How to balance the risks of climate change against the costs of doing anything about it? And what, in turn, might these decisions mean for energy security?
For the past six months our national attention has, understandably, been focused on the carbon tax issue. The policy agenda now needs to move in a related, but different direction. The reason is a three-letter word – oil.
While oil producers will be affected by the carbon tax, politics ensures that there will be no tax on petrol.
Yet oil is, arguably, one of Australia’s key energy problems. As a nation, we passed ‘‘peak oil’’ some time ago. Domestic production plateaued more than 20 years ago, and since 2005, has been in decline. The oil that is left is a long way offshore, and a long way down. Extracting it will be costly and risky.
Australian refining capacity is more constrained now than it was a decade ago. South Australia lost its one oil refinery in 2003. A number of the refineries in Queensland, Victoria and NSW are small in scale, and subject to stiff competition from imported, refined products. Further rationalisation of refining capacity seems likely as imports continue to increase, particularly from large-scale refineries in Asia. More >>>