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Australia's future oil supply

Speeches in Parliament
Rachel Siewert 7 Sep 2006

I present the interim report of the Rural and Regional Affairs and Transport References Committee on its inquiry into Australia's future oil supply and alternative transport fuels and move:
That the Senate take note of the report.

As people know, the references committees are winding up. The committee felt that it was very important that we put our thoughts on record and record where we are up to in our inquiry. This is an extremely important issue and it was largely prompted by the question of whether Australia should be concerned about peak oil. Peak oil, in this case, refers to the fundamental geological reasons global conventional oil production will reach a peak and then start an irreversible decline soon enough to be of concern. In their arguments, proponents of peak oil commonly predict a peak somewhere between now and 2030. They suggest that this could cause serious economic hardship if mitigating action is not started soon enough.

There was a great deal of interest in this inquiry. I think part of that was prompted by the most recent oil prices and subsequent flow-on to petrol prices. We received 192 submissions, which we felt was a large number of submissions. The submissions were very comprehensive and they came from a broad section of stakeholders, including the petroleum industry, peak oil groups, various academic experts, government agencies from around Australia, the renewable energy industry, non-conventional oil industry representatives and local government. We held nine hearings around Australia. If it was not already clear in people's minds, it became obvious during those hearings that this is an extremely complex area. There was a very large range of issues that were covered during our hearings.

I would say that most of the submissions we received generally agreed that peak oil was an issue; I think where they disagreed was the timing of it. We heard from peak oil proponents, who gave a very detailed critique of official estimates of the world's future oil supplies. I might add that everybody agreed that Australia's oil supplies were declining. There was much more debate around how rapidly global oil supplies were declining. But the peak oil proponents actually dealt with these arguments in a lot of detail, as is articulated in the report, and the committee felt they had very plausible arguments. The committee, however, is not aware of any official agency publications which attempt to rebut the peak oil arguments point by point in similar detail.

In other words, the committee received a lot of information critiquing the figures of the oil industry, in particular, on global oil supplies but there were not similar arguments from the reverse perspective.

In the committee's view, the possibility of a peak of conventional oil production before 2030-even if it is no more than a possibility-should be a matter of concern.

Exactly when it occurs-which, it points out, is very uncertain-is not the important point. The committee feels that Australia should be planning for it now, as Sweden has with its plan to be oil free by 2020.

The committee also felt that it is clear that gas should be carefully looked at and that there was a need for longer term planning. As was aired in the media, there was a lot of criticism of ABARE's predictions on oil prices and our reserves.

Their predictions came in for a great deal of criticism in, I think, virtually every hearing that was held.

The range of issues that the committee considered was extensive. We were asked to look in particular at Australia's oil vulnerability and we looked at issues at a national, international, state and local level. We looked at our cities' vulnerability to oil depletion. We looked at agriculture, and agriculture is particularly vulnerable. We received a lot of submissions on that. We also looked at the impact on, in particular, people living on the outskirts or in our inner urban fringes. We looked at the economic and social impacts. We particularly noted the convergence between the issues of peak oil and climate change and felt that any solutions that we reach for peak oil also needed to be reached for climate change.

The committee looked at issues around oil demand and oil supply. Of course, propositions were put to us that Australia needs to increase its oil exploration activity. While the committee felt that it remains to be seen whether the government initiatives will have a significant effect on oil activity, they pointed out that, if significant reserves are found, extraction of the oil from these new sources, which are likely to be in deep water, would come at a much higher cost. So, in fact, they might not address the issue of oil prices, which we were asked to address. In fact, oil prices would continue to rise if new resources were found.

As to whether the appropriate level of resources was being allocated by government and corporations to explore for more oil, there was a question about whether those resources should in fact be redirected to look at other alternative sources of fuel.

The committee have not yet reached a conclusion, but we did note that the costs and benefits of more exploration must be assessed against the costs and benefits of other options to reduce our oil dependence.

The committee felt that they are significant issues that need to be addressed and that will continue, I hope, to be addressed in the final report.
The issue of biofuels came up and we heard a lot of evidence from people working on biofuels and looking at the various options, whether they be from waste or grain for ethanol and biodiesel. Again, we heard a lot from the agricultural industry on these areas and we also heard about the promise of lignocellulose in providing a more sustainable long-term source for biofuels.

We heard that there does not seem at present to be an overall approach or national approach being taken to the issue of peak oil and oil depletion. The committee felt that that was an area that needed to be looked at. We also looked at the areas of energy efficiency, conservation and public transport. Again, those were areas that we heard a lot about.

We made a number of comments further on in the report about where we need to be looking in the future with respect to the committee process. A lot of concern was expressed to us about the lack of public transport services in many of our cities. I add a bit of home-grown parochialism here-that is, many of the submissions to the committee praised Western Australia, Perth in particular, for its foresight in providing the excellent train system that we have in Perth. I think it is fair to say that we heard people around Australia commenting on that, but people expressed concern that in other cities the public transport system at this stage would not be up to meeting increased demand for services if people made a sudden switch from private vehicles to public transport.

Another issue that came up very strongly was, as I said, how peak oil intersects with climate change but also how the cost of carbon in the future needs to be taken into consideration. The committee has not reached a conclusion on that. We made some comments on that, but it is certainly an area which has been flagged for future work and which needs to be taken into consideration in future options.

Those are some of the issues that the committee highlighted. I am sure my colleagues on the committee will raise other issues. I believe it was an extremely important area of inquiry, and I look forward to seeing the final committee report.

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