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Peak moment for peak oil in Queensland

Margo: Stuart McCarthy, who returns to Webdiary after a long absence with this piece, is the Brisbane coordinator for the Australian Association for the Study of Peak Oil. He has 20 years of experience in engineering, logistics, disaster relief, security, risk analysis and planning in Australia, Africa, the Middle East, Southeast Asia and the Pacific Islands. And see At last, a government has a go at peak oil!!

Until recently the peak oil debate in Australia has been largely confined to internet forums such as Webdiary. Those who have dared elsewhere make the obvious point that production of the finite resource upon which our entire economy is based will soon peak and decline, have usually been labeled as doomsayers, conspiracy theorists, socialists or rabid greenies. That situation has changed dramatically in recent weeks with the release of the Queensland Government’s long-awaited Oil Vulnerability Taskforce Report. World oil production is peaking – it’s official, at least here in Queensland. 

Fortunately Queensland has been blessed with a political rarity, a politician still capable of talking openly and honestly about the tough issues despite the modern obsession with spin, namely Andrew McNamara. McNamara has spoken publicly about peak oil in general and the threats to Queensland in particular for years, including his February 2005 speech in Parliament, and last year’s interviews on Four Corners and Sixty Minutes. Recently retired Premier Peter Beattie appointed him to chair a taskforce to examine the issue in May 2005. His Parliamentary colleague Rachel Nolan, who has also spoken publicly about peak oil but with less profile, assisted McNamara on the taskforce. Since 2005 those of us who have closely followed the peak oil debate have watched for news of the report’s completion with great anticipation. 

Two and a half long years later, that news arrived several weeks ago with the headline “Crude Shock” splashed across the front page of the Courier-Mail, after a copy of the McNamara report was apparently leaked to Assistant Editor Paul Syvret. This occurred during a period of intense speculation about Beattie’s retirement, with some of that speculation coming from Beattie himself. Rumours abound that Beattie, the master of spin who presided over a series of unprecedented public infrastructure crises here in Queensland, didn’t want anything to do with a ‘bad news’ story like peak oil. Possibly this was a factor in his handover to Anna Bligh, who drew much of the heat for Beattie’s short-sightedness during her tenure as Deputy Premier. You can draw your own conclusion from the facts that McNamara’s report took over two years to complete, that it then sat in File 13 for six months despite public assurances by Beattie that it would be immediately released, that McNamara is now a Minister in the Bligh Government, that Nolan is now a Parliamentary Secretary, and that the report was tabled in Bligh’s first Cabinet meeting four days after she became Premier. 

Personally, I will remember Beattie as the man who needlessly delayed the commencement of Queensland’s urgent peak oil mitigation effort for at least 12 crucial months while he dithered over his decision to take the soft option and get out of the way of true leaders who can guide us through the tough times ahead. A good decision, way too long in the making. Shortly after McNamara’s taskforce was convened in mid-2005, Qantas Chief Financial Officer Peter Gregg commented in The Bulletin that the airline industry is “not sustainable” if oil prices reach US$100 per barrel, and the head of the International Air Transport Association referred to high fuel prices as “a fifth horseman of the apocalypse.” 136,000 jobs (7.3 percent of the workforce) in Queensland’s tourism industry alone, the second largest export industry behind coal, rely on the viability of these airlines, while passenger rail has died the death of a thousand cuts in recent decades and ‘transport’ still means ‘roads’ in the Transport Department. As I write this light sweet crude is trading at US$83.69 per barrel at the New York Mercantile Exchange and many reputable investors are openly discussing the prospect of US$100 oil by Christmas, but there is still no plan for saving Queensland’s tourism industry, or any other industry for that matter. Only time will tell how much Beattie’s procrastination will have cost. 

Nonetheless, the report has now been released. After a three week pregnant pause since the Courier-Mail article, Opposition MP Rosemary Menkens questioned McNamara in Parliament about the report last Wednesday. It was tabled on Thursday and published on the web shortly thereafter. Unsurprisingly, not one word of this made it into the mainstream media amid the contrived sensation of the stem cell cloning debate in Parliament the same day. 

For those of us familiar with peak oil the report itself is unremarkable. Peak oil is real, it is soon, and the implications for key Queensland industries are huge – wow (with a lower-case ‘w’ and no exclamation mark). But there are a few gems that may see the state really come to grips with a profound sustainability agenda that addresses both peak oil and climate change. Chapter 3 examines the Impact on Various Queensland Sectors, including transport, mining, resources and primary industries. Transport received the most comprehensive treatment, however the oil price scenarios are extremely conservative and McNamara conceded that the worst case scenario is being realised even before the report was released.  

For my money the most important sections are those examining the impacts on the mining and fossil fuel resource sectors. The mining industry section concludes in part: 

The mining industry is highly dependent on liquid fuels, which makes it highly vulnerable to fuel price increases and shortages. The industry has been fortunate that recent high (oil) prices have occurred in conjunction with higher commodity prices. A decline in commodity prices and continuance of high oil prices would place marginal producers at risk. 

