Peak Oil News: Oil debate revving up

Wednesday, February 02, 2005

Oil debate revving up

The Australian

FORGET the hip-pocket pain caused by rising petrol prices. Depending on whom you speak to, there's something more sinister happening to our global oil supplies - we're running on empty.

The word is we're fast depleting crude oil supplies and we're ill-prepared for the fallout on global economies, Australia's included.

The worst-case scenario is that depleted oil reserves will cause petrol prices to skyrocket, forcing a rethink on our transport systems, and affect manufacturing and the sustainability of our existing indulgent lifestyles.

Throw into the mix the political tensions of the main oil producers in the Middle East, Venezuela, Nigeria and the former Soviet Union and the scenario does not look promising.

So what are our options?

Car makers are rushing ahead with research into alternative fuels while countries like Iceland hope to be self-sufficient in energy in another 40 years by using hydrogen fuel cells.

Wider issues of pollution and traffic congestion in the world's big cities are also forcing drastic action.

Governments are rethinking vehicular access to cities and some are even proposing "green" taxes on fuel-guzzling four-wheel drives. Congestion in London and Singapore has forced the introduction of a levy to drive through their CBDs, and Britain also enforces a pollution tax on the size of your company car.

Last year, the Paris city council passed an "anti-sports utility vehicle" resolution that could mean a ban on SUVs in 18 months. It's all part of a broader plan to reduce traffic and improve traffic flow.

The argument over our global oil supplies falls into two camps, optimists and pessimists, according to the 24-member scientists of the European-based Association for the Study of Peak Oil (ASPO). The association clearly falls into the latter camp.

It suggests the world's global oil production will peak as soon as 2010 and demand will outstrip production - a scenario known as "peak oil".

Apart from academic and scientific circles, "peak oil" enjoys little currency locally and it runs wide of any government radar. Only the West Australian Government and the state's Sustainable Transport Coalition (STC) have acknowledged it. It's also rated a mere mention in the South Australian government Hansard.

The STC's Perth-based Bruce Robinson claims there's an "intelligence failure of information" on the part of governments to clearly define any debate. The public is bombarded with incongruous information from governments and the oil industry, he says.

Robinson also attacks the "perverse subsidies" that see a fuel-guzzling Toyota LandCruiser four-wheel drive enjoy an import tariff of just 5 per cent when a fuel-efficient Toyota Prius hybrid/electric hatch is 10 per cent.

He welcomes more discussion on the country's fuel situation and raises a scary notion of $10-a-litre petrol prices. "What would $10 a litre (petrol prices) do to the outer suburbs of Melbourne and Sydney?" he says. "It would take out the major new suburbs on our fringes and impact severely on that mortgage belt."

The Australian Petroleum Production and Exploration Association is another voice in the wilderness. It warns of declining local production and advocates a significant review of our energy policy and the development of a long-term alternative energy strategy.

The ASPO's view, somewhat alarmingly, is that within a generation the oil price per barrel could be up to three-times what it is today. In a contentious 2003 report, ASPO president Kjell Aleklett and a team of scientists suggest that oil and gas supplies will run out too fast for doomsday global warming scenarios to materialise.

The British-based Oil Depletion Analysis Centre estimates the world's original endowment of sweet crude conventional oil to be somewhere between 2000 billion barrels and 2400 billion barrels. Humanity has consumed almost 50 per cent of that total, it says.

With both the tiger economies of China and India now emerging as major consumers of oil, this usage is expected to accelerate.

Conversely, oil producers and the Organisation of Oil Exporting Countries (OPEC) are confident supplies will keep on pumping for another 50 years, but they are reluctant to provide exact figures.

In its 2003 "Sustainability Report", one of the world's biggest energy suppliers, BP, says we have about 40 years in reserves of crude oil and 60 years of gas at current rates of production - an estimate that rankles with STC's Robinson. "It's not possible for someone to say 'no worries we've got plenty of oil'," he says. "They're on risky ground."

It's hard to dismiss the doomsayers based on conflicting estimates and the rise last year of crude oil to $US50 a barrel.

Apart from petrol pump prices, the ultimate fallout will be on economies - Australia's included - with Treasurer Peter Costello, albeit belatedly, warning that Australia's inflation would rise if oil prices remained high in the longer term.
Whatever field of thought, one thing is patently clear - the internal combustion engine will be joined by a variety of new power systems for cars.

