With regard to
News.com.au - We'll survive this crisis - PM

Yes, we all agree that Australia is the place to be, but I have one other thing to mention: Rudd's comment clearly implies a belief that while Australia will survive, others might not.

Given that this post (Queensland Blazing a Trail Towards Oil Resilience -
http://anz.theoildrum.com/node/4596#comments_top) is a week or so old, I copied my submission to the Qld Government below.

I have attached my submission below. Below that I have also included a copy of my unsuccessful complaint to the Queensland Ombudsman with regards to my previous council (Pine Rivers) failure to complete a risk assessment into the impact of peak oil which is referred to.

SUBMISSION

To whom it may concern,
Thank you for the opportunity to provide input into the Oil Vulnerability Mitigation Strategy and Action Plan for Queensland. Preparing for peak oil is a significant and urgent matter that should be Queensland’s number one priority.

Whilst there are many predictions on the timing of peak oil, the current global finance and economic problems are likely to mean that for all intents and purposes, peak oil is now. It is likely that many OECD nations will enter a recession which will reduce demand for oil. This in turn will introduce a lot of instability in the price of oil and possibly lower prices, resulting in oil projects being delayed or cancelled. The credit crisis will also impact upon investment in areas such as alternative fuels, alternate propulsion and infrastructure investment. The impact of the credit crisis on energy markets is eloquently summarised at the following link: http://www.theoildrum.com/node/4600#more.

At some point, the economy will no doubt recover, increasing the demand for oil. Due to both depletion in existing fields and lack of investment to increase oil production and alternative fuels, oil prices will once again increase significantly, resulting in further economic contraction. This cycle will continue until our economic system adjusts to a future with declining energy supplies. In this context, which is not yet understood by the majority of commentators outside of the peak oil community, the need for urgent and wide ranging actions to prepare for the onset of peak oil becomes crystal clear.

Below are actions that should be considered by the Queensland Government in mitigating Queensland against the impacts associated with the onset of peak oil.

1. Institute a state wide public education program on peak oil, its impacts and what can be done to mitigate these impacts. I have been peak oil aware for three years and have spoken to many people about it. The vast majority of people have never heard of it, think that it is a beat up by oil companies to increase fuel prices, or believe that we will make a seamless transition to some future technology. Education is vital to provide an understanding of the magnitude and urgency of the problem and provide the motivation to inspire the transformational change required.

2. Form an oil depletion commission, in a similar manner to the Water Commission, to manage oil depletion preparations and oil supply disruptions. This commission should be responsible for co-ordinating and integrating State and Local Government preparations, liaison with business and the community.

3. Develop and make publicly available a plan for the management of oil supply disruptions. There seems to be much secrecy at the national level about the plans for the implementation of the Liquid Fuels Emergency Act, which will likely result in panic and dysfunctional responses if and when oil supply disruptions occur. The current fuel shortages occurring in parts of the USA as a result of Hurricane Ike should be examined to identify any lessons that can be used in preparing Queensland for similar disruptions.

4. Set state wide targets for an annual reduction in oil use. The Oil Depletion Protocol provides a framework by which peak oil can be managed and thus reduce the severity of its impacts. See: http://www.oildepletionprotocol.org.

5. Remove the 8c/L fuel subsidy and redirect funds into public transport. In a world of declining oil supplies, it makes no sense to subsidise oil use and reduces the likelihood of individuals and businesses reducing consumption patterns and purchasing fuel efficient vehicles.

6. Legislate mandatory oil vulnerability assessments for all major infrastructure projects, both planned and currently underway. There are a number of projects that have paid lip service to peak oil and as a result they are likely to become ‘white elephants’ as the impacts of peak oil begin to be felt. This issue is examined in detail at the following link:
http://anz.theoildrum.com/node/4391.

7. Reprioritize road spending to the upgrading of public transport and rail networks.

8. Lower the states speed limits. For example 100kph to 90kph and 80kph to 70kph. This will increase the fuel efficiency of current vehicles and potentially encourage drivers to move to alternative transport modes such as rail.

9. Direct local governments to complete peak oil risk assessments and develop mitigation plans. Prior to the local government reorganisation, I completed a risk assessment on behalf of my Council (the then Pine Rivers Shire Council) into the impact of peak oil as they were not interested in doing so. This is despite the Local Government Finance Standard clearly stating that ‘the local government must consider the risks to which its operations are exposed.’ I found that the Council was at a high risk of becoming financially unviable as a result of peak oil’s economic impacts. I have attached a copy of the risk assessment for your information and the ensuing unsuccessful complaint to the Queensland Ombudsman.

