In a previous post I pointed to the special edition of the journal Australian Planner on Peak Oil (Vol 47 No 4) from the Planning Institute of Australia. Starting with this post I will give a brief cut and paste overview of some of the papers, hopefully capturing the flavour and important points of each paper. Much of the information is familiar to followers of energy issues, especially the backgrounds given at the start of the papers. Ellipsis (...) indicates deleted text and square braces [ ] indicates inserted text. Some references have been omitted.
Dark clouds on the urban horizon: petroleum and Australian planning
Jago Dodson, pages: 226-231.Rapid urbanisation, population growth, infrastructure and resource demands all place pressure on urban systems. A major strategic challenge for urban regions especially among developed nations ... is the vulnerability of cities to the systemic and particular effects of future constraint on global petroleum supplies.
The years [since oil began its upward climb in the early 2000s] have witnessed extreme volatility in petroleum markets with prices rising to beyond US$100 by late 2007 to a peak of US$140 per barrel by late-2008. Oil prices then slipped back to US$30 in early 2009 with the onset of the global financial crisis, but by mid 2010 had returned to their pre-crisis levels of approximately US$80 per barrel.
It seems unlikely that the world will return to the low and stable price patterns seen from the late-1980s to the mid-2000s.
A commonly cited causal factor underpinning recent high oil prices was the global economic expansion over the decade to 2009 intersecting static or only gradually increasing oil production. China’s economy, for example, has grown by at least 8.3% per year in GDP terms since 2000 (IMF, 2010).
The investment task [for the production, exploration, improving technology and protection of oil supplies] is monumental. The International Energy Agency (IEA, 2008, 39) projects that US$26 trillion worth of production investment is needed by 2030 to meet anticipated global oil demand.
As other reserves decline, the share of global oil production provided by members of the Organisation of Petroleum Exporting Countries (OPEC) dominated by Middle Eastern nations is expected to increase from 44% in 2008 to 52% by 2030, giving this grouping considerable influence on global supplies. Some 28% of global oil supply in 2030 is projected to come from just six Middle Eastern OPEC countries: Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.
Probably the most significant and imperative business statement on the problem of petroleum security, peak oil and wider energy constraints came from the Lloyds insurance group in June 2010. Lloyds is, according to the company’s website ‘the world’s leading insurance market’ which ‘is often the first to insure new, unusual or complex risks’. The company’s white paper on sustainable energy stated:
Companies which are able to plan for and take advantage of this new energy reality will increase both their resilience and competitiveness. Failure to do so could lead to expensive and potentially catastrophic consequences . . . An oil supply crunch in the medium term is likely to be due to a combination of insufficient investment in upstream oil and efficiency over the last two decades and rebounding demand following the global recession. This would create a price spike prompting drastic national measures to cut oil dependency.Perhaps the most substantive, if opaque, signal that petroleum security is now a major international governmental concern is the realigning of political and institutional relations between producing and consuming nations. Thus, the most recent International Energy Forum meeting in early-2010 gathering together 68 national energy ministers including Australia’s sought to establish a formal global venue for ‘consumer producer dialogue’ focusing on measures to mitigate energy market volatility, and the security implications of this problem.
Australia’s planning challenge
Australia is the greatest per-capita energy consumer in the OECD (Garnaut, 2008). Australia possesses huge energy resources in coal and gas but only modest petroleum reserves, holding just 0.3%of the world’s oil. Australian oil production peaked in 2000 and now satisfies only two thirds of domestic consumption; this is probably misleading as there is a strong divergence between the types of oil Australia can produce and the types it consumes. This mismatch has already generated a $9.3 billion trade deficit in 2008/2009, which is anticipated to hit $25 billion by 2015.