CSIRO scientist David Rand says technological developments will also deliver further economy gains in conventional petrol and diesel engines, but he admits that fuel cells, petrol/electric hybrids and hydrogen power are gaining ground. But problems still exist, with cost, delivery and infrastructure problems for these new technologies.

The challenge for the lead-acid battery industry is to develop satisfactory battery-to-power new-generation vehicles, he says. Just about every car maker has worked, or is working, on alternative fuels for the family car.

Local car maker Holden, in conjunction with parent General Motors, spruiked its Hy-wire hydrogen research late last year. The car boasts a skateboard-like platform housing fuel cells, batteries and the car's control systems. There's no conventional engine and the car's occupants sit on the powertrain and look through a panoramic windscreen that's almost from bumper to roof height.

Other countries are also embracing the technology. The US, Germany, Canada, the Netherlands, Spain, Britain, Belgium, Singapore and Japan have developed or are developing hydrogen fuel stations. Iceland has gone one step further, declaring that it wants to become a hydrogen economy, using its vast reserves of hydroelectric and geothermal energy to power the nation's 180,000 vehicles - a task that will take between 30 and 40 years.

The US and Japan are developing "hydrogen highways" expected to be operational by 2010 where hydrogen-fuelled cars can refuel just like conventional cars. Japan - which relies solely on oil imports - wants the highway to run the entire length of the country.

California dedicated its first hydrogen filling station a couple of months ago. Its plan is to have a network of 150 to 200 hydrogen refuelling stations within 10 years at a cost of $US90 million ($116 million).

Why hydrogen? It's plentiful and non-toxic, the only emission from the exhaust pipe being water vapour.
But apart from the vast infrastructure cost, detractors point to the huge technological hurdles to overcome before we see hydrogen as a mainstream fuel.

Hydrogen is highly volatile, storage is also a problem and fuel-handling systems must be hardened and hermetically sealed, which is a big consideration in the family sedan. It also takes between five and 10 minutes to fill a tank as against an average four minutes for petrol.

Despite questions over hydrogen, it has not stopped car makers like DaimlerChrysler, BMW, Honda, Toyota, Peugeot, Hyundai, Volvo, Audi, Nissan, Ford and General Motors from pushing ahead with the technology.

edictions are that we'll see mass-produced hydrogen-powered cars on our roads as early as 2010.

Research is also continuing into petrol/electric hybrids, bio-diesel, ethanol and all-electric vehicles.

The Japanese, not surprisingly, were first to market with petrol/electric hybrids. Honda's Civic hybrid and Toyota's Prius established a global beachhead but sell here in relatively small numbers to government fleets and buyers who fall into the "early adopter" category.

There's also a belief in the car industry that petrol/electric hybrids are a stepping stone to hydrogen vehicles.

The local divisions of Ford, Holden, Toyota and Mitsubishi all have access to well-funded global research into hybrids and hydrogen through their global parents. Ford and Holden are also known to be looking at the latest-generation diesels that could hit our roads sooner than alternative energy cars.

Fancy a Holden Commodore or Ford Falcon travelling more than 1000km on one tank of diesel? Well, the technology exists - it's just a matter of the market, diesel quality and infrastructure making it happen, according to Ford vice-president of product development Trevor Worthington.

A major stumbling block is cost. Because of their inherently higher levels of technology, diesels cost more to manufacturer than an equivalent petrol engine, adding as much as $3000 to a car's retail price.

It does not help matters that diesel at the fuel pump is more expensive than petrol and emits harmful pollutants.
Latest-generation direct-injection diesels use particulate filters to trap emissions.

Importers such as BMW, Mercedes-Benz, Peugeot, Citroen, Audi and Volkswagen have secured small, but important, niches with their diesels - and interest is growing. Demand for VW's new Golf diesels is running at 40 per cent, way up from VW Australia's original forecast of less than 10 per cent.

But if car buyers are worried by rising petrol prices and an empty global oil tank, they're not showing it.

Ford Australia president Tom Gorman says that, so far, consumers "haven't voted with their feet in changing buyer preferences". Last year vehicle sales were at an all-time record of 955,229 vehicles, according to the Federal Chamber of Automotive Industries.

There is as yet no evidence to suggest higher fuel prices are driving people into smaller cars, it says. Quite the contrary, in fact. Sales of luxury off-roaders have never been better. They were up 24 per cent last year over 2003 and mid-size off-roaders grew almost 58 per cent.


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