Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I wish to raise the issue of the recent increase in the price of crude oil on world oil markets to over US$125 per barrel, particularly in the context of the big spike in trading on Monday night where at one stage crude prices jumped $25 a barrel in the largest single rise in oil prices since the index began. Yet there had been no developments, no inflammation of tensions in the Middle East or anything that would justify such an extraordinary jump in the price of a staple commodity. It was just the latest example of wild swings in prices on the world financial markets that defy old-fashioned notions of the fundamentals. I do not think for a moment that we could put that price spike in the context of peak oil. The scary thing is that the markets do not yet appear to have priced in peak oil, even in the context of the current record high prices of oil.

The world faces an oil crisis. Global consumption greatly exceeds the discovery of new oil reserves. In 2005, 32 million barrels of oil were extracted and used around the world, while only five million new barrels of reserves were discovered. This demand and supply pressure will lead to a peak in world oil supplies followed by a significant fall, regardless of rising demand, resulting in a worldwide scarcity of oil and unprecedented competition and conflict over remaining supplies. We will not be able to say that we were not warned.

Domestic oil supplies are obviously under a great deal of pressure. National oil demand is rising rapidly. After the discovery of large quantities of oil in Bass Strait in the 1960s and off the North West Shelf of WA, almost none has been found in Australia since. Our country’s oil self-sufficiency will fall, it is estimated, from 84 per cent to about 20 per cent during the next two decades, resulting in large national oil trade deficits. And again, we will not be able to say that we were not warned. We have seen this coming.

It appears, however, that we are simply not ready. Our cities are not ready and, if anything, it is going to be harder to shockproof regional communities against rising world oil prices. Petrol prices in regional areas—at least in Western Australia, which I know of—are already vastly higher than those people are paying in metropolitan areas. These are the places where any Fuelwatch scheme cannot reach once you get out of metropolitan areas. No-one has any idea whether oil vulnerability studies are being planned or are underway. No-one seems to be in charge. No-one really is looking to prepare and shockproof the Australian community against inevitable rises in the price of one of the most important foundation commodities to the world economy.

There are some welcome moves. The Building Australia Fund was announced after the last election. We need to know to what degree that fund and its board will be investing in fossil architecture, such as coal port expansions and new freeways. We need to know whether we are still in the mindset of preparing Australia for the challenges of the 1950s or whether that fund will be investing in a post-fossil architecture more appropriate to the 21st century.

We need to know what will become of AusLink funding. In the last round of estimates, under questioning by Senator Milne from the Australian Greens, we had the rather dismal spectacle of the appearance of state and federal bureaucracies and ministries on autopilot, planning for the continued rollout of new freeways because that was the way it was always going to be. The Greens took to the last election the proposition of a roads to rail policy where for the first time the Australian Commonwealth government needs to get involved in funding public transport, not just in our metropolitan areas but in regional areas as well. The roads to rail policy suggested that a large proportion of AusLink funding should be rolled into regional and metropolitan rail and public transport. That is the kind of nation-building infrastructure that is appropriate for the 21st century, not more freeways, not expansions to coal ports.

Lastly, as to the Senate inquiry which tabled its unanimous findings in February 2006, we wonder what has happened to all those recommendations. There were no minority reports submitted—the Greens certainly did not. We agreed with the recommendations. Senators Milne and Siewert spent an awful lot of time taking evidence with that community. It seems we are still drifting along, we are still sleepwalking into this one and the degree to which Australia appears to be completely unprepared is quite alarming. We want to know whether the recommendations of that Senate inquiry were ever taken up. At what state is the Commonwealth government in planning for the post-oil age? Probably the most significant thing heard by that inquiry was that peak oil is a reality. We can still debate around the date—whether the rollover began in 2005 when production of cheap oil peaked or whether that rollover period is still a few years into the future is irrelevant. We know now that this challenge is upon us. It is not something our grandkids are going to need to worry about. This is here for us right now.

Are ABARE and Treasury reassessing official estimates of future oil supply? We would like to know whether that recommendation was taken up. Are they taking into account the concerns expressed in the world energy outlet for 2006? The current trends in energy consumption are neither secure nor sustainable. Has that been re-evaluated? Concerning the national biofuels target, in recommendation 3 the committee recommended:

... that the government publish the results of its review of progress towards meeting the biofuel target of 350ML per year, including which companies are meeting the target. 

We would like to know whether we are funding adequately lignocellulose ethanol research in demonstration facilities and whether that funding is appropriate for those very interesting developments. Most of all we need to know who is the lead agency. Who is coordinating Australia’s response to peak oil in this age where one of our most fundamental inputs into the world economy is going to peak, to start declining and to become very expensive. We will not be able to say that we were not warned. We are still waiting to hear from the Rudd government as to what state of preparation our country is in.