Treasury’s last Inter-generational Report contains, hidden away on page 91, a simple stunning statement: Australia’s oil will be gone by 2020. The timing could not be worse. By 2020 Peak Oil is likely to have rendered oil imports precarious and costly. And without oil, modern civilisation doesn’t work.
The media ignored this part of the Report, so the ministers of our two major parties and the bureaucrats who advise them, have rarely been required to explain why they let this happen. On those rare occasions the question has been brushed aside with assurances that either market forces will always supply oil (or a substitute) at reasonable prices or Australia has vast reserves of natural gas.
Both these arguments are shaky. Firstly, for many uses, such as aviation, mining, and most road transport, there simply is no good substitute for oil. No one has yet built a gas-powered plane.
It may seem impressive to find an urban taxi scooting around powered by a large tank of compressed gas that has taken over the boot, but the energy required to find and transport that gas, and to compress it to an amazing 2500 psi, and safely seal it in a robust tank, did not come from gas. We are a long way from knowing how to run our civilisation on gas.
And without cheap oil, most business plans might crash. BHP for instance is threatening to pull out of the Olympic Dam expansion unless diesel prices are kept low but the Pentagon’s projection is that oil prices will in time double.
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