Michael Ahern (Cork East, Fianna Fail)
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I move: "That the Bill be now read a Second Time."

Molaim an Bille um an nGníomhaireacht Chúltaca Ola Náisiúnta don Teach. For the convenience of the House, a detailed explanatory memorandum has been published, which provides a synopsis of the Bill's provisions. I do not propose to focus on the detailed provisions of the Bill at this stage. Instead, I will focus on the backdrop against which this Bill is being introduced, as well as the general policies outlined therein.

As a commodity traded on global markets, the market determines the price of crude oil. Despite recent geopolitical uncertainties in oil producer regions, supply continues to exceed demand and has not been disrupted. Growing global energy demand is likely to result in high prices remaining with us for the foreseeable future.

As the second largest energy market in the world, the EU has a growing dependency on energy imports. The sharp rise in oil prices also impacts on jobs and economic growth. Europe has also been to the forefront in embracing the issue of climate change and has set ambitious targets on emissions reductions, promoting new and renewable energy sources and developing low carbon technologies.

The issue of security of energy supply is one of the priority areas identified on the European Commission Green Paper on energy published earlier this year. The Green Paper sets out the framework for a common energy strategy encompassing security, sustainability and competitiveness. The Government welcomes the new focus at EU level on energy issues, while welcoming the recognition that certain decisions including energy mix remain the prerogative of member states.

Irish energy policy is set in the global and EU context. While we share many of the same challenges, Ireland has a number of specific characteristics. We are geographically isolated from the main EU market and small in scale with a customer base of less than 2 million. Geography also presents challenges in terms of security of oil supply. As an island with no indigenous oil production or interconnecting pipeline infrastructure, we rely on sea-borne imports mainly from refineries on the UK west coast. We have little in the way of proven indigenous fossil fuel resources and unlike some other European countries there are no significant hydrocarbon resources.

Ireland has grown increasingly dependent on oil to fuel its economic growth. Continued economic growth is expected to give rise to further increases in the volume of our energy requirements, even as the relative importance of oil to output continues to decline. Oil continues to be the dominant energy source, with that dominance increasing from a share of 46% in 1990 to 58% in 2005. Car usage has grown substantially in Ireland in recent decades, powered by a rapid growth in affluence. The amount of oil used for transportation in Ireland has more than tripled between 1972 and today, leaving Ireland consuming at least 50% more per capita than the EU average.

Alongside these constraints significant opportunities also exist. The creation of an all-island energy market is an opportunity to increase the scale of the energy market and enhance competition, in the interests of consumers North and South. This is the first step towards the creation of a regional energy market within the EU.

In line with the global shift to renewable energy technologies, in terms of natural resources and research capabilities Ireland is well placed to develop renewable energy. This will have important environmental, economic and social benefits. Action on energy efficiency will have direct benefits for the economy, the environment and individual consumers.

The Government's forthcoming energy policy Green Paper will set out the framework for national energy policy for the medium to long term. The policy proposals will be informed by projections on growth in energy demand and related economic and demographic trends as well as the key imperative to ensure sustainability and security of energy supplies and fuel diversity. Successful delivery of national energy policy objectives requires a sustained and cohesive effort across Government, in conjunction with all stakeholders. A key plank of policy to address the challenges, is to move towards greater deployment of renewable energy and a more energy efficient economy.

An ambitious agenda across the three principal renewable energy sectors, namely, renewable electricity, transport and heat, provides supports to develop the various renewable technologies. As the Irish economy continues to grow, giving rise to increased energy demand, energy security remains one of the key concerns facing Irish business. Our ability to continue to attract high levels of foreign direct investment and to provide a supportive environment for Irish industry generally will depend on our capacity to deliver a secure and uninterrupted energy supply. This Bill will allow the Government to enhance arrangements already in place in regard to security of oil supplies.

Oil is a global market and the management of major oil supply disruptions requires an international response. At international level, EU member states and member countries of the International Energy Agency, IEA, have had significant obligations to maintain emergency oil stocks. As a member of the IEA, Ireland is required to maintain emergency oil stocks equivalent to at least 90 days of net imports in the previous year. The EU imposes a similar requirement based on consumption. For some years the National Oil Reserves Agency, NORA, has been delegated responsibility for maintenance of emergency stocks.

Ireland also has an associated obligation to maintain contingency plans, including arrangements for the release of strategic oil reserves, so as to minimise the adverse effects of an oil supply disruption within the framework of a coordinated international response.

Ireland has undertaken to operate demand restraint measures in certain circumstances by entering into the agreement on an international energy programme under which the IEA was set up. The agreement obliges participating countries to cut oil consumption by 7% if there is a reduction in supply of at least 7% and by 10% if the supply loss is of the magnitude of 12% or more. Compliance with the agreement guarantees participants a fair share of available oil stocks.

The Minister for Communications, Marine and Natural Resources has wide powers under the Fuels (Control of Supplies) Acts 1971 and 1982 in the event of an emergency to restrict the sale and distribution of petroleum products in order to conserve stocks. The Department actively engages with the National Oil Reserves Agency, and the oil industry on an ongoing basis on contingency planning issues. In the event of oil supply disruption, there would be immediate liaison with industry at the highest level to evaluate the local situation and arrange for a coordinated Irish response within the international framework.

Ireland's response to an oil supply emergency declared by the IEA, would be either the drawdown of NORA stocks or demand restraint measures or a combination of stockdraw and demand restraint measures. Stockdraw on its own can be authorised by the Minister. Other measures, such as control over the oil companies' stocks or the introduction of demand restraint measures, would require formal Government approval under the Fuels Acts 1971 and 1982.

The Fuels Acts provide for significant State intervention in the market in the event of a major oil supply crisis. Under this legislation, the Government may make an order authorising the Minister for Communications, Marine and Natural Resources to intervene whenever the Government is of the opinion that "the exigencies of the common good necessitate the regulation or control by the Minister on behalf of the State of the acquisition, supply, distribution or marketing of fuels" held by the private sector oil companies.

Once the Government order is made the Minister is empowered to make an order or orders in respect of a certain fuel or fuels. This means that in effect, the stocks held by the oil companies become part of the totality of emergency stocks under the Minister's control and direction. Detailed provisions in the orders give the Minister, for example, powers to regulate the sale of individual products to prevent hoarding or unnecessary topping up of fuel tanks by setting out minimum and probably maximum sales of particular products, especially petrol.

At this point it is useful to outline the background to the setting up of the National Oil Reserves Agency. Prior to 1995 the oil companies in Ireland were obliged to meet a substantial portion of Ireland's oil stockholding obligations. This system proved unsatisfactory however and, under the European Communities (Minimum Stocks of Petroleum Oil) Regulations 1995, responsibility for the maintenance of strategic stockholding was vested in the National Oil Reserves Agency.

For pragmatic reasons the agency was established as a subsidiary of the INPC. Since 1995, NORA has acted as the agent of the Minister for Communications, Marine and Natural Resources with the function of arranging for the holding of strategic oil stocks at a level determined annually by the Minister.

