With oil prices reaching record highs and many groups continuing to express concern over its long term supply, along with the instability of regions from which crude is sourced there is probably no better time to consider energy security.

Modern economies like those of the western world are non-existent or non-functioning without energy, and with the current level of technology and infrastructure, particularly without oil. The oil supply disruptions of the 70’s teamed up with public outrage and economic effects from periods of record high fuel prices can provide an introduction to the importance of affordable energy for the maintenance of a happy and functioning society.

There would be few governments that would not have their finger firmly on the pulse of their country’s energies supplies. So it is the case with Australia.

As per the Department of Resources, Energy & Tourism in a fact sheet on energy security:

“Access to reliable and competitively priced energy services and sufficient energy infrastructure is essential in underpinning social and economic activities. Disruptions to energy supplies or the inadequate provision of energy infrastructure can have significant economic and social costs.”

Over time there has been numerous reports which provide interesting insights into Australia’s energy position and future outlook:

Securing Australia’s Energy Future View Report [PDF]
In 2006 the Federal Energy Taskforce, under the office of the PM, presented a major review of the country’s energy position in terms of current resources and opportunity for new sources, exports, production for domestic consumption, cost and security of supply along with a focus on developing renewable energy sources.

“Energy is a major contributor to global greenhouse gas emissions, and although Australia is a small contributor to global emissions, we will play an active role in developing an effective global response to climate change..….Our goal is to place Australia in a strong position to respond to the challenge of climate change, while maintaining a prosperous economy….. The Australian Government has undertaken a comprehensive review of its energy policies and approaches, and has developed a long-term framework to ensure our energy advantage is utilised for the benefit of all Australians.”

It was expected that the report on Australia’s Energy Security Outlook would be reviewed every two years and, from all indications, one is underway now in the form of the National Energy Security Assessment (NESA).

Queensland’s Vunerability to Rising Oil Prices View Report [PDF]
The report conducted in 2005 by the Queensland Oil Vulnerability Taskforce takes a look at the likelihood of a Peak Oil situation and its effects on the economy of Queensland. It’s an older report although it still provides an interesting insight to the risks of a much debated topic. What’s even more interesting is that we are already well past the ‘high oil price’ scenario presented in the paper.

“Australia’s future oil position will be one of growing demand and a widening gap between supply and demand. This will result in a very large expenditure to purchase oil and petroleum products on the World market, a market that will see increasing competition for a resource that will probably begin to decline sometime in the next ten years.”

Australia’s Future Oil Supply and Alternative Transport Fuels View Report [PDF]
The Senate committee report which was presented in early 2007 takes a further look at the risks of Peak Oil, the economic impacts or rising fuel prices, supply side risks and a range of alternative fuels.

“The committee considers that more needs to be done to reduce Australia’s oil dependency in the long term. This is desirable not only because of peak oil concerns, but also for other reasons to mitigate greenhouse gas emissions; to mitigate the costs of the expected long term decline in Australia’s net oil self-sufficiency; and to mitigate the risks of supply disruptions as oil production becomes concentrated in a declining number of major oil-producing countries, some of which are politically unstable.”

The report makes a number of recommendations including requests for further investigation into risk mitigation in case of supply issues, policy to work towards a less oil dependency, possible funding of lignocellulose ethanol research, addressing investment barriers to alternative fuel projects and reviewing the progress of new vehicle fuel efficiency.

“The committee recommends that the Government examine the adequacy of funding for lignocellulose ethanol research and demonstration facilities in Australia, and increase funding where appropriate.”

The committee also made note of the flow through effects of rising oil prices to inflation and the broader economy.

“Higher oil prices result in increased costs for the production of goods and services, as well as inflation, unemployment, reduced demand for products other than oil, and lower capital investment. Tax revenues decline and budget deficits increase, driving up interest rates. These effects will be greater the more abrupt and severe the oil price increase and will be exacerbated by the impact on consumer and business confidence.”

Energy in Australia 2008 View Report [PDF]
One of the most recent governmental reports on energy production, resources and final consumption is the report from ABARE entitled Energy in Australia 2008. The report contains a wealth of statistics and data including energy use projections for oil, gas, coal and renewable along with supply projections and much more.

“Access to reliable, affordable and sustainable energy is one of the most important issues facing Australia today. Our economic prosperity and environmental wellbeing rely on the strategic management of energy. Energy in Australia 2008 is a vital reference for anyone with an interest in Australia’s energy policy. It encompasses all aspects of energy production and use, from natural resources through to final consumption.”

Strategic Reserves and Supply Disruption Response Plans
The Australian Government also has a Liquid Fuel Emergency Response Plan which was developed in cooperation with industry and tested during a simulation exercise in June 2003. In 2004, the Ministerial Council on Energy (MCE) agreed to establish an Energy Security Working Group, as an umbrella under which the National Oil Supplies Emergency Committee (NOSEC) has a responsibility for managing the National Liquid Fuel Emergency Response Plan.

A new National Liquid Fuel Emergency Simulation, also known as Exercise Catalyst 2008, is apparently taking place this month.

Australia is also signed on to the International Energy Program (IEP) agreement which requires participating countries to hold oil stocks equivalent to at least 90 days of net oil imports along with being able to strategically respond, at a domestic level, to supply disruptions.

Government Departments related to energy issues:
Ministerial Council on Energy (MCE)
Australian Bureau of Agricultural and Resource Economics (ABARE)
Dept. of Resources, Energy & Tourism (DRET)
National Offshore Petroleum Safety Authority (NOPSA)
GeoScience Australia (GA)
Exploration and Mining (CSIRO)
Energy Technology (CSIRO)
Australian Energy Market Commission (AEMC)
Australian Energy Regulator (AER)
Energy Reform Implementation Group (ERIG)
National Framework for Energy Efficiency (NFEE)
Office of the Renewable Energy Regulator (ORER)

Whats Interesting about all this?
For one thing, it is refreshing to go beyond the day to day political rhetoric and the snippets of information that’s presented by news services to see the facts of Australia’s energy usage and the work of governance.

It’s a reminder of Australia’s dependency on oil, and a growing dependency on imported oil at the same time with an abundant range of resources such as gas, coal and potentially uranium. It also presents the scale of energy and related infrastructure required in Australia and a long road to renewable sources possibly supplying all of the countries needs.

Excitingly, throughout all the reports, many potential alternative energy sources are also presented which the interested investor or researcher may seek to follow up.

What’s not Talked about Here?
One could only expect that the discussion over who owns what, or what country owns what in the Australian energy sector, is going to heat up. As consumer prices escalate there is likely to be more focus on where the money is going from the sale of Australia’s natural resources, perhaps even leading to a discussion about parity pricing and part nationalisation to supply cheap energy domestically.

Uranium, it’s a hot topic for politicians but there possibly needs to be more fact based discussion about it’s use, sales and waste management along with the new research that’s emerging on both fusion and fission technology.

Also, still to be fleshed out is the Emissions Trading Systems currently under review with the Garnaut Report and the effects that it will have on Australia’s energy production, usage and pricing.

And no doubt theres much more, until then…

Macroeconomics
alternative fuels, energy, fuel prices, oil