ENERGY: by Patrick J. ByrneNews Weekly
Fuel import bill could negate mining boom benefits
, June 26, 2010
Australia's oil import dependence has the potential of "negating any of the economic benefits the nation might gain from its minerals boom".
This warning from NRMA Motoring and Services earlier this year was confirmed at a recent conference of the Australian Petroleum Production and Exploration Association by federal Minister for Energy and Resources, Martin Ferguson.
Addressing the conference, Ferguson said that Australia presently has a $16 billion trade deficit in crude oil, refined products and LPG, and that could grow to $30 billion by 2015. (Business Spectator
, May 31, 2010).
His prediction is worse than two years ago when he told a conference of the same group that Australia would be "looking down the barrel" of annual deficits of $25b billion by 2015.
Furthermore, Queensland Energy Resources (QER) modelling shows that, by 2030, the trade deficit from liquid fuel imports could be $90 billion annually. QER is seeking to build a shale-oil plant in central Queensland.
Writing in the online Business Spectator
(May 31, 2010), Keith Orchison said that Australians "were self-sufficient in oil production in 2000 and are now a little less than half self-sufficient - and by 2030 on present trends will be meeting only a fifth of our needs from our own resources.
"In a television interview two years ago Martin Ferguson acknowledged ‘huge problems on the (fuels) trade front' and, on his own numbers, the elephant in the room has put on a lot of weight since then."
In recent years, warnings of Australia's growing dependence on imported oil have come from, among others, Geosciences Australia and Caltex head, Des King.
Supposedly, these ballooning liquid fuel imports are more than offset by Australia's huge and growing energy exports, meaning that we earn enough from energy exports to pay for the imports. For example, LNG exports were worth $10 billion last year and could be worth $50 billion in 2015-16.
However, as Ferguson pointed out in April, "Global oil production is increasingly concentrated in less stable regions of the world."
To this should be added the fact that Australia will have to compete with the rapidly growing economies of China and India for available oil supplies.
According to the Energy Minister, more than 70 per cent of Australia's 50 sedimentary basins are unexplored or under-explored; but unless there is a major oil discovery, domestic crude production is set to decline and leave the nation heavily dependent on imports.
There have been several federal inquires into Australia's oil and gas reserves and dependence on imports, but there has been little action to address the looming problem.
Recently, the NRMA repeated its call for solutions, in part advocating greater use of biofuels, from various food stocks, and converting the nation's considerable natural gas and liquefied petroleum gas for use in vehicles.
It is frequently argued that biofuels cannot provide a substitute for mineral fuels, as their feed-stock crops compete for scarce arable land at the expense of food production.
This may be the case in some countries, but not in Australia. We are fortunate to have abundant, well-watered arable land in tropical regions, and we already produce huge amounts of sugar cane, which is the most efficient feed-stock for making ethanol fuel.
Ethanol mills can be built on the back of sugar-cane mills using off-the-shelf technology. A small sugar-cane-based ethanol industry already exists.
Ethanol is already competitive in price to petrol and adds no new CO2 emissions to the atmosphere.
NSW has mandated ethanol use in fuel and Queensland has announced its intention to introduce a mandate.
The Federal Government should be aiming to mandate 10 per cent ethanol content in petrol, starting at 5 per cent and increasing the proportion over a number of years. This can be done either as a mandate or possibly by raising the fuel emissions standards for Australia to the level of other developed nations.
To give consumers a wider range of fuels requires that pumps allow customers to choose higher ethanol content of up to 85 per cent at the pump for flex-fuel cars. Both the fuel and the cars are available to consumers in other countries.
Australia also has huge supplies of gas. LPG is a mix of butane and propane. It is ideal for storage and use in light transport.
LNG is basically methane. It is more difficult to liquefy, but offers good possibilities for larger vehicles with greater room for storing LNG. LNG is too good a fuel to waste on generating electricity.
Because gaseous fuels have a lower carbon fraction than liquid fuels, they also produce less CO2 on combustion.
The Federal Government is currently assisting motorists to convert their cars to gas. This program should be expanded and the domestic automotive industry should receive assistance to enhance gas-powered use.Patrick J. Byrne is vice-president of the National Civic Council.