In 2005 the Hirsch Report informed 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.

In 2010 the US Joint Force Command recognised the problem, predicting serious oil shortages (perhaps as early as 2015), blackouts and civil unrest throughout the world, and urging that their defence forces be fully capable of operating with non-petroleum fuels inside 30 years. At the same time a study prepared for the German army has concluded that the economic damage from peak oil impacts is almost impossible to quantify – but it will result in economic instability, unemployment and perhaps the complete collapse of our banking systems, stock exchanges and financial markets.

Peak oil – the point at which the exploitation of oil resources reaches maximum production and then declines – was first postulated in the mid-1950s. While predictions of when that point has been/will be reached vary (evidence suggests it has already happened while the supreme optimists or those acting from political motives give us another twenty years) what is not in disagreement is that the dwindling supplies left to exploit will be harder to obtain and therefore more expensive. Australia’s oil supplies have already peaked, and demand for oil has increased at an average annual rate of 1.3% for the past 10 years.

Depletion of oil reserves as demand increases results in greater risks being taken to produce alternative energy sources. BP’s Gulf Oil spill in 2010 is one example of such risk-taking. With rainforest destruction and loss of local food crops, the move towards ethanol is exerting environmental and social pressures in developing nations. Extraction of oil and gas from unconventional sources such as tar sands or ‘fracking’, is already creating some potentially disastrous environmental consequences e.g. rainforest destruction, water table depletion and greenhouse gas pollution.

Living as we do on the edge of our continent, with consequent movement of goods across thousands of kilometres, Australia is extremely vulnerable to peak oil impacts. Because of infertile soils, our food production is heavily reliant on imported fertilisers (using oil as the transport fuel). Where natural fertilisers are not available, petro-chemical versions – by definition made from oil – are substituted. The burgeoning economic power of China may soon out-compete nations such as ours for fertilisers, thus dramatically reducing Australia’s food export capability.

While there are direct economic costs resulting from peak oil, health and social costs will increase with distance from city and suburban centres. Our health system assumes transport mobility, ranging from the large distances country-dwellers are willing to travel to obtain specialist help, to the shipment of pharmaceutical products over large distances. Fuel poverty will confront hundreds of thousands of people living in the outer suburbs of our major cities when they are faced with steeply rising fuel costs and inadequate public transport planning.

So why is it that most Australian politicians fail to even mention the problem, particularly as peak oil will hit sooner and harder than the impacts of climate change? A 2009 Australian Government report from the Bureau of Infrastructure, Transport and Regional Economics, which stated that the transition will be challenging to most economies around the world, was withdrawn from the public domain post-publication. But collectively burying our heads in the sand will not make the problem go away.

The Australian Democrats have been at the forefront of efforts to have peak oil taken seriously, convening a Select Committee in the SA Parliament in 2008.

Actions required

A report prepared for the City of Portland, Oregon, in the US recommended Act big, act now. This should be the motto for our Federal, State and Territory governments.

  • A new Federal portfolio should be created, that of Energy Security.
  • Just as we have environmental impact statements on large projects, governments must introduce oil vulnerability statements.
  • Prioritise uses for remaining supplies of oil, particularly for transport that cannot, at least in the short term, use anything but oil.
  • Emergency fuel storage plans must be developed, including the establishment of new fuel storage terminals in rural areas to facilitate food production.
  • As demand as well as supply must be addressed to cope with the problems of peak oil, Australia’s population levels must at least be stabilised, if not reduced.
  • Movement of freight over distances of more than 200 km must be accomplished using rail wherever possible.
  • Significantly greater investment in rail freight infrastructure is required at the national level.
  • Recognising that it can be a stopgap measure only (as we face ‘peak gas’ in the slightly longer term) increase the number of vehicles able to be converted to LPG under AusIndustry’s scheme from 25,000 annually to 30,000, include CNG conversion and extend the life of the scheme beyond 2014.
  • Mandate national fuel efficiency standards of 5litres/100km for new and imported domestic vehicles as soon as practicable, tightening over time.
  • Introduce national standards for ultra-small electric vehicles.
  • Facilitate a national network of kerbside recharging posts for electric vehicles (and wheelchairs), powered by locally generated renewable energy.
  • Encourage research into alternative fuels, but not at the expense of the environment.
  • At state government level, transport planning must move from road building to increasing public transport, particularly light rail (i.e. trams) which are more fuel efficient than buses or trains.
  • Train stations should be upgraded, providing greater security and more public facilities as a consequence of more people turning to public transport.
  • Vehicle registration fees to reflect fuel efficiency, including, if necessary, the creation of a new small electric vehicle classification.
  • Support the development of transition towns.
  • Encourage local production of food by ensuring there are no more housing subdivisions developed on agricultural land close to our cities.