One month ago I was contacted by Jeff Waters from ABC News in Australia and this week some of my comments were aired when the news program “PM” made a report titled, “Infrastructure adviser warns of peak oil”. My translator in Australia Michael Lardelli considers that this is one of the most influential news programs on Australian radio. You can listen to the report here (click play to listen under the head line)
or you can read a transcript here:
MARK COLVIN: One of the Federal Government’s top infrastructure advisers is warning of an oil crunch which could send the global economy spiralling back toward recession.
Curtin University’s Professor Peter Newman is on the Government’s Infrastructure Australia Council. He says peak oil – when demand outstrips dwindling supply – has already hit but the global downturn has kept prices low.
Professor Newman even blames oil for causing the global recession in the first place. And he’s not alone. It’s an issue being taken seriously by some local councils which have drawn up peak oil contingencies.
Jeff Waters reports.
JEFF WATERS: It was a theory which emerged in the 1990s. Proponents of the peak oil scenario said the cost of oil and therefore petrol would rise exponentially in the first decade of this century when increasing demand outstripped finite supply. With oil now hovering at about $US85 a barrel it doesn’t seem to have happened – at least in the original timeframe.
But Curtin University professor, Peter Newman, who’s a Federal Government adviser on the Infrastructure Australia Council says we’ve already reached peak oil back in 2008 when it spiked at around $140 a barrel and sent petrol prices soaring.
PETER NEWMAN: Peak oil did happen I believe in 2008. And it didn’t happen because some oil-exporting country had a revolution or something. It just happened because you couldn’t produce enough to meet the demand.
JEFF WATERS: Professor Newman largely blames the global financial crisis on oil prices.
PETER NEWMAN: Subprime mortgages were mostly out on the urban fringes miles away from work. People had to drive. And when the price of fuel tripled in American cities they couldn’t pay their mortgages.
JEFF WATERS: As the global economy has strengthened in recent months so has the oil price. Professor Newman says it doesn’t bode well for recovery.
PETER NEWMAN: As the demand increases again the supply crunch will happen and the price will go up.
JEFF WATERS: Professor Kjell Aleklett is the Swedish-based president of the Association for the Study of Peak Oil and Gas. He’s in agreement with his Australian counterpart.
KJELL ALEKLETT: The fact is that we are producing less oil now than we did in 2008. So just now we have 2008 as the peak year for peak oil.
JEFF WATERS: Professor Aleklett says he thinks the world will find a way around the problem simply because it’ll grind to a halt if it doesn’t.
KJELL ALEKLETT: I’m one of those people who believe that it’s not possible to have a very high price of oil because that will put the end of globalisation. And the fact is that a price of $200 per barrel there will not exist an airline industry any longer and we will see problems with airlines in the future.
JEFF WATERS: On the other side of the debate are academics like the University of South Australia’s Dr Vlado Vivoda.
VLADO VIVODA: What peak oil theorists miss out on is the fact that with the changes in our, with improvements in our technologies and improvements in a drop in oil production costs what is considered oil is changing as well.
I see the definition of what is exploitable oil changes with the changes in the levels of technological efficiency and with changes in the cost of exploration and production of oil.
JEFF WATERS: The question is whether we’ll adopt new technologies fast enough. Some Australian municipal councils have already drawn up peak oil strategies and Professor Peter Newman welcomes big, recent, federal spending on public transport. But he says he’d like to see a full national plan.
PETER NEWMAN: We really do need a national peak oil strategy that can take us through the next two decades of change in our infrastructure requirements.
MARK COLVIN: Infrastructure Australia Council member Professor Peter Newman ending that report from Jeff Waters.