The defining issue for transport planning is peak oil, not traffic congestion

Griffith University’s recent “Our Future, Your Say” forum on the future of the car was an important contribution to the ongoing debate about transport infrastructure in South East Queensland. Unfortunately, three of the four panelists, namely Deputy Premier Paul Lucas, Brisbane Lord Mayor Campbell Newman and RACQ CEO Ian Gillespie, demonstrated a limited understanding of world events that are creating a paradigm shift in the field of transport planning.

While the current debate revolves around efforts to address traffic congestion, the underlying assumption here is that car travel will continue to be inexpensive. The peak and subsequent decline in world oil production, or “peak oil”, is invalidating this assumption, hence affordability, not traffic congestion, will soon become the defining issue for transport planning in South East Queensland. The only question is whether or not our policy makers recognise this reality before it’s too late to avoid a public infrastructure crisis that will make the water grid look like child’s play.

Evidence that the rate of world oil production is at or near its peak is compelling. The rate of oil discovery peaked in the mid-1960s. The rate of consumption surpassed the discovery rate in the mid-1980s. Today, the world consumes oil at five times the rate at which new discoveries are being made. World production of conventional crude oil has been flat for the last two years and may have already peaked. Additions to world oil reserves from new discoveries, enhanced oil recovery and non-conventional oil aren’t keeping up with the consumption rate.

Last month’s Association for the Study of Peak Oil annual conference in Ireland reached a broad consensus that peak production will likely occur by 2012, while the International Energy Agency’s most recent medium term forecast warns of an oil supply “crunch” by the same year. This reality is reflected in the tripling of crude oil prices over the last five years, but even US$80 per barrel will soon be considered cheap.

Australia is on a long list of oil producing countries that have already passed peak oil production. In our case, production peaked in the year 2000. While several new oil projects on the North West Shelf will see modest increases in domestic production for the next few years, by 2015 Australia will likely be importing 80 per cent of its oil. The annual petroleum trade deficit already exceeds $8 billion, two thirds of the entire trade deficit.

Belinda Robinson, Chief Executive of the Australian Petroleum Production and Exploration Association, recently estimated that this annual petroleum trade deficit would increase to $27 billion by 2015 (PDF 830KB), assuming that prices would remain at US$50 a barrel. Given that oil prices are already hovering around US$80 a barrel before world production has begun to decline in earnest, a much more realistic figure lies somewhere in the range of $40-80 billion, equivalent to 5-10 per cent of current GDP, or double to quadruple the current value of our coal exports.

The major implication of peak oil for the average Queensland consumer is that fuel prices, and food prices, could realistically double or triple within the next several years. A petrol subsidy of eight cents a litre will make no difference to somebody who can’t afford to pay $3 a litre, or $180 to fill up the family car. Families in the mortgage belt of the outer suburbs, with little access to adequate public transport, will be particularly vulnerable (PDF 921KB).

While the electorate might today be clamouring for governments to build more tunnels and motorways to address the immediate problem of worsening traffic congestion, in the next few years when faced with the choice between filling up the car or putting food on the table they will begin asking politicians why there are insufficient buses and trains for them to get to work. The correlation between increasing oil prices and patronage on Brisbane’s already inadequate public transport for the last five years (see graph) is a very clear "market signal" if ever there was one.

Despite growing awareness of the peak oil phenomenon in recent years, feasibility studies for new roads in South East Queensland, including the $3 billion North-South Bypass Tunnel (NSBT), have simply projected historical traffic growth figures into the future (PDF 4.31MB) while completely omitting the impact of rising fuel prices.

Since championing the NSBT’s construction, committing Brisbane ratepayers to $730 million in costs before the project is even completed and encouraging “mum and dad investors” (PDF 53KB) to risk their hard-earned savings on this high-risk venture, Newman is now attempting to shift responsibility for the Queensland equivalent of Sydney’s Cross-City Tunnel fiasco exclusively to the private sector. This is an absurd situation given that authoritative forecasts placing the world oil production peak in the 2010-2015 timeframe, well within the 2030 timeframe used by transport and urban planners, have for years been well known not only to the consultants undertaking these feasibility studies but also to public officials in Brisbane City Council and the Queensland Government.

Debates about transport in Queensland are hampered by two further myths surrounding cost comparisons between public transport and roads.