Friday19 May 2006

Check Against Delivery

Ladies and Gentlemen

Over the last two days you have heard from numerous speaker on this important issue. Today I would like to say a few words about Peak Oil. This I think was an under appreciated concept until recently. There seems to be a direct correlation between higher oil prices and the number of articles on peak oil. Indeed the concept of peak oil lies behind and has strong links with each of the topics that were on your programme over the past couple of days.

Escalating oil prices are affecting the cost structure of all sectors of the economy, including household budgets. Current oil prices are now at historically high nominal levels. No oil user, whether industrial, commercial or personal is immune from the impact of higher prices, neither do we have any influence over international factors that influence world oil prices. We are all price takers and this includes our competitors.

The past two years have brought new concerns about the sustainability of sucking in huge amounts of oil to drive economic growth. The rapid transition from easy oil at $15-$20 dollars a barrel to $70 dollars +, has quite changed our mindset. Quite rightly it has brought us face to face with the culture change of thinking sustainability, conservation and alternatives. Given our experience of very strong economic growth and the benefits this has brought, changing oil usage and adjusting to perhaps permanent escalating oil prices will indeed be a knotty problem to unravel.

If the peak oil theory is right this hypothesis should be built into your work from the first day you are back in office mode. This is important for the country because of the extent of our oil dependence. In 2002 Ireland ranked 3^rd highest among the EU 25 in terms of oil consumer per capita. We consumed 9 million tonnes of oil in 2004, an amount that has doubled since 1990. Taking into account our relative dependence on imported oil and the relative share of oil in total energy consumption, we are among the most sensitive to rising oil prices and therefore among the most vulnerable to a peak oil scenario.

Nevertheless by comparison with other countries, Ireland’s enterprise sector is not very energy-intensive, at least directly. Our emerging sectors, biopharma, computers, software and research sectors have below average levels of vulnerability in relation to direct consumption of oil. Our emphasis on modern industries and advanced sectors has meant that the amount of energy used by the sector in proportion to output has decreased in recent years. A focus on less energy-intensive sectors and higher value added activities in the future should help us in the future.

I know Paula Rice from Sustainable Energy Ireland has made an earlier presentation about energy performance and building regulations but I think it is important to mention that SEI has a number of programmes to drive conservation in the enterprise sector. Its Large Industry Energy Network and the recently launched Energy Management Action Programme deserve mention and active engagement by enterprise to reduce oil usage or use it in the most efficient possible way.

In the context of broader energy policy my colleague the Minister for Communications, Marine and Natural Resources, is preparing a national energy policy paper that will address our key options for energy management. This will set a policy agenda for energy over the medium to longer term. It will set out policy on a range of issues affecting energy, such as market issues, energy efficiency, alternative energy and research with sustainable energy as an important over riding theme. I would hope that this conference and the thoughts that have emerged will prompt most of you to contribute to the debate and respond to the consultation process that will result from this major policy document.

ENDS

LA187