The dismal truth, Mr Rudd

It is likely that the economy will overshoot into a recession far more severe than that required to cut back oil consumption to the levels needed to match supply. Ironically, as in the 1980’s, we would then see an excess of oil supply and a dramatic fall in price. However, any economic recovery would be short lived due to significantly reduced oil availability.

The magnitude of the coming decline in oil availability is truly alarming. In October 2007, the Energy Watch Group released a report stating that we passed peak oil in 2006. EWG predicts crude oil production will be down to about two thirds of current production by 2020 and to half by 2030. It is not feasible to reduce consumption sufficiently in two decades, except by a collapse of our current system.

But the story gets worse. Petroleum geologist Jeffrey J. Brown’s “Export Land Model” models what happens to exports from the major oil exporting nations whose domestic demand is still growing while their oil production is in decline: he suggests that it will only take about nine years from peak oil for exports from the major producers to reduce to zero. This spells disaster for major oil importers, particularly the USA and Western Europe.

What your government can do about it

Prime Minister, it’s time to tell the crew and passengers the dismal truth and get everybody working together to launch the lifeboats.

Step 1: tell the truth.

No government wants to tell the truth about the dire situation because that would cause a loss of confidence in the market economy and the government itself.

I contend that it is far better to level with the Australian people before the crisis hits than to wait for it to happen. To claim that you didn’t know it was going to happen would be to claim your own incompetence and the electorate would be justified in throwing you out of office at the next election.

The finesse required here is to talk in terms of Australia planning for the coming oil supply and economic problems.

Step 2: start planning for major infrastructure works.

When the economy goes into recession or depression, the only known way to restore economic activity and reduce unemployment is by government investment. At the same time as this government intervention is required, the nation needs infrastructure which will allow our society to function with an ever declining supply of oil.

I suggest that these are the most pressing needs:

• Major investment in national electric railway infrastructure - long distance freight, high speed passenger rail and suburban light rail. A vast amount of petroleum is consumed by road freight, air travel and commuting. The majority of it can be powered by electricity. This would also enable greenhouse emissions to be significantly reduced due to the large increase in efficiency of rail transport compared with road and air transport.
• Major investment in infrastructure to better manage our water usage. We need to return the waste water generated by our cities to the land, together with the precious nutrients it contains.
• Major investment in carbon capture and storage. We have no other resource except coal which can be readily deployed to provide the rapid increase in the electricity we need.
• Massive investment in renewable energy. The most promising technologies here are solar thermal with heat storage and geothermal. There is no point in developing large scale intermittent resources such as wind, photovoltaic and wave power because such intermittent generation cannot be managed on a large scale.
• Develop oil from coal technology in Australia, with the up-front requirement that any plant built must sequester the huge amount of carbon dioxide it produces.
• Get serious about infrastructure to allow bicycles to be used safely for commuting. This includes bikeways, storage facilities, showers and possibly public hire bike depots.