Treasury’s last Inter-generational
Report contains, hidden away on page 91, a simple stunning
statement: Australia’s oil will be gone by 2020. The timing could not be
worse. By 2020 Peak Oil is likely to have rendered oil imports precarious and
costly. And without oil, modern civilisation doesn’t work.
The media ignored this part of the
Report, so the ministers of our two major parties and the bureaucrats who
advise them, have rarely been required to explain why they let this happen. On
those rare occasions the question has been brushed aside with assurances that
either market forces will always supply oil (or a substitute) at reasonable
prices or Australia has vast reserves of natural gas.
Both these arguments are shaky.
Firstly, for many uses, such as aviation, mining, and most road transport,
there simply is no good substitute for oil. No one has yet built a gas-powered
plane.
It may seem impressive to find an
urban taxi scooting around powered by a large tank of compressed gas that has
taken over the boot, but the energy required to find and transport that gas,
and to compress it to an amazing 2500 psi, and safely seal it in a robust tank,
did not come from gas. We are a long way from knowing how to run our civilisation
on gas.
It is also far from clear that
market forces will provide oil cheaply, or spread it evenly. The International
Energy Agency has provisions to compel equitable sharing of traded petroleum.
Yet once Peak Oil bites, energy-producing countries may hoard the increasingly
precious stuff, like Russia did with its grain harvest recently, or sell it selectively
to their friends. Or to those who bully them.
Energy shortage will affect each
country differently, and often via its effects on fertiliser and food
production. Australia’s generally thin soils are particularly dependent on
fertilisers made from or transported by fossil fuels. As the Immigration
Department’s recent Sobels report (p. 89) showed Australia’s
future food supplies are not guaranteed.
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Is this our future
without oil? |
As well, higher prices may create a
rush to “cut green tape”, which is code for going after dirtier and more
environmentally destructive forms of energy. Examples include BP’s deep-sea
drilling, or the U.S. “fracking” craze with its now well-known health and
environmental risks. Optimists argue that the U.S. is now looking to export
Liquid Natural Gas, and hence world gas prices are actually falling. Yet some
experts believe the shale gas industry drilled the best sites first, hyping
prospects to attract investment and that politicians, and the media, desperate
to identify a new energy source to support future economic growth, accepted
the hype uncritically.
Turning to the government’s second
excuse, Australia does not have vast reserves of gas put aside. We have, or
have had, very large gas fields, but almost none of this is kept for Australian
use, because we don’t reserve gas: we sell the stuff off soon after we find it.
Or we all but give it away, in return for ephemeral jobs and often
inappropriate or damaging “development”.
The last government to make a
creditable attempt to retain Australia’s energy reserves was the Whitlam
government – which got into trouble for trying to borrow huge sums to buy back
energy reserves that had been sold off while still in the ground. Oddly enough,
the lesson most politicians seem to have learnt from this, under the tutelage
of the Murdoch Press, is not that further energy discoveries should be
retained, but that they should be sold off as fast as “market forces” would
like.
Democratic leaders are often so
focussed on getting re-elected in one, two or three years, that they make
utterly short-sighted decisions to get a temporary upswing in GDP, so they can
boast of being “good economic managers”.
On a slightly kinder view, they may
be blinded by economic growthism – the belief that if you just keep “the
economy”, meaning GDP, growing today, your successors are bound to find some
other expedient to keep it growing in the future.
The media often imposes such views.
In 2011 when the federal government approved the Wheatstone gas project in W.A.
TheAustralian
burbled that thanks to this sell-off “Australia is poised to become a
global energy superpower”, and implied that Chevron had done us a favour by
accepting the deal.
In Pantera Press’s forthcoming
debate book Big Australia Yes/No? (of which I did the No case)
I wrote: My opponents claimWe will have enough food and water. They
do not consider energy, without which neither food nor water can be supplied to
large cities in a semi-desert continent. Yet Australia has recklessly sold off
its energy resources…True, the 2010 Intergenerational Report Australia to
2050: future challenges, says on page 91 that our known reserves of
natural gas would last about 70 years if we continue to use it at 2008
rates. But this is unlikely. After Peak Oil, gas may be used at far higher
rates, and hence be gone in a fraction of the time.
We can’t assume that Australia will
keep a strategic reserve of its own gas to protect us from the world peak in
gas. Some experts predict global gas supplies will peak as early as
2020, though others predict no decline before 2030. Studies of how
civilisations fall, such as Jared Diamond’s Collapse, show a common cause is
that populations outgrow their resources.
Sure there are plenty of
politicians and advisers who think there is no problem. Maybe by the time our
gas runs out, we’ll have invented something else. Or we’ll have discovered another
major field that some enlightened future government won’t sell off.
Yet we have a history of grossly
over-estimating energy resources. The desire of exploration companies to boost
their share-price by overstating a find combines with the tendency of journalists,
once they have taken on a story about a find, to exaggerate its implications.
We have often been assured we have centuries’ worth of a resource when in fact
we have only decades.
The U.S. Professor of Statistics
Albert Bartlett gives a withering account of this pattern in his article Arithmetic,
Population and Energy. He points out that despite claims
that the U.S. had “more than 500 years” of coal, and more recently that
globally “coal will last us for at least 119 years,” it seems coal
may in fact be peaking now. Similar points are
cogently made in Richard Heinberg’s Forward to
the recent report Will Natural Gas Fuel America in the 21st Century?
And now even industry is getting
worried, and claiming that our sell-off of gas may leave us short of energy as
early as 2015. According to Andrew
Liveris, the Australian CEO of Dow: “Most obviously, Australia has no
evident energy strategy…You tend to get what you plan for. And if you don’t
plan…
