relaxation of certain fuel standards such as sulphur in diesel (a portion of the Australian refining industry has already moved away from using certain Australian crudes in order to meet the 500 ppm sulphur diesel specification).
• There would be contractual issues associated with taking supply away from the normal customers for Australian exports.

http://www.aip.com.au/pdf/supply.pdf

This report is in urgent need for updating

I agree with everything above and I will be voting Green and preferencing the Coalition last, however, this is what I think will really happen...

In the next few years oil prices (and commodity prices in general) will continue to head upwards, US recession or not. I believe Chinese economy has become a largely self-sustaining beast and is less and less dependent on U.S consumers continuing to open their wallets. This Chinese demand will ensure that commodity prices remain strong, and the Australian dollar will continue to track commodity prices upwards, including oil.

This means the Aussie motorist will be largely protected from future rises in oil prices. The price of oil will have to rise substantially faster than the price of commodities we sell (coal, iron ore etc) for the Aussie motorist to suffer.

If we do see any pain at the bowser the politicians will simply lower fuel taxes to ease the pain. This is already official policy for Family First and the LDP, and its an easy vote winner for the Coalition in opposition.

Are you expecting the oil and subsequent fuel supply to remain steady or grow? Will China be able to secure an exponential supply of oil to continue their growth and exports?
Will Australia be able to secure enough fuel to continue strip mining of iron ore for the Chinese market?

It is best to dig the well before you are thirsty.

This means the Aussie motorist will be largely protected from future rises in oil prices. The price of oil will have to rise substantially faster than the price of commodities we sell (coal, iron ore etc) for the Aussie motorist to suffer.

But he is not protected from physical oil shortages. In the case of oil, it is an untested assumption that market forces (prices) will always bring demand down to supply levels. Once demand destruction has worked its way through the discretionary down to the essentials we can expect massive government interventions all around the world - including quotas.

You also assume that profits from coal and other exports will trickle down to motorist's incomes as fast as oil prices rise.

A continuous growth in China of 8% pa will create social tensions and we have no idea how that will evolve and how the Chinese government will manage these problems. ASPO China has also calculated that Chinese oil production will peak in the next years. Spot diesel shortages have already impacted on truck movements.

Peak oil is likely to weaken commodity prices as oil, coal, iron ore and other minerals are in demand at certain physical ratios depending on technology which cannot be changed over night. One would have to do economic modeling to find out whether the Chinese boom can offset weakening demand elsewhere.

The coal business also cannot go on forever.

KERRY O'BRIEN: You said just a couple of weeks ago that there should be a moratorium on building coal fired power plants until the technology to capture and sequester carbon dioxide emissions is available. But you must know that that's politically unacceptable in many countries China, America, Australia for that matter, because of coal industry jobs and impact on the economy.

[NASA climatologist] JAMES HANSEN: Well, it's going to be realised within the next 10 years or so that we have no choice. We're going to have to bulldoze the old style coal fired power plants....

http://www.abc.net.au/7.30/content/2007/s1870955.htm

What Hansen meant might be the disappearance of the Arctic summer sea ice by 2013:

Causes of Changes in Arctic Sea Ice; by Wieslaw Maslowski (Naval Postgraduate School)
http://www.ametsoc.org/atmospolicy/documents/May032006_Dr.WieslawMaslows...

So it is both optimistic and premature to see the Australian motorist in a cocoon created by high commodity prices.

You put it quite starkly Matt.
I think Australia is very vulnerable to peak oil.
40% and growing oil imports, very poor agricultural land, drought and water shortages.

Reliance on mineral exports to maintain a balance of payments and just about 100% reliance on coal for electricity.

Australia is already thirsty, the well should have been dug 30 years ago.

Matt:

I didn't say this is what I would like to see happen, but its what I think will really happen. Obviously its unsustainable in the long term, but the current situation can keep going for a few more years, at least for the term of the next government.

Yes there will be demand destruction, but that will happen in the poorest countries first, and because of the strength of our dollar Australia will one of the last countries where demand destruction occurs.

Profits from the resources boom will continue to be redistributed as the government rakes in billions from mining company taxes. Every day we see Howard and Rudd promising more pork to placate "working families". That pork is coming directly from the resources boom.

