ABC 7:30 Report: Running on empty  

Posted by Big Gav in , ,

The ABC's 7:30 report has a segment noting the surprising lack of attention to Australia's oil supply deficit during the current election campaign - Running on empty.

It’s the lifeblood of the modern economy, but over the next five years Australia’s oil import bill is expected to almost double from $16 billion a year to $30. It’s an issue that will affect every business and household in the country, but it’s had precious little mention in the current election campaign.

KERRY O'BRIEN, PRESENTER: Whoever wins the election will be confronted by a series of daunting strategic dilemmas, not the least of which will be how to secure sufficient fuel to counter an alarming shortfall in Australian oil production. In just five years, the Federal Government is projecting a trade deficit in oil that will almost double from $16 billion a year to $30 billion. Yet it's been off the radar in this election, despite the implications for every Australian home and business. Business editor Greg Hoy reports.

GREG HOY, REPORTER: Australia's oil gauge is falling fast for a nation self-sufficient in oil 10 years ago. Now, to fuel its 16 million cars, trucks, motorbikes, its trains, tractors, mining vehicles, ships and aircraft, Australia must pay a $16 billion-a-year import bill for half the 300 million barrels of oil it drains annually. In 20 years, it's forecast 500 million barrels of oil will be needed, 80 per cent of those imported.

DAVID LAMB, CSIRO AUTO TECHNOLOGY CEO, 1992-93: We have no-one to blame but ourselves when things go wrong, as surely they will. We saw in the '70s what happens when fuel runs out: the queues, the panic, the resentment, the anger. I wouldn't fancy being in government in that sort of situation. And you can say that's overstated. Too much hyperbole. But it is certainly on the cards.

MONICA RICHTER, AUSTRALIAN CONSERVATION FOUNDATION: We need to be making sure that we're not forcing families to be having to deal with petrol prices of $2 and $3 a litre, which is a real possibility in the future, or at the worst case, to be looking at oil shocks of $8 a litre in the next 10 years.

WENDY MACHIN, NRMA PRESIDENT: We'd like to see firstly some policy leadership. We'd like to see a key person in each of the major parties take hold of this issue and start planning, start developing a policy for our national transport fuel security. And there are a lot of reasons: national security, the hip pocket, the cost of our fuel, as well as environmental reasons why we've gotta start planning for a future that's not dependent just on oil.

GREG HOY: But this is a political minefield.

PEARCE BOWMAN, QLD ENERGY RESOURCES CEO: Shale oil has a huge potential. We develop very large supply in situ, particularly in Queensland.

GREG HOY: Demolishing the controversial technology of previous owners who failed to raise sufficient finance in the face of fierce environmental protest, near Gladstone Queensland Energy Resources is resurrecting development of Australia's vast reserves of shale oil, building a replacement test plant to demonstrate it says a far cleaner technique trialled in Colorado, where Queensland shale has been successfully heat-processed to extract crude oil.

PEARCE BOWMAN: We have a series of private investors who see the potential and the concerns for future supplies of oil and how critically they are tied to the economy. They're prepared to invest here in this technology, a new technology, that we will be developing and improving.

GREG HOY: In March, the Australian Bureau of Resource Economics emphasised Australia's extensive shale oil deposits, suggesting that combined with domestic use of liquefied gas or LNG, now mostly exported from the North-West Shelf, plus the planned extraction and liquefaction of gas from the country's coal seams, Australia might overcome its oil problems with new fossil fuels. But if it does happen, it won't happen fast, and in an age of increasing carbon concern and constraint, it's unlikely to happen without a fight.

MONICA RICHTER: Shale oil is four times more greenhouse intensive than conventional oil. So, we have the equal challenge of dealing with greenhouse gas emission reductions as well as reducing our dependence on imported oil. So shale oil cannot be considered to be a legitimate option.

GREG HOY: It's a sensitive subject, such that the Federal Government had promised to release its white paper on energy security well before this election. The paper has been completed, but never released, due, we are told, to delays in reaching a carbon consensus at the Copenhagen conference. Which suggests a prolonged delay lies ahead. Meantime, the oil problem intensifies, and so does the frustration of the National Roads and Motorists' Association, which has been pushing politicians in Canberra for a united plan of action.

WENDY MACHIN: We had a wide coalition of support go down to Canberra just a couple of months ago to press this case. We didn't get any serious commitments from either of the major parties to develop a policy on this. We're going to keep hammering them on that because we think it's a really important question for the future on all sorts of grounds - you know, economic, environment and national security.

GREG HOY: Some hope the solution will be found by industry, and indeed, just last week, Caltex announced in co-ordination with Holden it will ramp up service station supplies of biofuels. But in a speech announcing this, Caltex chief executive Julian Segal stated, "There is inadequate funding of biofuels, research and development and industry development. We really do need an energy white paper that addresses energy security and climate challenges. ... we shouldn't wait until the lights go out and oil prices escalate before we get a comprehensive grip on energy policy in Australia."

DAVID LAMB: We've just seen the price of oil rise in 2008 and then fall because of the Global Financial Crisis that sent us back to sleep. We didn't worry about it anymore. As the oil price goes back up, which it is already doing, we can expect to see an ever-increasing price at the pump.

GREG HOY: While politicians procrastinate, the NRMA has established a panel of Australian energy, transport and environmental interests to consider what Australia should be doing.

DAVID LAMB: Adopt a plan. We've suggested a plan; if you don't like elements of that plan, change those elements. But you're not going to find any new elements that we haven't thought of. All you can do is shuffle around the mix of those elements.

MONICA RICHTER: By 2020, the UK Government has said that all new cars sold will be electric or hybrid electric. We don't have those kinds of targets here in Australia. We also need to be looking at mandating fuel consumption standards. And of course, modal shift. We need to be giving people choice to move away from relying on their second car or the private motor vehicle towards public transport, much more substantial investment in rail. All of this requires investment, all of this requires a strategy that needs to start now.

GREG HOY: Indeed, major car manufacturers overseas are ramping up production of fully electric vehicles which have begun arriving on Australian docks, though major local car makers have no such plans. Nor is there any enviro-friendly infrastructure planned to encourage greater demand for such passenger vehicles.

Posing an even bigger challenge for freight, where long haul transport companies will be increasingly exposed to rising fuel prices. In Melbourne, Kenworth Trucks recently began manufacturing liquid natural gas-powered vehicles. But demand is low, costs high, and the fuel, though exported by the ship-load to Asia from the north-west, is scarce in Australia's busy south-east.

BRAD MAY, PRODUCTION DEVELOPMENT MANAGER, KENWORTH: There's little or no incentive for truck operators to adopt alternative fuels of any sort. I think that people understand that alternative fuels are a thing of the future, that there's certainly some challenges to overcome.

GREG HOY: Bad news perhaps for environmentalists, good news, it seems, for shale oil producers.

PEARCE BOWMAN: The International Energy Agency clearly predicts that oil is a part of our - part of the future for the world. We're gonna need in Australia all of our fuels. We're gonna need the LNGs, we're gonna the fossil fuels, we're going to need the biofuels.

GREG HOY: It's an issue of great national interest crying out for strong political leadership, but some are not holding their breath.

DAVID LAMB: I wouldn't be talking to you now if I were not an optimist. I'd like to think that we human beings are intelligent enough to take the knowledge that we have and apply it. I can't believe that we would be so stupid as to just let the fire overtake us before we decide that it's too hot.


The small-scale LNG plant allows localized peak- shaving to occur – balancing the availability of natural gas during high and low periods of demand. It also makes it possible for communities without access to natural gas pipelines to install local distribution systems and have them supplied with stored LNG.

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