ABC 7:30 Report: Running on empty

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.

If I recall Rudd gave big bucks to Toyota to develop the hybrid (but not plug-in) Camry. I seriously doubt that people will give up cars without a major protest. It's hard to get a full trolley load of groceries from the supermarket to home via public transport. I suggest Australia pursue a two pronged strategy for car manufacture
- low cost PHEVs to those who can best use them
- CNG/petrol dual fuel cars for those with heavier loads or longer journeys.

I'm not sure that EV subsidies are the way to go, as Spain is finding out and the US and UK are proposing. Ways could be found to make unavoidable car use more affordable; example rego fees could be split so a household can run both an EV and an ICE car. Do new cars really need 6 airbags and ABS brakes?

I'd like to see a long term plan for Australia's natural gas ie how much will be exported, how much burned in power stations and how much used in transport as CNG or GTL. Complicating matters are unknowns like
- variable pricing for electric charging
- what happens when petrol is $3/L?
- sleepers like methanol fuel cells.

This has all got to be worked out within a few years.

I seriously doubt that people will give up cars without a major protest.

The problem, if and when it manifests itself, will not be keeping the wheels of happy motoring turning; it will be system wide economic contraction. We will not have the resources to migrate to new systems, at least not quickly, and will have to keep the existing infrastructure working well beyond its design life. I personally think there is much more resilience in existing infrastructure than people give credit for. That doesn't change the basic premise that the more that can be done now to invest in rail the better. Buses will also be a good solution.

There would be a lot less need for travel if we "banned" supermarkets, no?

Once upon a less carbon intensive age people shopped locally in local shops for local people.
Do we all really need to go to the supemarket in this supposedly interneted world?
Surely, home delivery is an option and we all just shop online?
OR do we value the "social interaction" at the supermarket that much?
OR does the activity really satisfy a remnant hunter gatherer instinct?

Old systems worked once, why not again? Lets have a campaign for the corner store.

SP, your comments are spot on.

"OR do we value the "social interaction" at the supermarket that much?" ( presumably ironic) is a good point

The truth is that there is very little real social interaction in a supermarket. Milling about in the presence of strangers then being served by another stranger who has no time to say anything to you except the compulsory 'How are you today?' and carries on without waiting for a reply.

As a rule, the more people surrounding you, the more lonely you can feel.

Contrast this with the old days of clusters of small specialist neighbourhood shops which you could walk to with your shopping trolley in a few minutes.
In those days people knew their neighbours, their kids went to the local school, they all went to the local shops and got to know the shop owners quite well.
The level of social interaction in these shops was very high as part of the overall neighbourhood network.
Everyone knew the local butcher, grocer, greengrocer etc.
Perhaps people paid a bit more for this privilege, perhaps not when you look at all of the costs involved in getting to the supermarket and back and the effects of Jevon's Paradox on spending.
Either way, by moving out of our local neighbourhoods for shopping, schooling, work and recreation, we lost one of the great intangible benefits of life - a network of longterm social connections.

Shale oil and bio-fuels get a more than honourable mention in this 7.30 report.Of course,who is touting shale oil? None other than a representative of a mining company in QLD pushing to be allowed to go full ahead on this filthy,polluting process.

Both shale oil and bio-fuels have questionable EROEI and both are environmentally damaging.

NG is the most practical transportation fuel in the medium term but it will require government action to get the conversion process started.There is a big investment in infrastructure required.

Electric rail and light rail are practical for long distance haulage and for urban areas.But what a lot of city dwellers forget is that Australia is a vast country and decentalized outside of the urban conglomerations.So road transport,for passengers or freight,will still be necessary.If battery technology improves out of sight then electric vehicles might be the ultimate solution.That is not likely at the moment.

However Australia is the most urbanised country on the planet pretty much, so the vast majority of journeys do take place within metropolitan areas.

As for electric cars, there seems to be about 30 models about to hit the market over the next couple of years (as will Better Place's Australian venture), so they don't seem that far off.