10. Relocalise agriculture, manufacturing and governance. Initiatives such as Transition Towns (http://www.transitiontowns.org) will be critical in maintaining a functioning society post peak oil. Any service, good or process that can be conducted locally must be. Not only does this reduce fuel use, but it also increases community resilience in the event of oil supply disruptions. There are a number of fledgling community inspired transition type activities occurring throughout Queensland, however they are insignificant in the overall requirements of the State. The Government should encourage the development of Transition Town initiatives by providing the information and resources required for local communities to be able to take responsibility for their own future.

11. Recycling of sewage. Whilst not directly related to peak oil, there is debate as to how much phosphorous is remaining around the world. When ‘peak phosphorous’ will occur is unknown, but this issue could be potentially just as serious as peak oil. Phosphorous is a critical element required for plant growth. Without phosphorous plants do not grow and there is nothing that can replace phosphorus. With a growing world population and declining phosphorous reserves, food security becomes a critical issue. Fortunately, phosphorous can be recycled from both animal and human waste. The Government should introduce programs to recycle phosphorous from our sewerage system. See http://www.energybulletin.net/node/28720 and http://www.theoildrum.com/node/2882 for more information.

Once again I would like to thank you for the opportunity to provide input into what I consider is the biggest challenge facing Queensland and look forward to the implementation of the Action Plan.

Yours faithfully

Cameron Leckie

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COMPLAINT TO THE OMBUDSMAN

BACKGROUND

1. Peak Oil. Peak Oil is a term used to describe the peaking and then terminal decline of global oil production. Our economy is dependent upon cheap and readily available oil. With demand for oil continuing to grow strongly, Peak Oil is likely to result in significantly higher oil prices, and as time progresses, disruptions to oil supplies. This will have significant social and economic consequences. A Peak Oil primer is enclosed at attachment one.

2. Peak Oil and Pine Rivers Shire Council. I am a resident within the Pine Rivers Shire Council (PRSC) Local Government Area. Since December 2006, I have been requesting that the Council start planning for Peak Oil to mitigate the risks associated with its onset. This has involved written correspondence and two presentations to the Council General meeting. Frustrated with Council’s lack of action, I submitted a complaint on 23 April 07 to the Council on its failure to meet three provisions of the Local Government Finance Standard 2005. PRSC investigated the complaint and has deemed that my complaint has no basis, without providing an explanation as to why. The CEO recommended that I forward my complaint to the Queensland Ombudsman. Attachment two details the time line of events leading up to the submission of this complaint and copies of all documents.

THE COMPLAINT

3. The complaint is based on PRSCs failure to meet three provisions of the Local Government Finance Standard 2005. The relevant provisions are:

a. Paragraph 13 (a) which states that ‘the local government must consider the risks to which its operations are exposed’; and

b. Paragraph 30(2) which states that ‘Also, a local government must, when identifying the local and regional issues affecting its area, have regard to any foreseeable future issues that may affect its area.

c. Paragraph 13 (f) which states that ‘a local government must consider planning for the future.

4. These provisions and their relation to PRSC and Peak Oil will now be discussed in further detail.

COMPLAINT ONE

5. Part two of the Local Government Finance Standard 2005 details the policies and principles that a Queensland Local Government is to comply with. Part two, paragraph 13 details the ‘General Principles to be complied with in financial management.’ Paragraph 13 (a) states that:

the local government must consider the risks to which its operations are exposed.

The complaint

6. My complaint is that PRSC has not met the requirements of paragraph 13(a) of the Local Government Standard 2005 in that it has failed to conduct a risk assessment into the impact of Peak Oil on the Councils operations.

Applicability to PRSC

7. PRSC is a local government within Queensland. Therefore the Local Government Finance Standard 2005, including paragraph 13(a) are applicable to PRSC.

Definition of risk

8. PRSC Policy No: 39-2150-01 Risk Management, states that the Council has adopted the Australian risk management standard (AS/NZS 4360:1999 Risk Management) for its risk management process. The definition of risk in this standard is ‘the chance of something happening that will have an impact upon objectives.’ This definition of risk will be used throughout the complaint.

Is Peak Oil a risk?

