Will your Super be risked in the Tunnel?

Ever-increasing oil prices will mean serious risk for investments in the Brisbane North-South Bypass Tunnel.

There are two conflicting views about the future availability and price of oil.  Many in the petroleum industry now forecast that Peak Oil, the beginning of the decline of global oil production, will be upon us by the end of this decade.  Fuel shortages or price rises may well dramatically reduce tunnel usage below past forecasts. 

By contrast, many economists, including ABARE, predict that oil prices will have fallen by then.  But ABARE forecast just a year ago that oil would be $35 this year and $30/bbl in 2010.  Lots of people, including New York oil futures traders, are betting seriously against them.

Already production is falling in many of the world's great oilfields; the North Sea, Mexico's Cantarell, Kuwait's Burgan.  Bass Strait is just a trickle now compared to its peak in 1985.  When Saudi's Ghawar starts its decline, it will be certain Peak Oil is with us.

Clearly one can quote, as ABARE does, from the International Energy Agency.  However, its independence and competence are seriously questioned.  What will happen if the IEA forecasts are seriously optimistic, as many believe?

The Senate Inquiry into Australia's future oil supply is revealing a great deal of concern that ABARE's "business-as-usual" scenarios will prove dangerously wrong.There is a good chance of Peak Oil hitting us before the Tunnel is opened and a very high probability that oil shortages will be commonplace long before investors hope to break even.

The recent Griffith University Oil Vulnerability Index map of Brisbane shows how individual areas may be affected by rising fuel prices.  Investors need an Oil Vulnerability Index list of superannuation funds, to show those that are including oil price risks in their investment decisions

Superannuation fund managers who do not closely assess the risks that Peak Oil will bring will have more than retirees' incomes at stake.  ASPO-Australia will be approaching regulatory authorities to increase the level of oversight of high-risk investment options like the Brisbane tunnel. 

Bruce Robinson

Convenor, Australian Association for the Study of Peak Oil & Gas

www.ASPO-Australia.org.au