Dáil Éireann Debate, Thursday - 17 June 2004
5 Mr. Eamon Ryan asked the Tánaiste and Minister for Enterprise, Trade and Employment if her Department has carried out a review of the implications for industrial policy here of the doubling of oil prices in the past two years and the likelihood of further dramatic increases in energy prices, as a peak in worldwide global oil production is being approached. [18236/04]
View answerThe price of oil has traded at significantly high levels for some time reflecting a number of interacting factors including unanticipated strong demand, tight capacities, geopolitical uncertainties and some market speculation. Disruption to supply has not been a factor, though anxiety about possible disruption has fuelled the market. However, since OPEC's announcement on increased production at the beginning of June, crude prices have fallen back slightly from their recent high levels, although market volatility and concerns about supply and demand issues could mean that relatively high prices will remain a feature of the international oil market for some time. It remains to be seen if OPEC's recent announcement of expanded production will have a calming effect on the market in the longer term.
The situation will be taken into account in the Economic Review and Outlook which is prepared by the Department of Finance and due to be published later this year. If energy costs continue to rise I would be concerned about their impact on growth, employment and inflation but it is difficult to assess the longer-term outlook until OPEC's recent market calming initiatives have worked into the market.
The International Energy Agency has warned that a sustained increase in oil prices will have an adverse effect on GDP in eurozone economies. We have no control over international factors that influence world oil prices, but their impact re-emphasises the critical importance of strengthening competitiveness and energy efficiency. Our ability to adapt and remain competitive is a key issue for Ireland in the face of sudden or prolonged adverse global economic conditions over which we have no control.
The reply mirrors the response I got from the Ministers for Transport and Communications, Marine and Natural Resources on what they see as our future prospects. It appears all three say there is no long-term analysis. The Minister for Transport said he was not even predicting to the end of this year and, therefore, why would he predict ten years down the line. Most international indicators suggest the peak in oil production is close, following which there will be significant increases in oil prices that will make the recent increase look like minor blips.
We are uniquely exposed given that 60% of our prime energy consumption is in the form of imported oil — the European average is approximately 45%. Has the Tánaiste's Department any intention of planning for that? It could be on the basis of the investments we make in our science foundation, finally deciding to invest in sustainable technologies where there will be future markets or changing the policy on carbon taxes. If the revenue was returned in the form of lower employers' PRSI one could try, in advance of the oil shock, to turn the Irish economy towards labour intensive rather than energy intensive industries. That would be a clever preparation for such an event given our exposure.
Why does the Government have no long-term plan in this area? The only response I ever get to that question is that the market is up but it is hoped it will be down in a few months' time. Why is it the Government does not look five or ten years down the line? Would the Tánaiste consider it a clever idea to adjust some of the other policies within her Department to take into account that a peak in oil production is due and that the Irish economy is uniquely exposed?
It is an inaccuracy to say Ireland is uniquely exposed. In 2002 the economy grew by 6.9% whereas energy consumption grew by0.1%. We have been extraordinarily efficient users of energy. By way of comparison, Finland uses twice as much energy to produce one unit of GDP as does Ireland. While we are energy efficient there is no room for complacency. Energy has a huge role to play in industrial success and competitiveness. It is important to bring on stream the gas find off the coast of Mayo to help our energy needs. The party of which the Deputy is a member was not supportive of the Government's efforts in that regard.
Is the Tánaiste aware that gas supply might meet our gas needs for a maximum of one and a half to two years? Is she concerned that a 9 km. pipeline there is exposed and is unique? No other country in the world is laying a nine kilometre onshore pipeline from an offshore facility.
It would be terrible if it lasted longer.
The Tánaiste does not need any help from the Minister of State, Deputy Fahey.
Please allow Deputy Ryan who has submitted the question to continue because time is running out.
I would be delighted if that happened. Ireland is uniquely dependent. We import 87% of our energy needs in the form of fossil fuels. No other country in the European Union has as high an input.
I have to draw this question to a conclusion. Perhaps the Deputy has a simple question to put to the Tánaiste.
Is the Tánaiste doing any long-term planning for future price increases?
Many of the countries to which the Deputy has referred depend on nuclear power for a large amount of their energy.
That is the same answer.
These are the facts.
Every Minister gives the same answer.
During the past 12 years our energy intensity has fallen by 9% per annum, which is unique in the European Union. The price of oil will be determined in the international marketplace and not in Ireland. Hopefully, we can find our own source which would be terrific. If it can supply our needs for longer than two years that would be even better.