9. The crucial question in this complaint is whether Peak Oil and its impacts pose a risk to the operations of PRSC. There is a body of information to suggest that Peak Oil poses a significant risk to PRSC. This includes:

a. A risk assessment into the financial vulnerability of PRSC to Peak Oil, conducted by the complainant (see attachment 3). The risk assessment suggested that PRSC could be operating at a deficit of between $100 and $200 million dollars within five years of the onset of Peak Oil.

b. The United States Government Accountability Office recently completed a report into the peaking of world oil production. It found that previous disruptions to oil supply caused unprecedented increases in oil prices and were associated with worldwide recessions. This is supported by the Oil Shockwave simulation activity carried out in the US, which found that even a 4% disruption to global oil supplies would be sufficient to increase the price of oil by 177%. There have been five oil price peaks since 1965, all of which have caused economic recessions of varying severity. The two most significant, the OPEC oil embargo of 1973 and the Iranian Revolution and Iran/Iraq War of 1980, resulted in widespread panic and miserable economic recessions. These findings are based on experience from temporary disruptions to oil supplies. The impact of permanent demand shortfalls after the onset of peak oil are therefore likely to be much more severe and far longer in duration. Thus it is highly probable that after the onset of Peak Oil we will face a severe global recession or depression, with the potential to last for decades.

c. In 2005, the US Department of Energy sponsored a study into the peaking of world oil production, commonly known as the Hirsch Report. The Hirsch report found that:

(1) World oil production will peak and then decline,

(2) Higher oil prices result in increased costs for the production of goods and services, as well as inflation, unemployment, reduced demand for products other than oil, and lower capital investment. Tax revenues decline and budget deficits increase, driving up interest rates.

(3) Prudent risk management requires the planning and implementation of mitigation well before peaking. Early mitigation will almost certainly be less expensive and less damaging to the world’s economies than delayed mitigation.

(4) Without mitigation, the peaking of world oil production will almost certainly cause major economic upheaval.

d. The Senates Rural and Regional Affairs and Transport Committee released its final report into Australia’s future oil supply in February 2007. The committee concluded that:

the possibility of a peak of conventional oil production before 2030 should be a matter of concern. Exactly when it occurs (which is very uncertain) is not the important point. In view of the enormous changes that will be needed to move to a less oil dependent future, Australia should be planning for it now.

e. In March 2007, the City of Portland (USA) Peak Oil Task Force released its report. The report identified three scenarios that are likely to occur as a result of Peak Oil. The worst case scenario was disintegration. The Task Force described disintegration as:

Whether sudden or gradual, the impacts [of Peak Oil] become so severe that the social fabric begins to disintegrate. Unemployment, hunger, crime and violence are rampant, with socially catastrophic competition for scarce resources, including food, shelter and energy.

f. The Brisbane City Council Climate Change and Energy Task Force released its report in March 2007. The Task Force stated that:

Even though people around the world only really started using oil about 100 years ago, most societies have become economically and socially dependent on the commodity in that short time. Adding some complexity to this situation is the fact that the oil resource is not just a transport fuel. It is also a feedstock for many products such as fertilisers, asphalt, adhesives, plastics, textiles, tyres and contact lenses.

g. The Task Force also stated that:

As the planning authority, BCC will need to direct its policies, planning instruments and development assessment practices toward facilitating a more compact and efficient urban form. It will be helpful in future planning exercises to imagine how a land use plan would work if it were not possible to use private motor vehicles. Council will need to integrate sustainable transport into its land use planning, giving public transport priority on the roads and in accessing destinations, as well as expanding pedestrian and cycling facilities and access.

h. PRSC also acknowledges the impact that fuel prices have on its operations. For example, in her budget speech of 30 June 2006 for the 2006-07 budget, Mayor Chapman stated that ‘Like any other organisation Council is subject to market forces such as ……. the rising costs of petrol.’ This is further supported by the 2007-08 budget speech, in which the Mayor stated that ‘As we all know, increasing fuel costs are a real problem and Council’s fuel bill was 20 per cent higher than in previous years.’

10. This synopsis, from a wide number of sources, suggests that Peak Oil will have significant impacts, both socially and economically. This is supported by what has occurred as a result of previous oil shocks, all of which have triggered economic recessions. The Mayor of Pine Rivers has even admitted in her last two budgets that fuel prices are a cause for concern.

Summary

11. It has been established that PRSC is subject to the provisions of the Local Government Finance Standard 2005. The question then remains ‘is Peak Oil a risk to the operations of PRSC?’

