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Pulling together a national fuel strategy

By David Lamb - posted Wednesday, 25 January 2006

Transport is a vital element of any country’s economy and the most important issue that will influence future transport is the sustainability of our oil-based economy. This has shown up in 2005 in two ways. Firstly, the rapid rise in the price of oil has caused us to think about the security of oil supplies. China and India’s appetites for oil are burgeoning, demanding more and more from the world’s oil wells. It is becoming increasingly evident that reliance on greater output and continual new discoveries may not be realistic.

The second factor is growing awareness of global climate change caused by burning fossil fuels. Transport, which is almost totally dependent on oil, causes about 15 per cent of Australia’s greenhouse gas emissions but it is the fastest-growing part of the emissions equation in Australia and around the world. In the United States, transport causes 27 per cent of emissions and in California the proportion is 58 per cent.

Three quarters of Australia’s oil use is consumed in transport, roughly half by cars and a quarter by commercial vehicles. We are not self-sufficient and in the future we are likely to rely increasingly on imported oil. At current prices, the effect of importing oil could be to blow out our trade deficit by $20 billion or more.


We have to ask what alternatives to oil might be realistic and then look at the role of alternative technologies in meeting the challenges.

A recent report by the Bureau of Transport and Regional economics, under the title Is the World Running Out of Oil? shows a chart of new oil discoveries over five year periods, illustrating that the volume of oil discovered every five years has been decreasing since the mid-1960s. In the same report there is a chart showing that the world peak in oil production may be around now, or in the very near future. If this were so, it would create a seller’s market of unprecedented proportions.

Transportation is forecast to take an increasing share of oil consumption over the next 20 years.

So, the answer to the question, “Are we running out of oil?” is that we’re not sure. But of far greater importance is that we can’t be sure that it isn’t true. Predictions that higher prices would bring on new oil production have yet to prove true.

We build our defence policies on the basis of possible threats to our national security. Our health policies recognise prevention is better than cure. Yet we don’t seem to have any national plan for dealing with what could have a devastating effect on our economy and lifestyle.

The Australian Government Biofuels Taskforce in August 2005 supported the 350 million litre (ML) target for ethanol by 2010. After several years of debate about the rights and wrongs of ethanol, this is a useful start on the road towards an alternative to total dependence on oil, and it was wise to check out the environmental effects before making a decision, but 350 ML is less than one per cent of Australia’s oil consumption. The proposal is to use ethanol to mix with unleaded petrol (ULP) on a 1:10 basis, known as E10. Clearly, if E10 is acceptable to the majority of motorists, there must be an opportunity for ten times as much ethanol. But where is the plan for increasing ethanol production?


The taskforce report says that the oil companies support the plan, but how could oil companies possibly object to a quantity so insignificant in the total oil picture? Newspaper reports that the oil companies say the target will easily be exceeded sound comforting, but exceeding a target of one per cent is hardly going to make much difference in the total oil equation. When ethanol was first mooted several years ago there was talk of engines being damaged and that warranties could be voided, but latest information on the website of the Federal Chamber of Automotive Industries shows that just about every car made in the past 19 years, and many older ones too, can run satisfactorily on E10.

How have we allowed ourselves to be misled and distracted from the real issue – what will we do if oil prices continue to rise?

I’m not suggesting for one moment that oil prices will rise further. My guess is no better than anyone else’s, but I would feel a lot more comfortable and relaxed if I could be sure that someone was working on a plan that would wean us off oil gradually rather than by force of circumstance.

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About the Author

David Lamb is the Low Emissions Transport Leader for the CSIRO Energy Transformed Flagship.

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