NORA has proved successful in dealing with its remit in a transparent and cost-effective basis. Its establishment in 1995 coincided with the emergence of the Celtic tiger and the phenomenal increase in the country's oil consumption since 1990. This increase has impacted on the volumes of strategic stock required to meet the 90 days obligation of the IEA, and the EU.

At 1 April 2006 Ireland's oil stock reserves were estimated at 108 days, a figure well in excess of the 90 days obligation. In the event of an international oil supply disruption, this level of emergency reserves is considered to be sufficient to ensure that Ireland could participate effectively in any internationally co-ordinated response. Given the disposal of the Bantry oil terminal and the Whitegate refinery in July 2001, NORA is the sole remaining subsidiary of the INPC. The INPC has had no operational capacity since July 2001. Its current activities are limited to finalising residual issues arising from the 2001 transaction and meeting requirements under company law arising from its role as parent company to NORA. It is against this background that the Government agreed that NORA should be established as an independent body under the aegis of the Minister for Communications, Marine and Natural Resources and should continue to have responsibility for the maintenance of emergency oil reserves.

In accordance with company law requirements, the Bill provides that the INPC shareholding in NORA will be transferred to the Minister for Communications, Marine and Natural Resources. The agency will continue to operate as a private limited company under the Companies Acts. The primary function of the agency will continue to be the maintenance of emergency oil stocks in line with the State's oil stockholding obligations to the EU and the lEA. Ireland's emergency oil stocks comprise wholly owned stocks held in Ireland by NORA and industry or major oil consumers; wholly owned stocks held by NORA in other EU member states under cover of bilateral agreements; and stock tickets held by NORA in other EU member states under cover of bilateral agreements.

The facility to hold stocks under cover of bilateral agreements is provided for in EU legislation. A member state may hold stocks in the territory of another member state, subject to a bilateral oil stockholding agreement being in place between the respective states. These agreements are government-to-government agreements. Under such agreements, the host country guarantees that it would not oppose the transfer of the oil in question to Ireland in the event of an emergency. The practice of holding stocks abroad is therefore in line with international practice. In the event of a major interruption in oil supplies, there would be no question of Ireland or any other oil-consuming country attempting to deal on its own with an interruption in oil supplies. If such a crisis were to occur, the response, including the release of emergency stocks and the identification of alternative sources of supplies, would take place primarily within the framework of the formal emergency regime developed and maintained by the lEA. To provide for interruptions of oil supplies, the Bill includes provisions for the release of oil stocks held by the agency at the direction of the Minister.

Since its establishment in 1995, NORA has never received Exchequer funding. It has been funded by a combination of a levy on disposals of petroleum products and by borrowings from commercial institutions. Since 1995, oil companies and oil exporters have been liable for the levy when NORA was delegated with responsibility for maintaining strategic oil stocks. The levy, which funds the holding and storage of oil and other operating expenses of the agency, is charged at the rate of 0.476 cent per litre on sales of petroleum products. It is applied to oil companies that use petrol, kerosene, gasoil and fuel oil for their own consumption and-or sales of these products within the State. The levy remains unchanged since 1995. The legislative proposals envisage that NORA's operating costs and expenses will continue to be funded by the levy. NORA will continue to administer and collect the levy and will continue to be funded by borrowings from financial institutions to incrementally build up reserve stocks.

The legislative proposals provide that oil consumer companies as defined in the Bill that hold reserves greater than 55-day reserves, based on the previous year's consumption, may claim an exemption from payment of the levy. This exemption is available to oil consumer companies under the European Communities (Minimum Stocks of Petroleum Oil) Regulations 1995.

Ireland's obligations to the EU and lEA require the provision of monthly returns relating to oil imports, exports and consumption, together with details of oil stocks held by NORA. These returns allow the EU and the lEA to monitor member states' compliance with stockholding obligations. The Bill includes provisions requiring the making of specific written returns by oil companies and oil consumers, and by NORA, within specific timeframes. The proposals on data provision do not include obligations on companies over and above obligations currently imposed. Provisions are proposed to provide for inspection and monitoring of oil companies and major oil consumers and provision is made for summary offences in the event of conviction for non-compliance.

NORA will continue to operate as a private limited company governed by the Companies Acts and independent of the INPC. In line with corporate governance obligations applicable to State bodies, and in the interest of transparency, NORA will be required to provide annual reports and accounts, together with such information as may be required by the Minister. To enhance the accountability of NORA to both the Minister and the Oireachtas, provision has been made for it to report to relevant Oireachtas committees. Overall, the Bill allows NORA to build on its existing strengths and provides it with the freedom to operate as a stand-alone agency delegated with responsibility for the holding and maintenance of national strategic oil stocks while at the same time ensuring appropriate public policy and corporate governance safeguards.

The Bill is one of a number of measures which will allow the Government to continue to drive forward its energy agenda. I am confident that its focus on the enhancement of oil security will have considerable benefits for Irish economic development in the decades ahead. I hope I have given the Deputies a reasonable summary of the policies underpinning the Bill. The Minister will be glad to provide any further information they require to facilitate its early enactment. I therefore look forward to hearing the views of Deputies and progressing the Bill into law at the earliest opportunity.

Bernard Durkan (Kildare North, Fine Gael)
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I am glad to have an opportunity to contribute to the debate on this Bill. We have been requesting it for some considerable time on foot of general concerns over fuel and energy over the past 12 months. It has had a longer gestation than we expected, but I am glad it has finally emerged. We welcome it without any shadow of doubt because it gives us an opportunity to talk about the issue with which it is supposed to deal, that is, the availability of vital fuel supplies, especially in a changing world. Political and environmental changes often have an impact on fuel supplies and, consequently, on energy supply. The Bill highlights our need to comply with international agreements such as the Kyoto Protocol, examine the issue of carbon trading and determine its likely cost. We must evaluate the benefit of taking fundamental decisions on the development of our future energy policy.

The Minister of State referred to a medium-term energy policy, but if there had been a serious problem in the past six months, there would have been no sense in such a policy. The response would have had to have been immediate. Three plans are always needed and they need to dovetail into one another. One needs a short-term plan at all times for emergencies and it is not sufficient to say a plan will be created when the filling stations run out of fuel. That is too late because one must provide for alternatives in the short term. One must also have a medium-term plan — the Minister of State is correct in this regard — and a long-term plan. One grows into the other and, as a result of having them, there will be greater security of supply. Security of supply is an issue causing much concern in this country at present and the more our economy develops, the more important it will become.

The Bill merely updates and refurbishes existing legislation and puts some emphasis on the needs of today's world. I am a little concerned about access to stocks of fuel that might be stored outside the jurisdiction. The Minister of State referred to international agreements and the requirement to have a reserve that would last for 90 days. In emergencies, however, it may not always be possible for an island nation to obtain access to the stocks on which we rely, notwithstanding international agreements. When replying to the debate, I hope the Minister of State will reassure the House that whatever stocks are available, be they a three-month, 90-day or 108-day supply safeguard, it will be possible to access them at all times and that no country will review their international agreements and say that because they have a problem their supply safeguard will be reviewed and changed to 80 days, 70 days or whatever.

