Without immediate action peak oil will cost Australia up to $80 billion within a decade, a research body has warned.

In a submission to Infrastructure Australia, the Australian Association for the Study of Peak Oil and Gas (ASPO) argued Australia’s domestic oil production had already peaked in 2000, making the nation heavily import-dependent.

“Australian policy-makers must now accept that we have entered a ‘period of consequences’ and adapt to the new realities of the peak oil era,” it said.

“Unfortunately, the Federal Government is yet to even acknowledge peak oil much less formulate a plan for how to sustain the economy in the face of oil decline.”

With almost half of the oil consumed in Australia imported, the petroleum trade deficit is exceeding $12 billion each year. The deficit is expected to reach $40-80 billion by 2015, depending on oil prices and other variables.   

“Given Australia’s geography and the nature of its existing transport systems, oil dependence is becoming somewhat of an economic Achilles heel.

“This is clearly unsustainable,” the ASPO said.

It said the nature of Australia’s infrastructure was a key determinant of its oil vulnerability, and much infrastructure investment in recent years exacerbated the nation’s oil dependence.

The “seriously flawed” current transport planning processes resulted in a high dependence on cars and road freight, making Australia more susceptible to the impact of peak oil.

“Despite growing awareness of peak oil by decision-makers, planners have either ignored the phenomenon altogether or explicitly rejected the likely impacts.

“Many projects are already at risk of failure as their planning assumptions become invalidated by the combined impact of peak oil, the world financial crisis and related economic factors,” it said.

The ASPO said direct investment should be made in renewable, distributed energy infrastructure to minimise the impact of “systemic shocks” and alleviate the socio-economic impact of peak oil.

It recommended an independent study into the implications of peak oil for transport planning, in order to determine realistic planning assumptions.

While world-class public transport and enhanced freight rail infrastructure should be on the top of the priority list, it said airport expansion plans needed to be replaced with a high-speed rail system.
 
“Where peak oil relates to climate change and the broader environmental sustainability debate…urgent action is needed while petroleum fuels are still sufficiently abundant and affordable.

“This factor is sadly absent from the public debate and, to the detriment of policy formulation.

“Without urgent action to alleviate oil vulnerability the domestic economy will continue to experience systemic shocks akin to the present financial crisis, while many existing infrastructure projects fail,” the ASPO said.

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