The fossil fuel resources section notes Queensland’s limited oil and gas reserves, its reliance on imports, and the serious technical, thermodynamic and environmental limitations of coal gasification and liquefaction, geo-sequestration and shale oil. One of its key recommendations is to:

...carry out a major review of Queensland coal and its future utilisation ...(and develop) a strategic plan for development of the state’s coal resources ... 

Together, these dispel the notion that Queensland could literally dig, burn and/or bury its way out of peak oil and climate change triggered socio-economic crises. 

Unfortunately, the primary industries section bears the hallmarks of the prevailing stove-piped, isolationist, cornucopian approach to the problem, arguing that: 

...if it becomes apparent that peak oil will eventuate in the next few years or so, Queensland is currently well placed to combat this situation, purely based on the potential of the ethanol industry ... Queensland could potentially substitute almost 75% of all petrol consumed using ethanol. 

Further, this section uncritically repeats the ‘clean coal’ mantra, ironically quoting a glowing endorsement for coal liquefaction by Dr Brian Fisher, the former head of ABARE who was totally discredited at last year’s Senate inquiry into peak oil when he claimed with a straight face that “If the price of eggs is high enough, even the roosters will start to lay.” 

Chapter 4, Queensland’s Alternative Energy Options, dispels many of the myths that have hamstrung the debate so far. There are no silver bullet alternatives that can feasibly replace oil and allow what Jim Kunstler calls the “happy motoring utopia” to continue into the future. Ethanol, biodiesel and hydrogen, although they may have important roles to play, have enormous limitations in terms of thermodynamics, time, scale and cost. Further, the report allays one of the key fears of climate change activists in the peak oil debate, that Queensland would worsen the greenhouse gas emissions problem by turning to coal liquefaction, or coal to liquids (CTL): “The value of CTL technology in Australia is questionable, based on price and greenhouse gas intensity.” Solar power, on the other hand, although it “has no direct substitution value for oil,” is “a technology with potential to pay for itself very quickly with the right technology breakthrough.” McNamara recently suggested to me in relation to transport infrastructure that Queensland should “electrify everything.” Encouragingly, the foundations are being laid for a major switch to solar energy and public transport among other key mitigation strategies. 

What is remarkable about the report, however, is that it marks the Queensland Government as the first state/provincial government in the world to recognise that peak oil is real and decide to do something about it. To borrow a phrase from Winston Churchill, the battle for acknowledgement is over; the battle for action is about to begin. To that end, Bligh has made some of the right noises, purportedly instructing McNamara to “think big” in developing Queensland’s whole-of-government’ peak oil mitigation plan. 

Whether or not she fully appreciates this yet, the manner in which Bligh tackles peak oil will define her premiership. Her most important task will be to quickly sort out the wheat from the chaff in her own Cabinet. While McNamara has been talking about the need to “adopt a wartime mentality” to address peak oil for some time, many of his colleagues still don’t get it. His former boss in the transport portfolio and now Bligh’s Deputy, Paul Lucas, doesn’t appreciate that the feasibility studies for every one of Queensland’s tens of billions of dollars worth of road projects have completely omitted any consideration of rising fuel prices, and still complains about ‘subsidised’ public transport but not the $540 million per annum petrol subsidy. Echoes of Beattie’s oxymoronic ‘clean-coal’ gibberish still manifest themselves in almost $1 billion worth of government subsidies that continue to marginalise solar power and other renewable energy in what was once called the Sunshine State. One quarter of Queensland’s feed grain production is being turned into ethanol and burned while the world’s grain stockpile has halved in the last five years, food prices are skyrocketing and millions are starving. Discredited, neo-classical economic dogma still evidently holds sway over high school mathematics and physics. 

Bligh has charged McNamara with developing a ‘whole-of-government’ approach to peak oil mitigation, but the reality is that it requires more than that, more like a ‘whole-of-state’ approach. Businesses, civil society, and most importantly a jaded, cynical and apathetic public, will need to quickly become involved in the development of a reform agenda unprecedented in magnitude, despite the fact that few of them yet understand what the term ‘peak oil’ means. The clock is ticking, but we will first need to debate the tough questions in a sustained and meaningful way. We haven’t seen this sort of debate since Federation. To that end the last word here must go to McNamara himself. After describing his report as “an important starting point for a debate” in Parliament on Wednesday when replying to Menkens’ question, McNamara went on to describe peak oil as:  

... an issue that will require an open and honest approach from all members of this House. This is not an ideological issue — it is not a Left or Right issue; it is not a Labor, Liberal, National or indeed Independent issue — it is an issue on which the people of Queensland are going to require us, with goodwill and in good faith, to look for results and to come up with answers to preserve their lifestyles.

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