The next area we must examine is energy because we rightly talk about dependency on oil and various forms of energy in the future. It is timely that the European Commission and the Irish Government has done so but I would have thought that would have happened four or five years ago and that more plans would have been put in place. At least we are doing something about it now.

What happens from now on is important for a number of reasons. We recognise that our economy will continue to grow at its current rate. In those circumstances, it is likely that the demand for oil and various forms of energy will grow. What do we do about that? The obvious answer is to opt for renewables in so far as we can. It is not possible to do it in every case but they can dramatically reduce the impact in terms of the importation of fuels into this economy, with its associated costs. No fuel, regardless of where it comes from, is free. Nothing is free. We will have to pay for it but the degree to which we depend on imports can be reduced considerably by virtue of developing the alternatives, which come from a number of sources. Incidentally, all fuel is not necessarily road fuel. We can do little about road haulage costs unless we develop a new rail system.

Tommy Broughan (Dublin North East, Labour)
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Yes.

Bernard Durkan (Kildare North, Fine Gael)
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Otherwise, our entire supply and transport system will become stuck. Ireland is not the most densely populated in Europe and, as a result, long distances must be covered in terms of deliveries. The very large delivery trucks that deliver to the multiples are evidence of that. They are on the road day and night and if they stop for 24 hours, the consumer will immediately feel the pain through shortages. Not only will there be shortages of fuel, there will be shortages of everything. Incidentally, when the port tunnel opens, we will be unable to use those large trucks because they will not fit into it. We are heavily dependent on transport, especially the road transport fleet. There is very little we can do in that respect but we can do something in the development of technology.

I welcomed the Government's recent announcement of its intention to put greater emphasis on developing the sciences, although it should have been done a long time ago and especially on the development of alternative fuels. Little or nothing has been done in that area. All the people involved in the development of alternative fuels in the past ten years have done so virtually on their own, with a certain amount of EU assistance in some cases. A number of the third level institutions took it upon themselves to take the job in hand. From what I am hearing from Government, it appears a serious effort will be made to provide funding for research and development and let science take over areas it should have taken over a long time ago to improve our knowledge in the creation of the alternatives that will be necessary in future. If we do not do that, we will have a serious problem because others will be doing it.

On the question of the other alternatives, we are an island nation. Imports cannot come in underground; they must come in by air or sea. If we intend to keep up supplies of all commodities, we must rely on the transport sector, which means using fuel. Regarding the domestic motor sector, however, we can reduce that reliance by undertaking some simple tasks. We can encourage the use of vehicles that do not use as much fuel as other vehicles on our roads. I do not want to be critical of any particular type of vehicle but the emphasis should now be on manufacturing vehicles that will travel twice the distance on the same amount of fuel. The beneficial effects of that are manifold. We will not have to import as much fuel in terms of oil or as many alternative fuels.

There is a notion that all alternative fuels are ozone friendly. That is not the case. Every fuel that burns has a residue that is harmful to the atmosphere to a greater or lesser extent. Generally speaking, renewable energies are about 45% more environmentally friendly than the fossil fuels to which we have become accustomed. There is a notion that once we change to alternative fuels, there will be no more pollution. That can never be the case. That applies to all fuels.

The development of a more environmentally friendly motor engine is an area all governments throughout Europe must pursue vigorously. The Japanese have managed to do that, and I have spoken about this previously in the House. As well as this, a particular manufacturer — I will not mention the name — has spent time developing alternative engines that are not as hungry for fuel, so to speak, as previously. It may not have achieved the ultimate yet but it is working on it. Japan has developed an electric engine for an ordinary domestic car that accelerates to the same extent and has the same qualities and properties as the conventional motor car. That is where the future lies in terms of energy conservation and environmental protection. Those two aspects must be kept together in the future because if we do not do that, we will end up buying carbon credits, which do nothing for the environment. All that means is that somebody else has them to offer. That is an area that can be developed.

On the miles per gallon question, unfortunately, we have a problem with the heavy road haulage equipment which gives very few miles per gallon and has a very high consumption of fuel. Road haulage is a vital part of our economy, however, and we cannot get away from it, so we must examine what we can do in that regard. When I was a young fellow, the Acting Chairman will be happy to hear that I was curious. I am sure he was curious as well, as was everybody else in the House.

Michael Ahern (Cork East, Fianna Fail)
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Like all Mayo men.

Bernard Durkan (Kildare North, Fine Gael)
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Do the Members present remember the three-speed gear boxes that were in cars at that time? They were in trucks as well but especially in cars. I remember asking why there were not four or five speed gears and an engineer told me that such a gear box could not be made. It could be done, however, and it was done. There is no problem with a six, seven, 16, 17 or 20-speed gear box, depending on the differentials of the ratios introduced. The road transport fleet has such gear boxes but, in the ordinary domestic motor car, there is no problem with six or seven gears. The effect of such a speed box on fuel consumption is major because one can shift gears in an area and get 23, 24 or 25 miles per gallon for an average car. A Volkswagen Beetle used to give approximately 28 miles per gallon. I still have one myself and know the mileage. Increasing the gear ratios and changing the gear box around can double the mileage. One can get twice as much mileage and perhaps even more for the same amount of fuel.

There is a colossal saving to be made in the development of technology. If we address the issue and devote time to it, it can be done to a major extent. My party is not in favour of carbon tax because that is just like taking a tablet. One takes the tablet and then does the same as before. We will pay the carbon tax and continue on as normal. We must discourage the use of high consumption vehicles by introducing positive incentives and moving towards development of the technology to improve performance. At the same time there should be a financial bonus or incentive by simply going in the direction of the vehicles that are geared for that purpose.

On wood burning for domestic heating, which the Government is promoting, and geothermal heating there have certainly been improvements. These solutions are quite expensive, however. The lifespan will eventually determine how valuable they are. Based on my amateur investigations, domestic heating from home-produced oil is an area in which much more could be done in terms of biofuels of all descriptions such as biodiesel, bioethanol etc. These are very simple to introduce. As the Minister of State knows, the fact that biofuel may be home produced does not mean there is not some pollution. There is, and there is also pollution from wood burning, although people tend to regard this as carbon neutral. Carbon neutral, of course, can mean different things to different people. The blunt and short answer is that whatever carbons are trapped in a fuel are released when the fuel is burned. There are some who say they are released over a longer timespan, but in fact they are released quickly.

There is considerable merit in examining home heating systems. It is important to recall that in the 1960s and 1970s houses were built in this country without chimneys. Everyone was opting for oil at that time and houses were much cheaper to build.

Tommy Broughan (Dublin North East, Labour)
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What about hot air? I almost called the Deputy "Minister". That will be next year.

Bernard Durkan (Kildare North, Fine Gael)
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That is right. Well, I am coming to hot air. The hot air ones were not so bad at all, but the ones that were serious——

Tommy Broughan (Dublin North East, Labour)
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They ended up in the courts.