12. Whilst none of the referenced material, with the exception of the authors risk assessment, specifically state that PRSC will be impacted by Peak Oil, it is clear that Peak Oil will result in a number of negative economic consequences. These will impact upon individuals, businesses and all levels of Government, including PRSC. The Mayor of Pine Rivers has admitted that PRSC is subject to market forces and specifically mentioned fuel prices as being of concern.

13. Peak Oil will have an impact upon the objectives of PRSC, particularly its ability to provide services to the residences and businesses of Pine Rivers. Thus, Peak Oil meets the definition of risk, being ‘the chance of something happening that will have an impact upon objectives.’

14. Therefore it is in the author’s opinion that Peak Oil represents a risk to PRSC. As a result, PRSC has a legislative requirement as detailed in paragraph 13(a) of the Local Government Finance Standard 2005 to consider Peak Oil as a risk to its operations.

Requested action

15. It is requested that PRSC be directed to conduct a formal risk assessment, in accordance with the process detailed in the Councils Risk Management policy, into the impacts of Peak Oil on PRSC. These impacts should include the effect of significantly higher fuel prices, and the flow on economic effects on the Council, as well as the impact of fuel supply disruptions.

COMPLAINT TWO

16. Part five of the Local Government Finance Standard 2005 details the requirements for Queensland Local Government Corporate and Operational plans. Paragraph 30 describes the matters to be considered for identifying local and regional issues. Paragraph 30(2) states that:

Also, a local government must, when identifying the local and regional issues affecting its area, have regard to any foreseeable future issues that may affect its area.

The complaint

17. My complaint is that PRSC has not met the requirements of paragraph 30(2) of the Local Government Standard 2005 in that it has failed to identify Peak Oil as a foreseeable future issue that will affect its area.

Applicability to PRSC

18. PRSC is a local government within Queensland. Therefore the Local Government Finance Standard 2005, including paragraph 30(2) are applicable to PRSC.

PRSC Corporate Plan

19. The current PRSC Corporate Plan was adopted by PRSC on 20 March 2006. Section one details the issues that PRSC has identified that will affect the Shire. Nowhere in the Corporate Plan is the impact of Peak Oil mentioned.

20. The closest reference in the Corporate Plan, to an issue such as Peak Oil is:

Council must develop a financial strategy to take account of likely longer term declines in growth and resources, and the proportion of the employed population.

21. Given the likely impacts of Peak Oil and the possibility that it could occur within a matter of years, a statement such as this, if it intended to cover Peak Oil, is woefully inadequate as an identified issue to base future planning and risk management on.

Is Peak Oil a foreseeable future issue that may affect PRSC?

22. The key questions for this complaint are:

a. Is Peak Oil foreseeable? And

b. Will Peak Oil affect PRSC? Paragraphs nine to 13 identified that Peak Oil will affect PRSC and will not be discussed further.

23. There is a significant body of information that suggests that Peak Oil is foreseeable. This includes:

a. Global discoveries of oil have been in long term decline. Peak discovery occurred in the 1960s as shown at figure one. Given that you cannot produce oil until you discover it, this suggests that there will be a corresponding peak in production at some point after the peak in discoveries.

Figure One: Global oil discovery

b. The Senate Committee Inquiry into Australia’s future oil supply which stated that:

The timing of peak oil is debated. However the concept appears to be widely accepted, including by official agencies such as the IEA and the US Energy Information Administration, and some major oil companies.

c. The report also listed 25 predictions of the timing of Peak Oil. 20 of the 25 predictions predict that the peak will occur within 15 years and of those, 12 predict a peak within five years.

d. The Hirsch report found that:

World production of conventional oil will reach a maximum and decline thereafter. That maximum is called the peak. A number of competent forecasters project peaking within a decade; others contend it will occur later.

e. In July 2007, the International Energy Agency released its medium term oil market report. This report stated that:

(1) Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with OPEC spare capacity declining to minimal levels by 2012;

(2) The global annual decline from existing fields is predicted to be 4%, suggesting that 3.2 million barrels/day of new oil production must be found each year just to provide current levels of oil production; and

(3) The potential effects of a combination of low OPEC spare capacity and slow non-OPEC production growth are of significant concern – all the more so when considered alongside tightness in other hydrocarbons - particularly the natural gas market.

24. This information clearly suggests that there will be a peak in global oil production and that this has the possibility of occurring within the next couple of years. Thus Peak Oil is clearly a ‘foreseeable issue.’