China is doing everything it can to secure its oil supply so it can continue its breakneck economic growth. Why do you think President Hu does tours of Africa? He's not going there for the wildlife! When African oil is fully owned and operated by the Chinese they can operate completely outside the oil markets, and pay considerably less per barrel.

I don't see peak oil weakening coal prices. When TSHTF and oil hits $500/barrel we will see huge investments in coal-to-liquids. Australia will be seen as the new Saudi Arabia.

No arguments from me about the dangers of burning more coal. Its completely and utterly insane.

So it is both optimistic and premature to see the Australian motorist in a cocoon created by high commodity prices.

Its not premature, its been happening for years! Plot the AUD vs crude oil for the period 2000-2007 and you will see they've been in lockstep.

Believe me, I'm not being an "optimist" when I say Australia will be shielded from high oil prices in coming years. IMO, its the worst possible outcome for Australia.

.....but the current situation can keep going for a few more years, at least for the term of the next government.

Did you know the Government is preparing for Australia's National Liquid Fuel Emergency Simulation Exercise Catalyst 2008?

Yes there will be demand destruction, but that will happen in the poorest countries first, and because of the strength of our dollar Australia will one of the last countries where demand destruction occurs.

I checked the statistics. The demand destruction in poor countries is hitting them hard but their saving means nothing to the world oil market. They just don't consume much anyway. For example, from the 1st quarter 2006 to the 2nd quarter 2006, the main demand destruction happened in Japan (1.2 mb/d), former USSR (0.5 mb/d), Korea (250 kb/d), Italy(240 kb/d) and France (210 kb/d)

....we will see huge investments in coal-to-liquids. Australia will be seen as the new Saudi Arabia.

The energy profit ratio of CTL is very low. It will have as little to do with the conventional oil from Saudi Arabia as the Canadian tar sands. Monash Energy - if it ever goes ahead - would produce a mere 60 kb/d of diesel. It will be very expensive. Enough for the ADF, bush fire brigades, roadtrains carrying wheat where there is no rail and other essential transports.

I think we should start building more underground structures that do not reflect or trap heat.
As for 'hot rock' we run a risk of cooling the earths core too rapidly as the earths core provides us a magnetic field that protects us from the sun.
I have been reading of scalar energy, ZPE zero point energy,cassimir force and levitation which brings the idea of gravitational electrical generation on a household level.

Hi Xisithrus,
I think you may be confusing hot dry rock with some other kind of geothermal energy collection. Hot dry rock is simply an upper part of the crust that still has latent heat in it from when it first cooled (several hundred degrees celsius, since it is insulated by hundreds of metres of earth). It is nowhere near the kind of energy tapping that actually drilling into the magma would entail.

Your science is about 100 yrs out of date. Early estimates of the cooling rate of a body the size of Earth gave an upper bound on the age of the Earth that was in agreement with Creationist young Earth age of ~7000yrs. But that was made before anyone knew of the existence of radioactivity. The heat in the Earth is due to radioactive decay. It should be renewed at a very reasonable rate. But whether it can be produced on a scale that solves anybody's needs or desires is really open to question. Hot dry rock is dry. To get the heat one needs to circulate a fluid down to where it is and back up to the surface where the hot fluid runs a heat engine. What fluid? Water tends to pick up all sorts of nasty minerals, disolve them, and carry them to the surface. There are many other unsolved problems, too. Don't count on it. YMMV, etc., etc.

The earliest serious estimate of Earth's age was 25 to 400 million years. Lord Kelvin was assuming collision of asteroids causing initial gasification, followed by condensation and cooldown to molten, and then solidification, releasing heat at each stage and letting it convect and conduct out to the surface in the form of volcanos.
The production of heat by the Earth is only a few times as much as we need to run our civilisation. The thermal reserve is far greater than we need to run our civilisation for the next few million years. There is a lot of heat in even Australia, one of the coldest and least geothermal rich places on earth.
I don't think it's that important. I would allocate a token billion dollars in case someone figures out a practical method.

Fair cop.
I still think the poster I was replying to meant drilling a lot deeper. After reading about the site at Muswellbrook, the paper does in fact mention radiogenic heat. Thanks geek7.

Here is an example of real local leadership. Just think "Victory Gardens 2.0"!

Thanks for the report. I think its an excellent summary of the current situation and what needs to be done.