Bernard Durkan (Kildare North, Fine Gael)
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They did, but as regards the houses without chimneys, it was suddenly discovered that when oil supplies became scarce there was a problem. People then had to build chimneys. Houses are now being built without chimneys as well, with an eye to the future. That is a very dangerous thing to do. Serious problems could arise in the event of there being a difficulty with supply for any reason.

Tommy Broughan (Dublin North East, Labour)
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Hear, hear.

Bernard Durkan (Kildare North, Fine Gael)
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We could find ourselves very glad to get a chunk of wood from a tree to throw into the back of a burner or a stove to keep the house warm. In the promotion of the various schemes, which are fine in themselves, we are all agreed it would be very wise to keep the chimney for a variety of reasons, including emergencies, in the event of a cutback in the supplies of fuel. It might always be easier to get a supply of a locally based fuel than to obtain it from a source 150 to 200 miles away, depending on what part of the country one lives in. I have already mentioned the need for adequate and sufficient oil reserves. I hope the Minister of State will take that on board to ensure, for instance, that we have sufficient oil reserves, as required. At the same time we should develop alternatives and use them wherever they exist. If we do not do that we will face serious difficulties.

I have referred to the need to develop clean energies for the future and this is important. This goes back to where I started, concerning the need for short, medium and long-term plans. One must start somewhere, so there must be a short-term plan. This should provide that within a specified period targets are set for achieving certain milestones in the first three to five years. Otherwise, if something happens in the meantime we will be in trouble. If that is done and scientific research and development takes over, we can have an important role to play in our own and other economies in future.

Energy, fuel or power needs in this country should not be discussed without reference to our European colleagues. I say this in the context of the overall need for energy. Depending on where one lives in Europe, one will rely on diverse forms of energy. It is correct that we should develop alternatives. Many other European countries, however, do not tell us the alternatives they have. For example, some countries enjoy a great deal of hydropower, by virtue of the fact they have elevated areas, waterfalls and volumes of water in rivers which give them the advantage, and they can afford to provide a great deal of power in an environmentally friendly way in the production of electricity. A number of European countries have set a good example in terms of developing biofuels. They were ahead of us and I cannot understand this because we should have identified these problems a long time ago. We do not have as many varied alternatives, so we must develop them. They have developed targets and they have short, medium and long-term plans along with a blend of choices — hydro, fossil fuels, wind and nuclear.

I shall take the last one first. Many newspaper articles in recent times theorise and highlight the merits and developments of nuclear energy. They quite blatantly assert that modern nuclear energy is clean, safe, reliable and environmentally friendly in every sense of the word. I am not so sure about that. I do not believe our European experiences in recent years do anything to reassure us and I should be very wary of taking that particular road at the current time, for whatever reasons. It might well be economically viable and a solid means of providing power. The safety issue arises all the time. One outcome must be balanced against the other. On the basis of performance to date, I do not accept it is an option at this stage — perhaps in 20 or 25 years time it will be but I do not know. Technology advances all the time and there will be developments. One has just to recall what happened in the past and the technology is just the same.

At the accession of some of the new EU member states, the raft of ten, there were objections from some European countries to the fact that some of the former communist states had old-fashioned technology in terms of nuclear power. In fact they had the same technology as other states. It was no different and everything depended on how it was being maintained. We are not ready for nuclear energy and I do not believe we should go there. It is no reflection on anything we choose to do, but if we cannot build a swimming pool that keeps the water in, and a tunnel that keeps the water out, I should be very dubious about building a nuclear power station and locating a reactor here. There are so many aspects to the whole area, the safety factor in particular, that I am a long way from being reassured. I ask the Minister of State to keep that in mind. I know the Taoiseach has already said that, but that does not prevent speculation in some journals. The intent is quite clear. There are people who have an interest in promoting the nuclear idea. My reason for saying that is simply that this will affect the whole energy requirement throughout Europe. Many of our European colleagues already have a considerable reliance on nuclear energy, including those that are environmentally friendly. Since the technology is already in place, I will not comment on it. However, our situation is somewhat different. When we produce a balanced, reliable energy policy, we must have regard to the necessity to reduce fossil fuels, increase the use of renewable sources of energy and ensure we have a secure supply.

Wind energy is the cleanest energy possible, although some people object to turbines on hilltops. Turbines do not work so well in a valley, but they do on the slope of a hill. Some people are concerned about them, but I feel it is a clean means of producing energy. However, there must be a back-up if the national grid is to be maintained. That back-up is only as good as it is reliable. Many of our European colleagues are keen on nuclear energy, because they can marry the two and solve many problems. We are supposed to be talking about oil, but I have spent much time on wind energy because we will have to reduce our dependence on oil, whether we like it or not, notwithstanding the need to provide a secure supply for a limited period. We need to show intent. We need to give an indication on what we will do in the future. We need to tell our European colleagues about our intentions towards this blend of fuels.

In the next ten years, there will be a major development in electricity-powered cars. The way in which electricity is generated is an issue that follows from that.

Tommy Broughan (Dublin North East, Labour)
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And the railways.

Bernard Durkan (Kildare North, Fine Gael)
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The use of road transport for domestic traffic is not environmentally friendly, so the use of railways for rapid transport will be the thing of the future. There will always be cars as we cannot walk everywhere and there are parts of the country that are not served by rail. There are many parts of my constituency that are not served by rail, even though many of the towns are so served. In future, facilities in car parks will be on-line to ensure parked vehicles are charged. That has huge potential and the whole way of life we have come to know will be changed. We will make many of these changes of our own volition, some of the changes will be forced upon us and we may have to respond to other changes as a matter of extreme urgency.

I travelled into this city late this morning because I was at the opening of the new Intel facility in Leixlip. The tailback starts at the Newcastle Road junction beyond Lucan and continues all the way to the M50 interchange at Palmerstown. The person responsible for this should be asked to focus his or her attention on what is going on here. I counted trucks and cars for two miles moving a few feet at a time. They cannot get off the N4 to get onto the M50 and they are losing fuel at a great rate. At the same time, the ozone layer is going up in smoke.

Tommy Broughan (Dublin North East, Labour)
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It is the biggest car park inwestern Europe.

Bernard Durkan (Kildare North, Fine Gael)
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The only way of paying for it is through importing oil. I cannot understand why someone does not point out how unusual this is.

Tommy Broughan (Dublin North East, Labour)
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Deputy Brennan had a solution, but he was shafted.

Bernard Durkan (Kildare North, Fine Gael)
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That is right. It is a dangerous place over there, by the look of things. It defies logic that trucks, cars and buses should all crawl along at a snail's pace in order to get to the toll plaza to pay for the privilege of going up the other road. Whoever thought of that in the first place must have been a financial genius. There is no bank or financial institution that could give a return on investment from a captive audience in the same way as that toll plaza. There are two options. One could stay on the other side of the bridge, or something could be done about it. I had hoped somebody might have shouted "Stop" at this stage.