Summary

25. It has been established that PRSC is subject to the provisions of the Local Government Finance Standard 2005. The question then ‘is Peak Oil a foreseeable future issue that will affect PRSC?’ In the previous section it was identified that Peak Oil is a risk to PRSC, that is, Peak Oil will affect PRSC. There is a significant amount of information available that suggests that there will be a peak in global oil production and that this is likely to occur within the short to medium term future.

26. Therefore it is in the author’s opinion that Peak Oil is a foreseeable future issue that will affect PRSC. As a result, PRSC has a legislative requirement as detailed in paragraph 30(2) of the Local Government Finance Standard 2005 to consider Peak Oil as a foreseeable future issue that may affect its area.

Requested action

27. It is requested that PRSC be directed to include Peak Oil as a future issue affecting Pine Rivers in its Corporate Plan.

PROVISION THREE

28. Part two of the Local Government Finance Standard 2005 details the policies and principles that a Queensland Local Government is to comply with. Part two, paragraph 13 details the ‘General Principles to be complied with in financial management.’ Paragraph 13 (f) states that:

a local government must consider planning for the future.

The complaint

29. My complaint is that PRSC has not met the requirements of paragraph 13(f) of the Local Government Standard 2005 in that by not considering Peak Oil, the Council is not considering the future in its planning.

Applicability to PRSC

30. PRSC is a local government within Queensland. Therefore the Local Government Finance Standard 2005, including paragraph 13(f) are applicable to PRSC.

Planning for the future

31. Peak Oil will have significant impacts on all aspects of the society and economy of Pine Rivers. This will include transportation, urban form, food production and distribution, employment and the financial situation of PRSC. Both the risk associated with, and the likelihood of Peak Oil occurring, have already been identified in the preceding sections. Considering these factors leads to the conclusion that preparing for Peak Oil will require significant planning and implementation of mitigation measures well prior to its onset. As stated in the Senate Inquiry into Australia’s future oil supply, Australia should be preparing for Peak Oil now. Delays in preparing for the onset of Peak Oil will make the transition even more difficult. Delays in preparing are more likely to result in consequences such as disintegration, something that must be avoided at all costs.

32. Our dependence upon oil for nearly every aspect of our lives and the consequences of being unprepared for Peak Oil make it imperative that PRSC considers Peak Oil in its planning for the future. The author would argue that Peak Oil, along with Climate Change, should be the two most important considerations for all local governments in planning for the future.

Requested action

33. It is requested that PRSC be directed to base its planning for the future with Peak Oil as a central factor in all decision making.

LOCAL GOVERNMENT AMALGAMATION

34. It is likely that PRSC will merge with one or more councils as a result of the State Government local government reform. It is requested that the findings of this complaint be made applicable to PRSC and the council/s it merges with.

CONCLUSION

35. The Hirsch Report stated that ‘The problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society.’ Despite this, PRSC has proven to be extremely recalcitrant in commencing planning for its onset. Given the potential consequences for being unprepared for peak oil, this approach defies logic.

36. This lack of action by PRSC prompted me to send an initial complaint to the Council, based on its failure to meet some of the provisions of the Local Government Finance Standard 2005. Unfortunately, despite what is in my opinion, a clear legislative requirement to consider issues such as Peak Oil, the Council has refused to consider Peak Oil in its planning, without giving an explanation as to why.

37. This led to this complaint to the Queensland Ombudsman. I believe that I have clearly demonstrated that the provisions of the Local Government Standard 2005 require PRSC to conduct a risk assessment into the impact of Peak Oil on the Council as well as include it as an issue in its Corporate Plan and consider it in its planning for the future.

38. I strongly believe if PRSC implements the requested actions, that they will commence PRSC and the Pine Rivers community on a path that will significantly reduce the impacts of Peak Oil. This was my original intent when raising this issue with the Council and I am extremely disappointed that it has had to get to this level.

Summary of requested actions

39. The author requests that PRSC be directed to carry out the following actions:

a. PRSC be directed to conduct a formal risk assessment, in accordance with the process dictated in the Councils Risk Management policy, into the impacts of Peak Oil on PRSC. These impacts should include the effect of significantly higher fuel prices, and the flow on economic effects on the Council, as well as the impact of fuel supply disruptions;

b. PRSC be directed to include Peak Oil as an issue affecting Pine Rivers in its Corporate Plan. Further it is requested that PRSC be directed to base its planning for the future with Peak Oil as a central factor in all decision making; and

c. PRSC be directed to base its planning for the future with Peak Oil as a central factor in all decision making.

Yours faithfully

Cameron Leckie

13 July 2007