15/08/2006 - 22:00

A sorry lack of vision on energy

15/08/2006 - 22:00


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I am finding this fuel debate quite extraordinary.

I am finding this fuel debate quite extraordinary.

Fuel prices have been rising for a long time, notably with considerable encouragement from the federal government, which has been actively pushing the price up by around 50 cents a litre thanks to its fuel excise take.

Much of this tax was supposed to create an incentive for fuel users to be fuel efficient but, as the price moved above $1.30 a litre in recent months, the fact is we have clearly not prepared for this eventuality.

The truth is, the tax is just another revenue raiser. So we are now caught in a difficult situation where prices are higher than we may be able to manage and the only breathing space available is via government charges; charges it doesn’t want to drop.

The major question here is what have our governments really been doing and what is their strategy?

Energy issues have been on the boil in Western Australia for several years. The lack of vision was clearly outlined in February 2003 when, as most of you will remember, Perth’s power was shutdown in the middle of a heatwave.

Since then, there’s been lots of effort to get capacity back to sufficient levels. But the fuel debate linked to this has been about jobs (coal) and the environment (gas) rather than about security of supply.

In fact, apart from the nuclear debate led by Prime Minister John Howard, there has been little mention of Australia’s future energy needs. And why would there be?

As a net exporter of all the major energy commodities it hardly seems likely that we need worry.

Instead, we’ve found ourselves feeling a little insecure.

Coal is considered dirty and key problem to those driving the global warming debate.

Gas, once a fuel no-one wanted, has been well marketed by our energy exporters and now its development tends to lock in supply arrangements with our major industrial partners, who are desperate to keep their economies fuelled, potentially shutting it out as a cheap form of energy for domestic use.

And, finally, nuclear power remains a true not-in-my-backyard issue for most Australians, despite its common usage in sophisticated economies around the globe.

All this comes at time of increasing concern about peak oil, predictions that we may be rapidly slipping down the other side of the supply curve as oil reserves fail to match future predicted demand.

Amid this paralysis in the face of a long-term issue we have suddenly seen a flurry of activity as war and Chinese demand have pushed oil, and therefore petrol prices, into new territory.

Mr Howard’s $1.6 billion LPG conversion subsidy is a typical electoral ploy aimed at the so-called battlers.

While there was a component of spending on assistance to oil and gas exploration, this is a minor and short-term measure, especially in light of the fact that LPG prices have already started rising with demand and given the state’s ringing of alarm bells over future access to gas.

In other words, there’s little guarantee all this bluff and bravado is going to fix anything for the future.


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