PEAK Oil is a term used to describe the point at which maximum oil production is reached; it signals that half the world's oil reserves have been consumed. There is growing recognition, even from oil companies, that Peak Oil is upon us. Chevron makes the point in one of its advertisements: "One thing is clear: the era of easy oil is over." Prime Minister John Howard alluded to it in 2005: "I'm afraid we're not going to go back to the days of having petrol below a dollar for quite some time, if at all." Even the most optimistic oil company assessment has Peak Oil hitting around 2030. Whichever camp you belong to, planning for a low oil future begins now. We have never consumed as much oil globally as we do today.
Indeed, our appetite is growing, but geological constraints will put an end to it.
We are already seeing crude prices spiral. This rise can partly be attributed to geopolitical concerns, such as tension over Iran. Historically, however, when supply tightens for political reasons, producers have stepped in to boost output, thereby dampening world crude prices. Saudi Arabia, the king of swing producers, has this time been unable to boost production. It is operating at capacity.
This is the wake-up call we need. Oil has not run out, but it is getting harder and more expensive to produce. Dr Colin Campbell, a former petroleum geologist with BP, Texaco and Amoco, says of the oil production spike: "There will be panic. The market overreacts to even small imbalances. Prices are set to soar in the absence of spare capacity until demand is cut by recessions".
In an effort to partially insulate ourselves from volatile oil prices, governments must begin planning now.
US President George Bush has labelled Americans "oil addicted".
Australians consume a similar amount of oil per capita and can therefore also be considered "addicts". It will take decades to wean ourselves off oil.
In time, nature will do this for us, but it will be significantly less painful if we take some pre-emptive steps; an adaptation involving significant change in our society and its infrastructure.
Car-dependent suburbs will become unviable and public transport networks will require rapid expansion.
The current urban arrangement, where low-income communities are located in transport-poor outer suburbs, is unsustainable.
Urban planning academics Jago Dodson and Neil Sipe have conducted an assessment of rising fuel prices on Australian cities in their report Oil Vulnerability in the Australian City. They found "Urban residents at the lower end of the socio-economic spectrum with the least financial capacity to absorb additional costs would likely be worst affected …"
They found Melbourne to be the most vulnerable of the cities included in the study. Not only do low-income communities have the least capacity to pay higher petrol bills, they also have longer trip distances and the least access to public transport.
The Victorian Council of Social Service has shown that residents of outer-suburban municipalities spend twice as much on transport as inner, wealthier residents. Governments continue to lure the poor to outer-suburban locations with the prospect of fast travel on intra-urban freeways.
But the governments must begin the process of adapting to high fuel costs by placing a moratorium on new urban roads. It is simply irresponsible to spend billions on infrastructure that will be of limited use in an oil-scarce future. Fringe benefits tax and salary packaging arrangements that promote greater car use must be eliminated. The 4WD import duty concession should be removed. These are just a few of the perverse subsidies that encourage oil consumption in an era requiring conservation.
Last week the Federal Government demonstrated its inability to plan for the coming oil crisis by announcing a $52 million subsidy to Ford to produce internal combustion engine cars in Victoria. The Victorian Government is expected to match this. All this comes while the Senate Rural and Regional Affairs and Transport Committee conducts its inquiry into Australia's future oil supply and alternative transport fuels.
Despite being flooded with submissions from experts outlining the serious limitations to our oil supply, the Government acts as though supplies are cheap and plentiful.
Nothing could be further from the truth. Earlier this year, Sweden announced it was formally beginning the process of eliminating oil from its economy. All levels of our government must begin the transition to a low oil future, including a massive boost to walking, cycling and public transport infrastructure — the most appropriate transport in an oil-scarce future. The earlier we begin the transition, the less painful it will be.
Elliot Fishman is director of the Institute for Sensible Transport.