The revelation in this week's Age that government-subsidised biofuel production has been pushing up food prices is proof that we cannot think about biofuels as a long-term substituent for petroleum.
It is now clearer than ever that - notwithstanding current near-record rainfall in Perth - southern Australia has no future as a food-producing region because its former winter rainfall systems have vanished for good. The subsidisation of biofuel agriculture will necessary then involve farming in the tropics or eastern New South Wales, both of which are likely to be vulnerable to drought. Worse still, biofuels can do nothing to reduce carbon dioxide levels and their production is extremely inefficient in terms of land use. This could mean more problems from land-use change degrading the soil and altering Australia's fragile hydrological cycle. Biofuel subsidisation is a lose/lose proposition except for vested interests in road transportation whose watertight control over Australia's political system undoubtedly defeats both market and ecological logic.
The alternative to biofuels that is most palatable to our politicians and the road transport lobby is converting coal to oil on a large scale. However, with Melbourne's (and likely the Latrobe's) catchment runoff certain to decline permanently to zero within a few years, the water required to make oil from coal will have to be imported at great cost and would take a long time to arrive. Even using Hunter coal, water would have to be transferred on a large scale because of the amount needed.
This leaves us with no option but to improve the fuel efficiency of our vehicles. As John Rossi shows, less cheap petrol has an almost exponential effect on fuel consumption. Given Australia's extreme vulnerability to global warming and the fragility of its ecosystems, it should required to have much lower environmental impact from transport than any other country on earth. This logically means Australia should have the least cheap petrol in the world instead of some of the cheapest. Given the size of water storages in Australia for a given degree of supply security is about twenty times that of Norway (which traditionally has the least cheap petrol in the OECD), Australian petrol should thus cost around fifty dollars per litre, or thirty times its current price. Even if we adjust somewhat for the effects on European nations of taxes above what could be considered ecologically necessary, Australian petrol should still probably be twenty times less cheap than it actually is, making complaints about current price rises look dubious.
We need to accept that petrol needs to be much less cheap for Australia to avoid ecological catastrophe from runaway global warming alone. Ending subsidised biofuel development in favour of farmland revegetation and placing the ordinary petrol excise on aviation fuel are steps that will eliminate many costs to both government and the environment. Resultant less cheap petrol should force Australians to purchase far less thirsty vehicles and hopefully to use only the most fuel-thrifty means of transport.