Last Wednesday the Australian Association for the Study of Peak Oil and Gas (ASPO) wrote to Professor Ross Garnaut, noting the inconsistency in his Supplementary Draft Report in dealing with the possibility of Australia reaching Peak Oil.

According to ASPO:

We are deeply concerned that your Draft Report explicitly rejects the notion that oil depletion will constrain economic growth within the next 50 years despite very strong evidence to the contrary. In our view the resulting analysis, conclusions and policy recommendations are flawed and will probably exacerbate the climate change mitigation problem.

In 2006, a Senate Enquiry also found that the Australian government should be immediately start planning for the possibility of peak oil by 2030.

In June, CSIRO’s June Future Fuels research forum found that Australia would experience petrol prices up to $8 dollars a litre by 2018 and, in a country experiencing changing climatic conditions, a 40% drop in passenger and freight travel that could see GDP drop by 3%.

Despite these warnings, Queensland is one of the first provincial governments in the world to acknowledge the possibility of a peak oil scenario, releasing on the 12 September an information paper regarding the development of an Oil Vulnerability Mitigation Strategy.

Stuart McCarthy, scientist and engineer from the ASPO, believes it is “quite curious” that the Federal government has failed to deal with the problem.

“Government has their heads in the sand and needs to be honest and upfront with the problem,” he told Crikey.

McCarthy also noted that peak oil will become a problem before Government initiatives, such as the Emissions Trading Scheme, come into effect. Prolonging acknowledgment of a peak oil scenario will also increase the cost of future oil mitigation strategies.

The strategies proposed by the Queensland government include planning for oil resilient towns and cities and transport networks. The government will explore the viability and sustainability of alternative fuels, such as ethanol and biodiesel. Incentives will be provided for people to switch to fuel efficient cars. And increased investment will be made in more compact and livable settlements, reducing residents’ reliance on cars.

Queensland Minister for Sustainability, Climate Change and Innovation, Andrew McNamara, sees peak oil as the “hidden dragon.”

“There are big challenges to reengineer employment and living practices, and a huge need to change the car culture,” McNamara told Crikey.

However, the Queensland government is currently in the process of consultation on the delivery of a revised petrol subsidy scheme of 8.3 cents per litre, with fuel subsidy cards automatically available for Queensland residents and interstate visitors who apply.

When Crikey asked how a fuel subsidy can be justified when the Peak Oil mitigation strategy aims to reduce Queenslander’s reliance on cars and use of petrol, a spokesperson for Minister McNamara claimed that “the subsidy is aimed at bringing Queenslander’s back to the pack. We have a lot more decentralised, non-urban regional centres, and people who drive very long distances.

“In reality, because of the distances, it is very difficult to have public transport that suits everyone, the strategy is trying to get people to use the services more,” Dickson said.

Crikey asked Martin Ferguson, Minister for Energy and Resources and Tourism, if the Federal government had specific policy regarding the peak oil issue.

A spokesman said the Federal Government is currently developing and preparing the National Security Assessment and Energy White Paper. The National Security Assessment will identify security issues in the liquid fuels, natural gas and electricity sectors, and the Energy White Paper aims to ensure the government provides clean and reliable energy into the future. However, according to the Department, the scope of the paper is not going to be announced for a while.

ASPO scientist and engineer Stuart McCarthy believes the White Paper and Assessment are a step in the right direction, but until the policy is enacted, it is difficult to comment on its effect.

“We (the ASPO) are concerned that the Government has not yet recognised the enormity or urgency of peak oil and its likely socio-economic impact on Australia, the harsh reality in relation to oil is that we now need to manage our ‘energy in-security’ in an era of declining oil supply, by proactively reducing our demand for oil,” McCarthy said.

The Federal Government’s policy implementation may come too late, which is to say after Western Australia’s oil field’s peak, which the Western Australian government has forecast to occur in 2008-09.

In a report on Western Australia’s petroleum exploration, development and production activities, prepared in September by the West Australian Department of Industry and Resources, it was shown that that while a crude oil peak will occur, followed by a sharp decline, Australian’s are consuming oil three times faster than we are discovering it.

At this point, it predicts Australia will need to increase it crude oil imports to 32 GL/Year from 2009. The study also infers that this level of imports could have a significant impact on Australia’s exchange rate and balance of payments.

Bruce Robinson, convenor of the ASPO, believes that in light of the inevitability of rising fuel prices, the Australian governments are “living in a fools paradise”.