The immediate problems I see with the To Do List are:
Point (1) - What unemployment will result if these activities were reduced or stopped? What regions would be impacted and what could be done to mitigate these impacts? It is too simplistic to say that the resulting unemployment can be readily shifted to ‘renewable’ industries. Some will, not all.

Point (2) - How do we overcome the loss of export $s and resultant impact on economy? What is the current annual value coal, LNG/LPG exports? What unemployment will result if these exports were reduced/stopped? What regions would be impacted and what could be done to mitigate these impacts?

These questions need to be convincingly addressed before any political party is likely to adopt your suggestions.

Ian,
"These questions need to be convincingly addressed before any political party is likely to adopt your suggestions."
Political parties have screwed various parts of the electorate with unemployment and taxes many times before, so I don't see why it can't be done this time. The only difference is that there would have to be a whole lot of truth dealt up in the discussion - something politicians are not famous for.
The bottom line is that these changes are going to entail some pain and considerable change. The later those changes come, the greater the pain.

Uncle,

I agree with you on political parties, pain and change and the need for action. All I'm trying to say is that if you want a 'wish list' implemented you need to show how it's going to be done. Or at least how to 'sell' it. If you remember, Howard has critised both the Greens and Labor parties for proposing reduced coal mining, etc as 'economic vandalism'.

I believe a moratorium on "new freeways, tollways, car dependent shopping centres and sub divisions, airport extensions, coal fired power plants" and reducing LNG/LPG exports would have a major impact on the economy. Unless a plan is put forward to convincingly reduce this impact, the 'wish list' will remain a wish list.

Indeed, "how to 'sell' it" - we both seem to agree it'd be tough to do.
My two cent idea is to have renewable energy industries given tax breaks commensurate with those given to existing energy industries to locate on existing rail corridors in low population areas - IF they employ people that have been made redundant from existing energy jobs. The reasoning I have behind this is to:-
a) alleviate the housing cost crisis by encouraging development in lower cost areas (less demand for metro real estate)
b) allow more sustainable communities (bigger blocks in a cheaper area would have better solar access for gardens, hot water, rain water harvesting and photovoltaics ('hopefully' lower council rates would assist in people being able to afford the above items).
c) integrate new industries into the economy in a less environmentally harmful way
d) ideally the resource freed up by the use of renewable energy could be used to generate overseas revenue

The reason I call it a two cent idea is that I haven't thought of any actual sites!

Ian,
"These questions need to be convincingly addressed before any political party is likely to adopt your suggestions."
Political parties have screwed various parts of the electorate with unemployment and taxes many times before, so I don't see why it can't be done this time. The only difference is that there would have to be a whole lot of truth dealt up in the discussion - something politicians are not famous for.
The bottom line is that these changes are going to entail some pain and considerable change. The later those changes come, the greater the pain.

What unemployment will result if these activities were reduced or stopped?

None, instead of new freeways, construction companies will be busy with rail projects. The limiting factor will be man power skilled in rail jobs and diesel supplies. It is essential that CNG (compressed natural gas) be used in the construction sector.

How do we overcome the loss of export $s and resultant impact on economy?

Instead of exporting LNG, we should be using our natural gas to manufacture e.g. solar panels or mirrors and export these. More value added, permanent jobs secured and CO2 emmissions reduced if those solar power plants replace coal fired plants.

I agree with your comment that the greens have the platform that makes sense, though I'm a partisan. You'll be happy to know that greens in the eastern US made some gains in the off cycle elections recently at the municiple level. This should help to turn some localities towards prosperity and away from ruinous growth.

The way some of us are looking at things, some items on your list should not be actively encouraged. They might help in the short run, but switching to yet another resource that will run out should not be a goal of policy. So, one might not ban use of CNG (your point 5) but neither would one give incentives or encouragements and save that role for renewables. We're looking for sustainable prosperity rather than a series of desperate measures, and all depletable resources look desperate from this point of view.

Good luck with the trains,

Chris

I must admit I like the Greens for several reasons such as their policy on victimless crimes. Their leader Senator Bob Brown had the cojones to tell Queensland coal miners they should look for other jobs. I doubt he achieved anything besides publicity when heckled GWB on his visit to Parliament. So far he has stood up to being personally sued by forestry company Gunns.

