The Oil Drum: Australia/New Zealand

The Australian - Queensland mine flooding spurs huge coal price rises

AT about 1am on January 19, some of the heaviest rains in a century caused the Nogoa River in Queensland to burst its banks, sending about 146 billion litres of water into one of the largest coal mines in Australia. "It was like watching Niagara Falls," says Peter Westerhuis, 46, general manager of operations for the mine's owner, Ensham Resources Pty. "It filled the whole pit up in five hours."

Almost four months later, two of Ensham's six coal mines, along with others owned by companies including Melbourne-based BHP Billiton, remain submerged. The greatest damage was in the Bowen Basin, the source of 40 per cent of the world's steel-making coal. As production fell, the price of coking coal tripled to a record $US300 a tonne last month, raising costs for the steel that goes into cars, aircraft and washing machines. "There are only a couple of key producing coking coal regions in the world and this is the key one," says Mark Pervan, a commodity strategist with ANZ.

There was more to the Budget than I caught in last nights post, so here is a follow up.

While the reaction to means testing solar panel rebates has been understandably negative (how many people on below average incomes can afford solar panels ?), the good news is that one fossil fuel subsidy has been removed - an excise exemption for condensate being abolished, much to the chagrin of the north west shelf joint venturers.

ABC - We weren't consulted on Budget changes: petroleum industry

The petroleum industry says the scrapping of a tax exemption on crude oil derived from gas will create uncertainty for Australia's largest resource project. The North West Shelf will be the hardest hit by the Budget announcement, which will add $2.5 billion to government coffers over the next four years.

The Rudd Government's first budget contained a number of green initiatives - subsidies for solar hot water and PV, incentives for landlords to insulate homes and more encouragement for rainwater tanks.

They also kept Howard's $500 million handout to our largest and most profitable industry, the coal industry, which might explain why Bob Brown said the "budget had nothing for renewable energy but was a boon for the coal industry". The Clean Energy Council was more enthusiastic, saying "Australia heads towards a clean energy future one budget at a time".

The budget also expects a surge in farm production and continuing growth in mineral exports.

For those who didn't see it last night, Tony Jones interviewed Richard Heinberg about peak oil on the ABC's "Lateline" program.

Video - RealPlayer and Windows Media.

TONY JONES: Now to tonight's interview with Richard Heinberg. He's one of the world's leading experts on the phenomenon of peak oil. That's the point at which the world's oil reserves go into decline. The idea is that having reached its peak it's all downhill from there and there's evidence that global rates of oil discovery have been declining since the 1960s, and that new oilfields are becoming more and more inaccessible.

So as demand increases and supply decreases the price of oil goes up and up and up, as we've painfully experienced in recent years. No one really knows when we'll reach peak oil. It may have already happened, it may take another three decades. Why has the price of oil gone up so fast and so high in recent years? How much higher could it go and can anything be done to reverse this relentless process?

Richard Heinberg has written a series of books on the oil crisis including 'The Party's over', 'Power Down' and his latest 'The Oil Depletion Protocol'. I spoke to him a short time ago in Santa Rosa, California.

Richard Heinberg, thanks for joining us.

ABC - Solar energy technology must be improved: G-G

Governor-General Major General Michael Jeffrey has stepped into the energy debate, saying solar power is Australia's best prospect of securing a large-scale clean and sustainable energy source. Speaking at a Future Summit in Sydney, he suggested water, food and the environment would be among Australia's top issues in 50 years time, and that all three were linked to plentiful and reasonably priced energy.

The Australian - Oil to stay high, says Knox

SANTOS acting chief executive David Knox thinks that world oil prices will remain high in the short term because of political instability in several of the major oil-producing countries. But he said in the long term, factors like demand from countries such as China and the rise of gas would play a far more important role.

StreetFilms has a very enthusiastic look at inner-city Melbourne, dubbing it a "pedestrian's paradise" and looking at the impact that efforts to make the streets more pedestrian friendly have had on the city (hat tip Glenn).

How far these sorts of initiatives extend out into the suburban sprawl is an interesting question. I must admit I never get the impression that Melbourne is particularly sustainable on my occasional visits to the city (which are usually confined to the Tullamarine - Docklands - CBD corridor) - but I'd be interested to hear what you Mexicans think - what say you ?

Today's SMH has a prominent article on the impact of rising petrol prices on Sydney suburbs featuring a study by Peter Rickwood of UTS (one of Garry Glazebrook's students (pdf) by the look of it). ASPO Australia's David Bell gets a mention too.

There is a good graphic accompanying the article (Update: 3 images now included) which shows the sensitivity to petrol prices (in terms of proportion of gross income) across the metropolitan area under 2 scenarios - $1.50 a litre petrol and $2.00 a litre petrol. Under the second scenario most of western Sydney will be devoting more than 6% of their income to fuel consumption.

The results look somewhat similar to the charts in the Griffith University report on Oil Vulnerability in Australian Cities from a couple of years ago.

Image 1 - % of household income at $1.50 per litre

A related personal impact story looks at the impact of fuel prices and lack of public transport on one western Sydney family - though their refusal to share vehicles and large petrol guzzling cars do reduce the amount of sympathy generated somewhat...

Queensland opposition leader Lawrence Springborg seems oblivious to the recent backlash against biofuels (or doesn't care - it is not clear which) and is pushing for a mandatory 10% ethanol content in fuel sold in Queensland by 2011. The Queensland government isn't much better, proposing a 5% target instead.

While I've long been puzzled about the lack of any sugar ethanol plants in Queensland, I don't think turning any more grain into biofuel can possibly be justified, so if they do go ahead and legislate for ethanol production I hope it will be limited to sugar based ethanol only.

A great article in The Age in Melbourne today, about a climate change rally at Federation Square tomorrow, including two great quotes from the organisers (including my friends in the Bayside Climate Change Action Group).

The Age: Forget breakfast in bed, these mothers are on a global mission

Another week, another record.

Closing price for Tapis this week: US$131.43 (A$139.56) per barrel.