Jerry Cowley (Mayo, Independent)
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The Deputy's time has concluded.

Bernard Durkan (Kildare North, Fine Gael)
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I appeal to the Minister to try to ensure something is done about the waste of oil imported into the country at huge cost to the economy and to road users who pay all kinds of taxes for the privilege of using the road. They still cannot get on to the M50 just to park.

My time went very quickly. Is the Acting Chairman sure the clock is right?

Jerry Cowley (Mayo, Independent)
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The Deputy is one minute overtime.

Bernard Durkan (Kildare North, Fine Gael)
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I am very sorry about that. I ask the Minister to keep in mind the need for conservation, the need to recognise environmental requirements, the need to ensure we have supplies that are accessible and that nobody else can intervene, especially given that we may have oil stocks stored outside this jurisdiction. In the near future, the people will hopefully rise up, set things right and put someone on that side of the House who will do something about the issues to which I have referred in my short statement.

Tommy Broughan (Dublin North East, Labour)
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On behalf of the Labour Party, I welcome the long-delayed appearance of the National Oil Reserves Agency Bill 2006. I am glad the senior Minister for the Department has now turned up for this debate. There were gaps in the Minister of State's presentation. My understanding was that the target for national reserves is 120 days by January 2007. That is what the National Oil Reserves Agency informed the Joint Committee on Communications, Marine and Natural Resources two or three years ago. According to the Minister of State, Deputy Michael Ahern, we only have 108 days of reserves. Effectively, a gap of nearly two weeks has appeared on the Minister's watch. I am aware the EU base target is 90 days, but we always felt that 120 days was the target towards which the Government was aiming. We find that the Government has failed in its target for oil reserves.

There is also concern about the make-up of the reserves.

Noel Dempsey (Meath, Fianna Fail)
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The Deputy is misinformed.

Tommy Broughan (Dublin North East, Labour)
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When the representatives of the National Oil Reserves Agency, NORA, attended a meeting of the Joint Committee on Communications Marine and National Resources, they outlined the status of the reserves. The oil companies, the major consumers of oil, held approximately 33% of the reserves at that time and NORA held 33% of them, consisting of wholly owned stocks and 7% in rented stock tickets. The area about which we, as public representatives, were concerned and remain concerned is the percentage of NORA's stocks held abroad. My colleague, Deputy Durkan, raised the issue of the security of those stocks in the hugely volatile situation which could pertain in the future whereby 34% of those stocks are either wholly held abroad or by way of tickets for rented stocks. The construction of NORA's current holdings was dealt with by the Minister of State, Deputy Michael Ahern. I ask the Minister, Deputy Dempsey, as a priority, to deal with this issue when replying to the debate.

We have been waiting for the introduction of this Bill for a long time. A number of energy Bills, including this one, are long overdue and they have been repeatedly put on and taken off the Dáil legislative programme. It has almost been like Lanigan's Ball. An electricity Bill was listed on the programme and then taken off, another electricity Bill was listed and we are told an energy Bill which was on the old list will be tacked on to that Bill as an amendment.

The Minister, Deputy Dempsey, recently trumpeted his energy awareness credentials and proactiveness in this area, although in his press statements and presentations he was mostly recycling the announcements made by the Minister for Finance, Deputy Cowen, in the budget six months ago. The Minister, Deputy Dempsey, is now only belatedly getting around to publishing a Green Paper on the future of our energy needs in the dog days of this floundering and dying Administration.

Noel Dempsey (Meath, Fianna Fail)
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Who wrote that script for the Deputy?

Tommy Broughan (Dublin North East, Labour)
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In the past five years most of our EU colleagues have establish landmark energy policies. As I said to the Minister when we debated the previous energy Bill, two reviews were produced in the past three years by Prime Minister Blair, and we are still waiting for this Administration to act in this area. The energy policy here contrasts badly with that of most of our neighbouring responsible governments.

Noel Dempsey (Meath, Fianna Fail)
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Does that include introducing nuclear energy?

Tommy Broughan (Dublin North East, Labour)
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As we approach the summer recess, the Government has only got around to bringing forward the Energy (Miscellaneous Provisions) Bill. It appears that neither that Bill nor this Bill will be completed by the time the Dáil goes into recess, which is a shocking scenario. In both of these Bills the Minister will be given emergency powers, which we in the Opposition consider are essential.

Under this Bill, NORA is finally being established as a stand-alone, non-commercial State body and is being given the ensuing commercial flexibility to act efficiently and effectively. I commend the Minister on doing that in this legislation. Since oil is the dominant fuel accounting for 60% in our energy mix it is critical for powering many aspects of our working and everyday life, with the transport sector depending almost 100% on oil for its fuel supply. With no indigenous sources of oil, we are completely dependent on imported sources to keep our economy moving, the lights on, and homes and businesses heated throughout the country. Global supplies of oil are also rapidly being depleted. We had a debate on whether we will approach the peak in oil production in two years' time or whether that may happen during the term of office of the next Government or four Governments hence. This Bill afforded the Minister a perfect opportunity to set out his vision for the country in regard to oil supplies.

Bernard Durkan (Kildare North, Fine Gael)
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Hear, hear.

Tommy Broughan (Dublin North East, Labour)
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We need only contrast the Government's position with that of the Swedish Government. Sweden has put in place an ambitious target for that state to be free of oil imports by 2020. Although many Swedish commentators have questioned the achievability of this target, it is admirable to have such a bold and ambitious vision for that state's energy future and for it to have recognised the dangerous long-term vulnerability of state's such as our own, which are so addicted to oil as an energy source.

Bernard Durkan (Kildare North, Fine Gael)
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Hear, hear.

Tommy Broughan (Dublin North East, Labour)
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I was amazed recently when an executive in a well known energy company referred to the competitive nature of the liquid fuels market — he was contrasting the liquid fuels market with the electricity market. Consumers would be entitled to ask the question, to what competitive market was that gentleman referring. When I travelled from Dublin to the Donegal South-West constituency and to a constituency in Limerick on business for the Labour Party recently, I was astonished to be presented with virtually the exact same price for petrol and diesel to the exact same decimal point from one end of the country to the other. Where is the competition in that market? There is no competition in the retail fuels market. There appears to be simply a cartel operating among a few large operators in each area of the market. We know for certain that cartels operate within the heating oil sector and recently there was a series of court convictions in that regard.

We have heard news today that Topaz will take over the Statoil network of petrol stations, having taken over the Shell service stations last year. That means that Topaz will supply more than 400 services stations throughout this country and it will have a significant interest in oil importation and storage in Dublin, Cork and Galway. The latest news today means that Topaz will control 40% of the retail market and 45% of the commercial market. Does that not represent dominant market power? Do the Minister, Deputy Dempsey, and the Minister for Enterprise, Trade and Employment not have grave responsibilities in this regard? This Bill could have presented an opportunity to set parameters for real competition in the domestic oil market. I am aware that the Bill primarily deals with the critical issue of oil reserves, but it could have been used as a vehicle to promote a truly competitive market. The Minister spoke in the context of our Labour Party policy of bringing forward measures in that respect in the communications Bill. Our policy is to give co-competition powers to ComReg and to the Competition Authority to regulate broadband companies. Is there not also a strong case to give CER, the energy regulator, some co-competition powers, with the Competition Authority, over the oil market as the regulator has over the gas and electricity markets? We should consider expanding section 30 to allow NORA to transmit regular key information on the Irish oil industry and market to CER and the Competition Authority and to give those agencies a clear additional mandate to vigorously police the oil industry.