However it must be remembered that Brown was the ringleader of the campaign to kill off Australia's last big hydro project, the Gordon river near the Franklin junction. Since he is now passionate on renewables perhaps he will urge run-of-river mini hydros on that stream. Also if he is so anti-nuclear will he sack all the workers at Olympic Dam, Beverly and Ranger uranium deposits?

I'd vote for a semi-green party with fewer whackos and more pragmatists. That party doesn't seem to exist.

Check on Dr. Karl's Climate Change Coalition
http://www.climatechangecoalition.com.au/

Clean coal a furphy: Dr Karl

Dr Kruszelnicki used a scale model of Sydney and a $10 tent to demonstrate what he said was the "myth of carbon capture".

Sydney alone would produce a cubic kilometre of compressed carbon dioxide every day as a result of the process, far more than could possibly be stored under ground, he said.

http://www.smh.com.au/news/federalelection2007environment/clean-coal-a-f...

While I like DR Karl and the CCC, in the interests of accuracy I'll note Dr Karl retracted that statement and now says that clean coal has a limited role to play to help us transition to real clean energy sources.

(I included the relevant articles in a Bullroarer a few days ago).

We cannot win by oil rules. So change the rules.

Apply the concepts of distributed collaborative networks to our energy and transportation networks. The internet does this in our communications networks. The Germans are doing it in their energy network with their solar lifeboat policy

In transportation networks, remove the Parasitic Mass, congestion, power with solar collectors and apply networks. They become more durable against the postulates of Olduvai. A distributed collaborative network does not collapse as our current monolithic centralized system. We can no longer avoid pain but we can survive.

Besides these networks provide a 65% cost and 96% energy cost savings. Exploiting a cost savings is something people can accept event if they cannot accept Peak Oil, climate change and Olduvai.

The basic mechanics were recommended by US DOT in 1975 (PB-244854) as a way to permanently prevent future oil embargoes.

Morgantown was built in response to that oil embargo. It has since delivered 110 million injury-free passenger miles.

Cabinetaxi was also built. Unfortunately neither system was ever taken to the next iterations of distributed collaborative computer networks. Such networks and micro computers did not exist at that time.

They exist now and are expanding. ULTra is building at Heathrow. MISTER building in Poland. Vectus is building in Sweden. PodCars is raising a $1 billion fund in Sweden/California. JPods will open March 1, 2008 at the Mall of America.

Acceptance and action on Peak Oil will only happen when people see they can do something about it. There is hope.

If you live in the UK you can be absolutely sure that little or nothing will be done to resolve this issue. Levels of both public and private sector investment in energy related R&D are shamefully low whilst our Govt continues to pile on "carbon taxes" in order to try to drive down hydrocarbon consumption.

I have no doubt in my own mind that the increase in carbon taxation is a proxy for Govt failure to have begun doing something about this ten or more years ago and mobilised our not inconsiderable engineering and scientific skills to get ahead of the game. It's now easier for them to pile on tax in the name of global warming than admit they screwed up.

The Democrats have commented by refering to following links:

Is Australia's auto industry imperilled by ignoring climate change and peak oil?

The future of the Australian Car Industry
Centre for Public Policy Symposium
27 Sept 2007
Senator Lyn Allison

