[Peakoil] Ian Cohen's speech in NSW Parliament last night

[Jenny Goldie]

Mr IAN COHEN [11.12 p.m.]: I wish to speak about Peak Oil. I attended a public forum at Parliament House tonight where I listened to presentations from Professor Ian Lowe of Griffith University, who is also the President of the Australian Conservation Foundation; Brian Fleay, author of the book Decline of the Age of Oil; and Rowan Tucker-Evans of the Sydney Peak Oil Group. Last week honourable members would have received an informative package produced by the Sydney Peak Oil group on this matter. Oil is a critical resource. Oil, natural gas and petroleum products are central to the functioning of the modern world economy. 


Transport, agriculture, mining and construction industries are particularly reliant on the supply of oil. Crude oil provides 90 per cent of the world's transport fuels. Oil is required not only as a fuel for farm machinery, but also as a raw material for the production of pesticides and herbicides. Natural gas is used to synthesise nitrogen fertiliser. Farming implements are constructed and powered using oil. Food storage systems, such as refrigerators, are manufactured in oil-powered plants and distributed across oil-powered transportation networks. 


The yields that modern farming obtains could not be sustained without oil. The strain on wheat farmers in America is apparent already. Recently they have had to absorb a tripling in fuel prices, combined with a doubling in fertiliser costs. Mining and construction, vital components of the Australian economy, are dependent on diesel fuel for machinery. Crude oil provides another vital component to any modern economy: plastic. Petrochemicals provide the feedstock for many products, from detergents to pharmaceuticals, prosthetics to contact lenses, and garbage bags to fishing line. The concept of Peak Oil comes from the observation that output from individual oil fields rises from initial production, reaches a maximum peak and then begins to decline. The peak of production occurs when approximately half of the oil has been extracted. With some exceptions, this holds true for a single well, a whole field, an entire region, and the world. 


The ascent to world peak is characterised by the ability of oil producers to match or surpass world demand. This production growth has fuelled economic prosperity and enabled us to enjoy the modern world we live in. Oil shocks on this side of the peak have been caused by supply disruptions, such as the OPEC embargo and the Iranian revolution. After the world peak of oil is reached and decline sets in, the price of oil is expected to surge and fluctuate as oil exporters strain, then fail, to meet demand. Oil shocks on the down side of the peak will be very different to those experienced in the 1970s and 80s. They could be longer lasting and more damaging to the world economy. This will not be the end of oil-it will be the end of cheap, affordable oil. Saudi Arabia, the world's biggest oil producer, generates 90 per cent of its oil from just five old mature oil fields. Today we are consuming four to five barrels of oil for every one we find. 


The implications of this trend will be immense and far reaching. Higher oil prices will have an inflationary effect. Interest rates will rise. Transportation costs will escalate. The price of food will follow. The effects on the economy and on our standard of living will be profound. There is an urgent need for Federal, State and local governments to respond to Peak Oil. We will need to rethink many aspects of our lives-how we travel, and how we source our good and services. There is an urgent need for transport demand management, with public transport the main priority. We also need to consider where our food comes from. The concept of "food miles" is important. In the United States of America, the average portion of food is transported 1,500 miles before it gets to the plate. In Canada that figure is 5,000 miles. In Australia we import food at a great ecological and energy cost. This will not be a viable option when the price of oil escalates, as it is bound to do. We need to consider food security. 


I do not propose any magical solutions to this looming crisis. It certainly will be a wake-up call to many who take the abundance of our earth's resources for granted. I strongly urge the Government to seriously consider the potential impacts of Peak Oil when formulating policy and planning for the future. The path that our State is going down, with its addiction to more roads and motorways, will not be sustainable. The retention of farmland local to population centres is also important for food security. We must not become dependent on food imports. Myriad other social and economic impacts must be addressed. I hope our governments at all levels will be responsible and not bury their heads in the sand. It is interesting to note that if, as I understand it, we were going to consider timber product for fuel we would need the entire Australian agricultural production area. 


Source: http://www.parliament.nsw.gov.au/prod/parlment/hanstrans.nsf/v3ByKey/LC20051115 
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