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Australians are already suffering from ‘peak oil’

By David Worth - posted Monday, 28 November 2005

Since its Beyond Oil conference in 2003, the Sustainable Transport Coalition (STC) in WA has researched the issue of global oil production and the various arguments for and against peak oil. The Our Oil: Living With Less conference last year featured Dr Ali Samsam Bhaktiari, from Iran, whose predictions of a peak in 2006-07 gained nationwide media attention. Later this month the president of the Association for the Study of Peak Oil & Gas (APSO) in Sweden, Professor Kjell Aleklett, will be hosted by the STC and while in Perth he will announce the establishment of the Australian affiliate of ASPO.

Australians are now more aware of the debate about “Hubbert’s Peak”, the “big rollover” or “peak oil”, as exemplified from this ASPO prediction of a peak in 2008-10. In this essay I won’t discuss arguments for or against the general theory but will highlight the plight of people living in non-urban regions of Western Australia who are already feeling the impact of peaking oil.

Hubbert’s Peak - Peak Oil Production


What do we know?

Australians, especially urban motorists, are aware that global oil prices have rapidly increased from US$40 per barrel to over US$65 in the past 12 months. There are a growing number of authoritative forecasts such as from the ASPO that global oil production will begin to decline within the next one to five years. Others such as the International Energy Agency are more optimistic, suggesting Peak Oil will be in 2015 or beyond.

There is debate about actual production levels, annual consumption figures and the levels of remaining reserves (especially those of Saudi Arabia). What we do know is that production is already declining in many existing oil fields (for example, production from the UK section of the North Sea declined by 15 per cent last year) and new discoveries have failed to keep pace with annual production since 1980.

Most Australians are now aware that Australia has to import a significant proportion of our annual crude oil needs and that this costs about $12 billion. Motorists in city areas have been surprised by how quickly petrol prices have soared past $1 a litre to over $1.30 a litre and peak motoring organisations have called for the government to lower excise levels as a short-term fix. Data in the IEA figure below shows that Australia has one of the lowest levels of fuel excise in OECD. The position of motorists in Australia is nowhere as dire as those in countries where petrol has been subsidised. The STC web site carries recent stories from countries such as the Philippines, Indonesia, Nigeria and Iran where high oil costs have led to a fall petrol consumption, i.e. “demand destruction” as predicted by classical economic theory.

OECD Petrol Taxes

Who is hurting the most?

The high price of oil is already hurting sectors in the WA economy but has received little media attention; for example, transport firms, agriculture, Indigenous communities and regional tourism. Many small remote Indigenous communities in WA use diesel fuel for power supply as well as transport. In the Western Desert communities, an annual grant for diesel purchase from the Federal Government was based on $1.10 per litre, and they ran out of money in July. A shared responsibility agreement (SRA) has been signed to give the communities additional funds but comes with a whole range of strings attached.

There is already anecdotal evidence that many Aboriginals from smaller communities have begun to leave their land and move into larger settlements, such as South Hedland, to try to ease the burden posed by diesel prices that have risen by 27 per cent in the past 15 months. The graph below from FuelWatch charts the rise in diesel prices in the Kimberley. Many smaller roadhouses have sold it for over $1.80 per litre.


Kimberley Diesel Price

What many Australians don’t understand is how mobile many of the Aboriginal communities are. Those who still lead a traditional life need to travel great distances for customary activities or to interact with government departments. The figure below is from the Centre for Aboriginal Economic Policy Research at ANU.

Mobility of the Indigenous communities in 2002

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About the Author

Dr David Worth is the Convenor for the Sustainable Transport Coalition. He completed his PhD at Murdoch University, Western Australia, and is presently employed in the Research Unit at the National Native Title Tribunal.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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