Peak Oil Day In The Herald  

The Fairfax papers (the Sydney Morning Herald and The Age in Melbourne) had peak oil on the front page this weekend, leading in with Get Your Foot Off The Gas, then a more detailed look called Running On Empty and finally a biodiesel anecdote called Have chips, will travel, say fry-drive duo.

When the Labor backbencher Andrew McNamara rose from his seat in the Queensland Parliament in February to state a few home truths about falling world oil supplies, he expected, at most, a few catcalls from the Opposition benches.

Instead, the speech by the provincial solicitor from Hervey Bay "bounced around the world".

Although his words were little reported elsewhere in Australia, McNamara was inundated with emails from around the globe congratulating him for addressing an issue that might have seen him labelled a flat-earther.

The issue is Peak Oil, the theory that the world will face a sudden, cataclysmic decline in supplies after global production peaks in the next 20 years.

According to McNamara, who believes it will happen sooner rather than later, the direct impact on our lives will be greater than terrorism, global warming or bird flu.

"The challenges we face after Peak Oil will require localised food production and industry in a way not seen for 100 years," he says. "Local rail lines and fishing fleets will be vital to regional communities. Self-contained communities living close to work, farms, services and schools will not be merely desirable; they will be essential."

Once a net exporter, Australia still exports oil and gas, but now depends on imports for 60 per cent of its crude oil. According to Barry Jones, executive director of the Australia Petroleum Production and Exploration Associatio, oil imports will add $25 billion to our balance of trade deficit, equivalent to last year's entire deficit.

"We find it fascinating that Australian Government experts are quite blase about the risk of importing oil and becoming more and more dependent on imported oil," he says.

Rising prices make conservation measures such as high fuel excise less politically palatable. The Howard Government removed indexation of fuel excise in 2001. "That was a knee-jerk reaction to public pressure. Nobody's thinking long-term," says Jeanes.

The complexities of running a growth economy in a democracy against a backdrop of declining fossil fuel supplies and rising energy costs will test the political agility of future Australian governments.

Renewable energy sources still provide no feasible alternative fuels for aviation and surface transport. And, as McNamara told the Queensland Parliament, most of the world's fertiliser is now made from natural gas, and most of the world's pesticide is made from oil.

"As fuel prices double and then double again in the years after the peak [of oil production], we will be faced with some very hard choices in the fields of agriculture, food distribution and transport generally."

At the Centre for International Economics in Canberra, such hard choices are no bad thing. "To an economist, high prices are the solution to the problem. As long as we let markets work correctly, we'll get through this in the cheapest possible way," says the executive-director, Andrew Stoeckel.

However, to Victorian Liberal Senator Tsebin Tchen, that sounds like an economic rationalist's version of Marie Antoinette's "let them eat cake". "That's how revolutions happen. It's a very painful and risky way of doing it," he says.