Planning for peak oil - what it will mean

Peak oil is a term to describe the dwindling world oil supply. We won’t run out of oil - at least not in the short term - but there will be less oil and it will be more expensive. This problem is exacerbated by the burgeoning economies of India and China; so, just as supply is decreasing, demand is increasing. The latest BP Statistical Review of World Energy states, “It is no secret any more that for every nine barrels of oil we consume we are only discovering one”.

When looking at peak oil, we should be aware that it is in the commercial interests of oil companies to exaggerate the amount of their oil reserves. Their share price depends on it.

South Australia has no transport plan - if there was an understanding of peak oil we would have. At the national level the transport-related promises of both parties in the 2007 federal election were almost entirely about roads. Yet, in May 2005, the then Premier of Queensland, Peter Beattie, listened to the concerns of the member for Hervey Bay, Andrew McNamara, and set up the Queensland Oil Vulnerability Task Force.

Its report was tabled in October 2007 and recommended the development of a Queensland oil vulnerability mitigation strategy and action plan. Queensland's minister for sustainability responded by saying Queensland would have to adopt a wartime mentality in regards to oil use, and a committee has now been set up to prepare that recommended strategy.

The report considered three scenarios of low, central and high in relation to petrol prices and made observations about the implications under each of the scenarios. The authors assumed that the most likely scenario was the central one; that is, oil prices would average US$58 to US$60 a barrel between now and 2015, then reach US$70 to US$80 a barrel by 2050. The high scenario assumed that prices would rise to US$110 to US$115 a barrel by 2050.

History tells us that, only two months after the release of that report, the average price was US$87 a barrel and it hit an historical peak of US$100 a barrel early in January this year. Although it has fallen back a little since then it remains remarkably high.

That we are already facing the high scenario demonstrates how quickly this situation can get out of control without government having strategies in place. Oil market volatility could plunge the economy into crisis. Higher costs for using private cars will most certainly result in social disadvantage. In our large cities those with less income are pushed to the outer suburbs to obtain housing. Urban sprawl is a direct result of oil dependence and an unstated expectation that oil will always be there.

People living on the edges of cities are almost always car dependent because public transport is not factored in with urban expansion. They usually carry higher levels of debt, often having recently purchased housing and often there are few businesses or industries to provide employment, consequently outer suburban dwellers are forced to commute long distances in their cars. The result is fuel poverty.

Regional areas will be hit harder still because their food and commodity costs include the extra cost of petrol to transport them. State governments will have to look seriously at providing public transport in country areas. One of the risks associated with rising costs in rural areas is a population drift to cities and larger regional towns. We need strategies to deal with that influx.

Governments could be taking action on a variety of fronts to encourage the use of fuel-efficient cars by, for instance, offering lower registration costs. The Reva electric car has been refused registration in Australia because of the question of vulnerability to impact in a crash but we continue to register motorbikes, which offer no rider protection. We know the Reva has potential as an alternative mode of transport. So why not simply create a new category of registration?

We have seen the announcement of the closure of Mitsubishi, and I have called for that site to be used for the manufacture of solar buses; however, it could equally be used for an electric car industry.

In terms of transport, the government will need to seriously consider car pooling. We need to look at full-time bus lanes and soft technology, such as scooters, cycling and walking. As far as work is concerned, we are going to have to look at encouraging telecommuting.