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Lacking in foresight

By Daniel Donahoo - posted Thursday, 20 April 2006

Reports from the CSIRO warning of an oil shortfall in Australia by 2012 aren’t surprising. Of course, such predictions have been made before, but this is no longer just a pet issue of environmentalists. Peak oil is a reality and one that our government isn’t preparing us for.

Federal Resources Minister Ian MacFarlane’s response to the issue of oil decline is to provide tax cuts for further fossil fuel exploration. This is a waste of time. The financial and energy costs of further exploration are large, oil reserves are much harder to find and the likelihood of striking a meaningful source low. It is definitely a high-risk investment and such actions will only be a buffer from the inevitable. If our government were serious about securing Australia’s long-term transport capability they would be spending money where real gains can be made - in research and development.

CSIRO says government should invest in the research and development of alternatives to fossil fuel. They express concern about the “security and reliability of Australia’s oil supply”. And, so they should. The consumption of oil continues to increase at an exponential rate. Primarily thanks to levels of growth in China and India whose large populations will only continue to demand more oil as they move further along the development continuum.


But, even without scientific reports and recommendations there are some other clear indicators that the glass of oil is half empty. The best indication of the future of oil is coming from the corporations for whom black gold has been their bread and butter.

The world’s largest oil company, Exxon Mobil is clear about the facts. “Every day we use about 80 million barrels of oil … [t]hat’s what it takes to keep the world running, and by 2030, experts predict it will require about 50 per cent more energy,” they say on their website. That is 120 million barrels. And, if the peak oil theory holds true Exxon Mobil knows it can’t keep up with demand.

It is the oil industry that has the most to lose; consequently they are way ahead of government when it comes to preparing for a future without oil. Exxon Mobil research and development arm has been investing millions into the development of hydrogen fuel cells. In Australia, BP underwent a complete brand overhaul to reflect its future as an energy company, not an oil company. And, Shell Australia Chairman Tim Warren has been quoted as saying, “[T]he world could be consuming more gas than oil by 2025”.

Considering this, Australia’s continued inability to support cutting-edge research and development into alternative fuel options is foolish. Our government is even slow to commit to the use of ethanol as a resource to top up our current fuel resources. In some other countries, engine fuels comprise 30 to 40 per cent ethanol. And, while it isn’t a solution, a worldwide commitment to ethanol and ongoing improvements in engine efficiency would help stretch our depleting oil reserves.

If Ian MacFarlane wanted to really become serious he’d support Australian industry to purchase manufacturing licences to the latest innovation in engine technology - the compressed air car. Motor Development International (MDI) has developed several prototype cars that run using a compressed air engine. Along with the development of electric cars, we are beginning to see a future where the development will not be in alternative fuels, but new fuels that require the development of new engines and new fuel delivery systems.

Even if Australia chooses to ignore investing directly in developing fuel and car technologies, we could be promoting better policies to support development of our energy future. If the government wants to offer tax cuts it should offer them to those involved with the research and development of alternative fuels.


The offer of tax cuts, appropriate policy and planning and some good negotiations with oil companies could see Australia become a research and development hub for future fuel and energy technology. This isn’t a new idea: solar energy pundits have been arguing this line for years. But, it requires long-term foresight and motivation. Something oil companies are rich in, but which Australian politics is lacking on resource issues.

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About the Author

Journalist and columist with The Age, Sushi Das says he is ‘one of today’s young rebels’. Author and ethicist Leslie Cannold has referred to him as one of her ‘gorgeous men’.

Daniel Donahoo is fellow with OzProspect, a non-partisan, public policy think tank. He writes regularly for Australia's daily papers and consults on child and family issues. A father to two boys. Daniel's first book is called Idolising Children and explores our society’s obsession with childhood and youth. Updates on Daniel's work can be found at

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