http://www.democrats.org.au/speeches/index.htm?speech_id=2315

Democrats Action Agenda

Commonwealth and State funds pooled for all transport infrastructure and allocated on the basis of clear criteria that deliver on long term transport reform objectives and include:
- Substantial funding for integrated public transport - rail, light rail and bus networks and transit lanes on urban freeways with a priority for those metro areas where transport services are poor.
- Improved public transport frequency, amenity, safety, reliability and accessibility, particularly in outer metropolitan areas. Better scheduling and ticketing coordination.
- Rail services extended to residential developments on the city fringe and modernised and high quality sub-regional feeder and circumferential bus services provided.
- The east coast route modernised, multi-modal exchanges, rail links into ports and nationally consistent regulations, codes and communication systems provided. Fast train services extended to all major airports and regional centres and linking Brisbane, Sydney, Canberra, Melbourne and Adelaide for rapid, low emissions passenger ad freight travel.
- Safe off-road walking and cycling networks for commuters. Improved local access to public transport for pedestrians and cyclists.
- Substantially changed car parking practices by reducing space requirements for new and refurbished commercial development and increase parking at transport nodes, including safe cycle lockers. With the states, introduce car
parking and congestion charges in inner urban areas and reduce public transport charges by at least 10%.
- A moratorium on residential expansion on the fringes of capital cities and a shift of growth to regional centres and underutilised urban land. Transport reform objectives applied to urban planning for all land use change.
- A greenhouse trigger in Federal environment laws for major infrastructure projects.
- FBT reformed to encourage public transport, cycling and car pooling.
- Excise on alternative fuels removed until agreed targets have been met
- Tax incentives for fuel efficient and low emission vehicles, funded from higher taxes and registration fees for inefficient vehicles and the reintroduction of fuel excise indexation (abolished in 2001).
- The ban on blends of more than 10% ethanol lifted and mandatory biofuel targets of 20% of all petrol and diesel sold phased in by 2020. Ethanol petrol blend (E10 and E85) availability mandated at all outlets,
- All government vehicles switched to alternative fuels and fuel efficient vehicles on re-leasing.
- Democrats-negotiated alternative fuel vehicle conversion maintained and extended to electric and LNG vehicles of all sizes.
- Grants for compressed natural gas, liquefied natural gas, hydrogen and electricity refuelling infrastructure.
- Auto industry subsidies conditional on producing high efficiency vehicles including hybrids
- An enhanced Bass Strait Passenger Vehicle Equalisation Scheme that keeps passenger and freight costs as close as possible to those of rail and road over the same distance.
- Implement recommendations from the Government’s own House of Representatives’ Sustainable Cities inquiry.

http://www.democrats.org.au/docs/ActionPlans/Transport_LandTransport_200...

Thanks for the update.

We really should have included a look at the Democrats in the main post - its a shame they are struggling to survive at the next election.

Fantastic article, I agree completely with all the points raised. I've already postal voted for the Democrats and Greens.
Some of you may have heard of the Australian political lobby group 'Getup'. I have been looking to them for leadership on these issues, as they have hundreds of thousands of members, however they seem to be focusing on purely political topics such as the indigenous situation. Energy and climate change should have pushed almost everything else off the agenda.

I plan to join the Labor party, and perhaps volunteer, once they come to power in the Federal election. Beginning a Government job will probably be the best option available anyway once I finish my Melbourne University Commerce degree - the Financial system will have surely mutated beyond recognition in two years time.

Living in London, I have many mates from Australia. They love England because they don't need a car and because they can walk down a high street. They complain that in Australia you are beyond the economy, your friends, society if you don't have a car. Goodness only knows what kids do to amuse themselves before they are old enough to drive.

Your lax planning system puts houses at low densities in random places that do not connect with public transport and you allow shopping malls with no thought about traditional shopping centres. Once there was the chance of a high speed rail link between Melbourne and Sydney but the money was embezzled or something like that so you have to fly or drive between these two great cities. Its a real shame, because, when a city is designed spatially in a way that does not support local services and public transport, its extremely expensive and requires subsidy to be retrofitted. Hopefully the Aussie developers charter approach can be changed, but I doubt it. Unfortunately New Zealand appears to have a similar approach.

As a sub-note, the independence of individual States on planning is a problem. You need a Federal direction on environmental issues, as is the case with Planning Policy Guidance and Statements in the UK, or in the case of Environmental Impact Statements and Strategic Environmental Impact Statements from European law. That is how national elections could be relevant. If the Federal Government took the issue to task and put a legal obligation on states to ensure that their planning systems and policies cover these issues within a defined deadline, with Federal planning inspectors having the final say on development plans. It would probably be unconstitutional and cause outrage, but nothing will happen otherwise, IMHO.

This weakness of the federal system is also a reason why American planning is so distorted towards vested interests, why Los Angeles was allowed to dismantle its public transport, why suburbs can be built without pedestrian connections to the city or even sidewalks. Going a step further, solving the Australian planning system would be a model for solving the American planning system.

You have heaps of planners with European experience now, particularly in the UK, use it!!

"We can expect business as usual until the first petrol and diesel shortages arrive at the filling stations which will happen in the next term."

I remind TOD readers once again that in a functioning free market economy, the problem will not be that there is no meat in the stores. The problem will be that you can't afford it.

Why the insistence that peak oil = "The shit will hit the fan" ? The decline will come (and sooner rather than later), but it will be gradual at first. People will adapt to gradually increasing gasoline prices for a long time yet.