The Labour Party believes the issue of fuel and energy poverty should be placed at the top of the political agenda, as I have said to the Taoiseach on the Order of Business on several occasions. Last winter we had the spectacle of vulnerable and low income elderly householders trying to avoid turning on their oil and gas central heating until as late as possible in the evening. I met some elderly people who were wearing overcoats in their homes in the afternoon because they could not afford to turn on the heating. People in rural areas in particular are heavily dependent on oil central heating. Is it not the job of the Minister and the Government to devise strategies to keep our senior citizens and other vulnerable citizens warm this coming winter? Last winter was the coldest one I remember. In so far as profiteering and market dominance in oil pricing is occurring, this Bill is a lost opportunity by the Government to help restore competitive markets.

Section 16 permits NORA to establish subsidiaries which I warmly welcome. Given the enormous difficulties we have had in regard to the Shell Corrib field, will the Minister consider inserting a provision in this section whereby NORA might have a subsidiary interest in the area of exploration? The Corrib saga showed a total dearth of information — the Minister will recall our meetings at the early part of the Corrib crisis and the Private Notice Questions the Acting Chairman, Deputy Cowley, and I tabled — on Ireland's possible offshore oil and gas resources. The petroleum affairs division of the Department at that time seemed to be overwhelmed by the complexity of the issues. Is it not clear that Ireland's oil and energy security should be addressed in a holistic manner?

This State, like Norway, Denmark, Canada and many other oil and gas provinces, must be in a position to deal with the oil majors from a position of knowledge and strength — and knowledge is strength. A prerequisite for this could be to have an enhanced NORA with full powers to protect our oil security, including managing the likely exploration process in the best interests of the people. I might return to this aspect by tabling amendments on Committee Stage when the Bill is dealt with by the Select Committee on Communications, Marine and Natural Resources, and the Minister might support such a proposal.

Forfás recently released a report entitled A Baseline Assessment of Ireland's Oil Dependence: Key Policy Consideration. As the Minister will remember, the report examined the extent of the vulnerability of the Irish economy to the peaking of oil production and the policies that were urgently necessary for preparing for such an event. The Forfás report highlighted our over-dependence on imported oil and the increasingly vulnerable situation of our society and economy as the supply of oil peaks and dwindles. This is the reality. It is like climate change. We can no longer challenge this reality — only idiots challenge the reality of climate change or that of the peaking of oil production. They are happening. It is clear from the Forfás report that Ireland has one of the highest rates of import dependency across the EU, and that our consumption of oil per capita has increased by more than 50% between 1990 and 2002. Imported oil and gas accounted for over 73% of primary energy used in 2004 compared with 45% in 1990, and oil is the most significant element in that mix. In 2004, oil accounted for 55.8% of Ireland's total primary energy requirement. Our requirement has remained relatively static over recent years, but without indigenous oil production, we are in a vulnerable situation. We are vulnerable to any disruptions in supply because of bad weather, problems with suitable transportation vessels, industrial action at a domestic or international level or the onset of a major crisis. Every few months we hear there may be another crisis.

Energy planning by the Fianna Fáil-Progressive Democrats Government continues to take place in a haphazard and ad hoc manner. While I welcome any measure to enhance security of supply in the State, the Minister and his predecessor have not contributed to this security by their failure to act dynamically and urgently to diversify fuel mix — Deputy Durkan outlined well how it could do this — help break our total reliance on imported supplies of fossil fuels and contribute to actions to combat global warming.

Under EU and IEA requirements, our basic requirement is to hold 90 days of strategic oil reserves. We were told our target was 120 days, but today we found out the Government has not met the target.

Noel Dempsey (Meath, Fianna Fail)
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The Deputy was misinformed.

Bernard Durkan (Kildare North, Fine Gael)
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Not for the first time.

Tommy Broughan (Dublin North East, Labour)
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The Minister can return to that in his response. The Government still has six or eight months left to achieve it. Ireland's IEA oil stock holding for 2006 is 2,278,800 tonnes of crude oil equivalent. According to the Department, this is higher than the EU obligation because of "differing methods of calculation and different times for changing the year that the data is based on". We are also obliged to manage contingency plans, including arrangements for the release of national oil reserves to minimise the adverse effects of a major oil shortage. I understand there is a 7% requirement in that regard. Will the Minister give the House some more information about that and the powers he will have under the Bill with regard to the release of oil onto the market?

Last winter, when Britain experienced serious problems with its wholesale gas market and we had a series of amber alerts and a red alert in our electricity system, I asked the Minister what contingency plans were in place in the event of a disruption to supply in the Irish system. He was very reticent about his strategy in that regard and made wild allegations about scaremongering by Opposition Deputies rather than answer a perfectly reasonable question about the serious danger to our energy supply. Before 1995 the oil companies had to meet a substantial portion of Ireland's stockholding obligations. It is astonishing that while the national oil reserves agency, NORA, has existed since 1995, we are only getting around to legislate for its powers today.

A large and growing body of opinion concurs with the view that we are approaching an energy watershed and that comprehensive plans must be put in place to deal with seriously reduced and more expensive supplies of oil and gas. Forecasts for how long the supply of oil will last are divided as to when the so called topping-out point or peak will arrive. Optimistic analysts, which generally include the oil companies and agencies, such as the US Department of Energy, estimate that there are perhaps 2 to 2.7 trillion barrels of oil left in known wells. In this scenario, oil production will peak somewhere between 2020 and 2040. Early "toppers" at the other end of the spectrum predict a much earlier peak of oil production. In their estimation, with just 1 trillion barrels of conventional oil remaining, production could peak as early as 2008. Our next Government may, therefore, have to meet a major challenge in this regard, yet we have only belatedly got around to legislating for NORA.

Before coming to the Bill, I want to deal with the issue of the Irish National Petroleum Corporation, INPC. In 1979, INPC bought the Whitegate refinery on behalf of the State after its then owners decided to pull out. In 2001, Whitegate oil refinery, Whiddy Island oil terminal and other INPC related assets were sold. When these were sold to the Tosco Corporation on 16 July 2001, the State's involvement with the INPC in operational aspects of the oil industry was concluded. Legal provision for this was provided under the Irish National Petroleum Corporation Limited Act 2001.

I understand the company is still not in a position to pay its outstanding payments to the Exchequer. I have asked the Minister about this three times since he took office and also asked the previous Minister about it. The current office holder informed me that the INPC has paid approximately €20 million to the Exchequer and that the total net return to the State from the sale would be in the order of €30 million. Where is the missing €10 million? In a previous reply, the Minister told me the State would gain approximately €35 million and when the Government announced the sale, media headlines reported we would get €101 million. Where are the missing millions?

