Something quite momentous happened on 26 January 2012. While most Australians were distracted with celebrating their national day, the world's leading scientific journal, Nature, published its first serious commentary on peak oil. That's right, peak oil took its final step from "extremist fringe conspiracy theory" to general acceptance by the world's scientific community. The authors of the Nature article were David King, a former chief scientific advisor to the UK government and James Murray, founding director of the University of Washington's Program on Climate Change. In their article we learned how "there is a potentially more persuasive argument for lowering global emissions [than climate change]: the impact of dwindling oil supplies on the economy". Indeed, writing about rising oil prices have affected Europe's second biggest debtor nation, Italy, they said, "Italy now spends about $55 billion a year on imported oil, up from $12 billion in 1999. That difference is close to the current annual trade deficit". King and Murray are quite blunt about the implications of peak oil for future economic growth (the same growth that the USA and Europe are counting on to drag them slowly out of their debt woes),
"Historically, there has been a tight link between oil production and global economic growth. If oil production can't grow, the implication is that the economy can't grow either. This is such a frightening prospect that many have simply avoided considering it."
Despite its length, there were many topics that King and Murray's article did not cover. For example, declining oil supplies threaten the world's food supply. Until recently, the "green revolution" allowed us to expand food production in tack with the world's expanding population but this was underpinned by the mechanization of agriculture and the increased use of fertilizers and pesticides. Therefore, peak oil and food security are absolutely and intimately linked. King and Murray also failed to mention how the volume of oil available on the world's export market has been in decline since 2006 as the rate of global oil production stagnates and the expanding populations and economies of oil exporting nations consume a greater proportion of those nations' production.
Australia is a net importer of oil so an important question is what our government has been doing to prepare for the decline phase of the oil era. Unfortunately the answer is worse than nothing, In fact, both of Australia's major political parties have been actively suppressing investigation of the issue. On two occasions Labor and Liberal have joined forces in the Senate to vote against developing a plan to address the peak oil issue. Amazingly, it recently became known that a very detailed 470+ page report on peak oil was produced as long ago as 2009 by the Commonwealth's Bureau of Infrastructure, Transport and Regional Economics (BITRE) but was subsequently suppressed. The leaked report is now available on a number of national and international websites and is vastly superior in its data analysis to any other governmental report I have seen. One fascinating part of the report is the analysis of why its conclusions (supporting declining world production within a few years) differ so markedly from those of the International Energy Agency (IEA). It found that the IEA was assuming that new discoveries of oil would be brought into production far more rapidly than has previously been possible. The same conclusion was arrived at by other independent researchers and has since been published in the peer-reviewed scientific literature. This testifies to the quality of the BITRE analysis.
So where does South Australia stand in this brave new world of declining oil? Our position is precarious since we much of our liquid fuel arrives in almost just-in-time fashion from Singapore. In fact, shipping delays in 2005 caused our reserves to fall to just 3 days supply before any alarm was raised. How does one ration three day's worth of fuel? Declining world oil production will drive increased conflict over oil, erratic prices and, probably, disruptions to shipments. For example, conflict involving Iran would disrupt the flow of crude oil to Singapore from the Middle East and this would affect their ability to supply us with fuel.
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