Disasters, terrorist attacks, panics, such things CAN cause shortages in a free market economy, because then it ceases to be well-functioning for a while. But none of these are guaranteed consequences of a peak. The most serious of them, panic, is what many of you are irrationally promoting in a self-fulfilling Cassandra party. Stop it, please.

Thanks for pointing this out Mr Vintermann.

I agree - there weren't be any sudden oil shock as a result of oil depletion - the effects will be gradual, punishing the poor (countries and individuals) first.

This may lead to instability and some of the issues the doomers (Cassandra was correct by the way, so I don't use that metaphor) foresee - if handled incorrectly. But this certainly isn't guaranteed.

And there is a danger of self fulfilling prophecy occurring if everyone buys into the most pessimistic forecasts - which is why its best to aim for postive outcomes instead of focusing on the negative possibilities.

I remind TOD readers once again that in a functioning free market economy, the problem will not be that there is no meat in the stores. The problem will be that you can't afford it.

Yes, functioning and free market economy. One could argue we don't have a free oil market anymore as a massive military presence is needed to maintain oil flows. Its cost per barrel could easily be in the order of $30.

Apparently you did not experience the 1st oil crisis in 1973/74. As a result of the OPEC embargo oil tankers did not arrive in the required numbers in Rotterdam and Sunday driving bans were introduced with the objective that commercial transports during the week could use the fuel saved over the weekend. The laws of the market economy will work only in a very narrow band plus/minus the equilibrium, especially if there is no alternative fuel in sight.

There will be no way around a combination of fuel price controls (to stop inflation damaging the economy) and quotas according to need (to provide the functional minimum for the economy).

Now we do not expect another OPEC embargo, but the Middle East is a tinder box, we all know it. Read this from an interview Tony Jones had with Abdul Bari Atwan, editor of a London based Arabic newspaper:

TONY JONES: I'm sorry to interrupt. I want to move you on, because you write about a strategy designed, in fact, by Al Qaeda's military strategist, the same man who helped design what was going on in Iraq with the insurgency there and the infiltration of Al Qaeda people into Iraq, has set out a plan which you've published right up to 2020. Where are we now in that plan? Where does that plan propose to end up?

ABDUL BARI ATWAN: Well, actually we don't know what will happen. I believe now the American administration is facing a huge crisis in Iraq, and also another crisis in Iran.

What will happen to the Iranian nuclear program? What will happen to the situation in Lebanon which is turning to be a failed state, whether Al Qaeda will manage to set up bases there? What will happen to the oil industry, if there's a far flare-up between the United States and Iran and the Iranians use their missiles to hit the oil fields and burn it again like Saddam Hussein did in Kuwait. What will happen? Is it going to be blocked? What will happen to Israel, for example, whether the Iranian, the Hezbollah missiles will hit Israel?

We are facing a huge problem in the Middle East. I believe that the coming 12 months is the most important period of this part of the world's history. I think in 2020 we will see a completely different Middle East, because most of oil resources outside the Gulf, in particular, will be dried up simply because it's very short-term production oil reserves. Even in Iran in 2020, 2025, the oil will run out completely.

China's consumption of oil increases 7 per cent, 7.5 per cent, every year. India, which is another superpower, emerging its consumption of oil increasing by 5.5 per cent every year. United States' consumption is increasing.

Where are we going to have this oil from? Who will control the oil in the Middle East? Who will put his hand on the tab there? Anybody who will control that part of the world will control the whole world, the whole economy. To be honest, it is very bleak picture.

So Middle East will be there in the news and there will be many wars to come, many, many conflicts. Many competitions between the emerging superpower, India, China and Europe with Soviet Union or Russia in particular. So, it is very interesting to see what will happen there.

http://www.abc.net.au/lateline/content/2007/s2013661.htm

The most serious of them, panic, is what many of you are irrationally promoting in a self-fulfilling Cassandra party. Stop it, please.

The panic may come not because of self fulfilling prophecies (the average Australian doesn't know about them anyway) but because the public is not properly informed of and prepared for, peak oil. For example, when the crunch time comes, many motorists may confuse "running out of oil" with "peak oil" and declining oil production. No one is telling them the difference. Or inelastic behaviour may sharpen the crisis unnecessarily.