In his response on this debate, will the Minister tell us what is happening with regard to the INPC assets that arose as we established NORA as the flagship State agency? Will we get any more money and what happened to our money? Is this a saga in which the Comptroller and Auditor General and the Committee of Public Accounts should become involved?

The primary function of NORA under the legislation is to facilitate the holding of strategic oil reserves at a level determined annually by the Minister and to meet EU and IEA obligations. The enforcement provisions of NORA in Part 6 of the Bill are welcome. This is perhaps an area under which we could conclude the outstanding issues relating to the INPC.

We seem to get new energy scares every few days. Recently Polish newspapers reported a fresh Ukrainian gas crisis was looming as a result of low Ukrainian gas reserves. Our economic situation and our dependence on oil energy make us vulnerable. Oil prices have rocketed over recent years from €25 a barrel in September 2003 to €70 or more in recent times. What will happen to our economy if oil reaches €100 a barrel and how will we exist? It could even reach, as predicted by some New York city brokers, €200 a barrel. What impact will that have on us? There are numerous explanations for these increases, ranging from immediate concerns surrounding security of supply due to strikes and hurricane threats to oil platforms to general geopolitical instability that often encompasses this area.

Meeting the global daily demand of 80 million barrels a day and our daily demand of 200,000 barrels is an enormous task. When we look at the reserve strategies adopted by other countries, including countries becoming more industrialised such as China and India, we realise the daunting task we face and that we should be more proactive.

Section 35 of the Bill needs to clarify the issue of the release of oil stocks, especially with regard to price hikes. Perhaps the Minister will come back to that matter.

Part 4 informs us that one of the key duties of the agency is the maintenance of stocks. One of the issues discussed in this regard is our high vulnerability. We need to know what percentage of our stocks are held abroad and whether, to enhance our security of supply, we should examine measures for holding a greater amount of our strategic oil reserves in Ireland. The difficulty for us is to ensure that the large amount of stocks held abroad on ticket, or however, are accessible to our economy, especially if there is disruption to the physical transportation of fuel supplies to Ireland following a serious crisis. Sections 32 and 33 are areas to which the Labour Party may return with amendments.

In answer to a recent parliamentary question the Minister stated:

a number of bilateral oil stockholding agreements have also been concluded with other European Union member states — Belgium, Denmark, France, the Netherlands, the United Kingdom and Sweden. Such agreements allow for the storing of Irish oil stocks within these jurisdictions under guarantee by the host country that it would not oppose the transfer of the oil in question to Ireland in the event of an emergency.

However, that guarantee may not seem so rock solid if a serious oil crisis arises or if there is a major disruption to the physical transport infrastructure to get the oil to our shores. I understand that Japan has a type of double protection with a strategic oil reserve under the control of the state with the oil companies also required to hold a certain percentage of oil in reserve. We should consider enhancing that element in section 33 covering holding contracts.

In the overall communications, marine and natural resources portfolio we have had major debates about networks. In this regard I warmly welcome what the Minister is reported as saying at a recent conference on the future of the ESB, which seems to accord with the policy of the Labour Party, regarding the necessity of holding the network. We have heard today about the oil network and the market power Topaz is likely to gain. I have great concern about the recent surge in service stations that are closing down. As the Acting Chairman, Deputy Woods, will be aware, in my constituency no fewer than seven filling stations have closed, mainly in the east of the constituency. For instance the Statoil and Texaco filling stations at the entrance to Howth have closed. Two more filling stations close to Sutton Cross have closed and it is has recently been reported that a planning application has been made for development of the Maxol station on the Baldoyle Road. This may have already received approval. There have been further closures at Kilbarrack and Coolock.

The only new petrol station to open in the constituency is the new Tesco service station at Clare Hall shopping centre. Dublin North-East seems to be typical of constituencies across the country and particularly the urban ones. The former service station owners are cashing in on the property boom as they seek to maximise the value of the filling station properties. The end result will be a considerably smaller network.

In a recent article in the Sunday Business Post, the distinguished economist, Moore McDowell, indicated his belief that Dublin was set to follow in the footsteps of London and Paris, where the downtown areas have only a handful of petrol stations charging extremely high prices, which they must charge to exist owing to the value of the land on which they are located. In these cases the customers are paying for the use of the land to get the service they need. Owing to the Government's failure to provide the necessary resources for public transport, people depend on their cars. The Minister can imagine what could happen if we had a major disruption or price hike. Price gouging would take place and the network would be too small to look after all the vehicles in the economy. The queues of cars could stretch for miles given the continuing haemorrhage of filling station business. The Minister should address the issue of the network in Part 8.

I welcome the €1 billion borrowing limit outlined in section 26. I will ask the Minister to give more detail on Committee Stage. The Houses of the Oireachtas through the Joint Committee on Communications, Marine and Natural Resources should have an input into the five-year strategy. As we already asked the Minister to do regarding fisheries, he should bring the strategy to the House so that the elected representatives of the people and not just the oil interests can put forward their priorities.

I will also table a number of smaller amendments on Committee Stage. I do not believe a chief executive should also be a director as outlined in section 14. The chief executive should report to the board. I note that the Minister failed to specify a gender requirement for membership of the board. The Labour Party proposes a 40% requirement for both genders on boards and I will table such an amendment. In the appointment of directors for this agency, the Minister should have made provision for avoiding any conflict of interest among potential appointees, especially among individuals who may have been or still are intimately involved in the global oil business. We remember previous appointments to agencies where conflicts of interest arose. Under the Scottish Executive system, the Commissioner for Public Appointments monitors all such appointments and no appointments can be made unless they have been scrutinised first by an assessor in the office of the commissioner. I will also propose an amendment to section 24 regarding a record of interests for directors and staff. Deputies and Ministers have been required to declare their interests for many years. It is vital that the same applies to this national agency.

The Bill could have afforded the opportunity to address the issue of lack of competition in the oil market in addition to the issue of security of supply to ensure that price gouging does not take place. We have seen the massive economic power Russia has gained on the back of its great gas reserves. During the same period the world's largest publicly traded oil company Exxon Mobil posted a quarterly profit of almost $10 billion, which was the largest quarterly profit ever earned by a US company. Shell, BP, Chevron and Conoco Philips also experienced huge increases in profit in the same period. When one views the websites of such companies, they all appear to have become "green" companies. They have adopted logos reminiscent of the Irish Green Party and they invite the viewer to work out his or her CO2 emissions. They appear to be "green" energy companies rather than oil and gas exploration companies. They are making so much money that they do not know what to do with it.

The windfalls the oil companies are receiving are in stark contrast to the reality for Irish consumers of petrol, home heating oil and natural gas, the price of which is going through the roof. Last winter we had the spectacle of some of our senior citizens in Dublin North East wearing overcoats in the early afternoon because they were fearful of turning on their central heating. This agency, our oil company, should be able to address the issue. It is time to widen NORA's powers and allow it have a wider remit over key strategic energy issues.

On Committee Stage, I will return to the issue of the release of stocks. I welcome that the company is a self-financing commercial semi-State body, which has been possible because of the 0.476 cent levy that has been in place since 1995. I welcome the elements of enforcement introduced by the Minister.

The Labour Party warmly welcomes the statutory underpinning of NORA, which is long overdue. However, it could represent a lost opportunity. We could have had a much more comprehensive oil strategy and could have emulated the Swedes. We need to review the issue of market dominance and the lack of competition. NORA should have a role, as it should in the area of exploration. Above all, we should be increasingly concerned about high oil prices and Ireland's worrying addiction to oil, which the country needs to break in coming years.

Dan Boyle (Cork South Central, Green Party)
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I will share time with Deputies Cowley, Connolly and Finian McGrath. I look forward to them coming into the Chamber. I speak in this debate in advance of our party's spokesperson, Deputy Eamon Ryan, who, I hope, will have an opportunity to contribute before conclusion of Second Stage. As a Deputy for Cork South-Central in close proximity to the Whitegate oil terminal, I have a particular interest in how the State structures its oil reserves and energy security. I start on this point because the Bill is typical of much of the legislation introduced in this area in that it reflects a patchwork approach to energy legislation and the absence of an overall national energy policy. While a State agency with responsibility for national oil reserves is necessary, establishing a State agency with overall responsibility for energy security should be an even greater priority as it would, as Deputy Broughan noted, take a more holistic approach to the energy equation.

It is unfortunate that the House must discuss legislation in a vacuum. This debate takes place in the absence of the White Paper promised by the Minister and against the backdrop of a good report on energy issued by the Joint Committee on Communications, Marine and Natural Resources. Our economy is still overly dependent on imported fossil fuels. The legislation should signpost what will be the nature of the oil reserve in future, including the volume of oil we will need to maintain current consumption and projected requirements for the next ten, 20 and 30 years.

As Deputy Broughan noted, Ireland has failed to follow the example of Sweden which has made a commitment to have an economy free of fossil fuels by 2025. This legislation will, therefore, create another State agency which will persist with doing things as they have always been done. The only saving grace is that the new body is a State agency. Policy in this area has danced in and out between relying, in the first instance, on foreign multinational companies to build refineries and procure oil reserves, establishing a State agency to fill a gap and then selling it to multinational companies and, as the Government is doing now, defining a remit for another State agency. We have no reason to take pride in the lack of consistency in our approach to oil use throughout the history of the State.

As one whose constituency office in Cork South-Central is located about 100 yards from the Whitegate oil terminal, I have continuing concerns about oil storage infrastructure. The Whitegate refinery is 30 to 35 years old and one hears regular reports about the condition of its fittings, frequent flare-offs and so forth. The sites in Whitegate and Whiddy Island are Seveso listed facilities which have the capacity, as we know from a previous incident at Whiddy Island, to cause tremendous damage because they store volatile substances. I seek clarity on storage capacity and the costs it will generate for the agency. Deputy Broughan referred to the capacity held outside the State and the ability to control and minimise this potential storage cost to ensure the agency is able to operate within its cost base.

On the governance issue, I ask the Minister to explain a number of issues. The memorandum appears to question whether the House should even debate the legislation given the number of sections described as standard features or provisions. The proposed governance of the agency requires greater scrutiny. While I note the chief executive will be available to Oireachtas committees to explain the operations of the agency, scrutiny of the role of commercial companies is excluded from the remit of the Committee of Public Accounts, of which I am a member. Although I accept the agency will operate on a self-financing basis, this is only by virtue of its power to collect a levy or tax. For this reason, the activities of the new body should be open to examination by the Committee of Public Accounts, not only on the grounds that it engages in financial transactions but also because it will have stewardship over an important national resource. We cannot cede complete control in this area to a body which has a hands-off relationship with the Minister and is at even further remove from the House in terms of accountability.

Deputy Broughan also referred to applying a gender quota of 40% to the composition of the board. I oppose the decision to give the Minister a sole appointing role in connection with the six members of the board, albeit not with the chief executive.

The Bill states that appointees must have experience and competence in either oil or oil related industries, chemical or chemical related industries, finance, economics, legal matters, energy production and supply industries. As such, the criteria cover a wide range. The process of making appointments to public bodies needs to be radically overhauled. Despite the decision to lay down criteria for membership of the board of this agency, we all suspect that most public appointments are made on the basis of the political party to which the appointee belongs and the party that happens to be in government. While I accept that this Minister is fair and open-minded in this regard, experience shows that too many of those appointed to State boards are the wrong types of people and have been selected for the wrong reasons.

This legislation will be applied by the current and subsequent Ministers. All legislation that provides for appointment to State bodies should include a provision requiring that appointments are made on the basis of high levels of scrutiny and accountability. For example, a chairman or chief executive should be interviewed by an appropriate committee of the House, either prior to his or her appointment or in the period between being appointed and taking office. In addition, appointments to the position of director should be ratified by a committee. Too much of our legislation provides for direct appointments by Ministers, which ultimately leads to ministerial and political patronage.

Given what we know about the long-term future of fossil fuels, a question mark hangs over the long-term future of the proposed agency. Perhaps it is an exercise in whistling in the wind in the name of energy security that a body of this nature is being established when known reserves of fossil fuels may not last beyond the 21st century. For this reason, as I indicated, the remit and purpose of the agency must extend beyond oil and fossil fuels to cover energy security.

On paper, the Government has commenced a discussion on addressing energy issues and the Minister, who has left the Chamber, deserves some credit for recent grant initiatives, even if they come several years too late. The new measures will have some effect, however small in scale. Grants available to assist in modifying houses to facilitate the use of wood chip, geothermal or solar energy will affect fewer than 10,000 houses in an economy in which 70,000 to 80,000 houses are built per annum. We are not even playing catch-up in terms of delivering the type of energy-efficient housing we need.

On transport, an issue raised by Deputy Durkan, while the Government has introduced legislative measures, including two initiatives announced in the most recent budget, it shows no intention of implementing them. One, a tax relief for converting engines to flexi-fuel use, was announced in the budget and introduced in the Finance Act. To date, this relief has been availed of for only 12 vehicles. The second measure, a biofuel initiative was trumpeted more loudly than the first. A follow-up to a pilot programme which took 18 months to get up and running, it is still not in operation because the Government has not even bothered to ask the European Commission for its view on whether it constitutes a state aid. For the reasons I have outlined, I have little confidence that the Government will introduce the type of alternative measures required to enable us to take a more relaxed approach to energy security in the future.

Jerry Cowley (Mayo, Independent)
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Our oil and gas reserves constitute an enormously valuable resource, particularly at a time when fossil fuel reserves are in decline. Managing them will be perhaps the greatest challenge of the coming half century. Their potential should not be squandered but should be exploited within a coherent policy led context that seeks to maximise benefit for the people rather than them being developed according to the timetable and interests of private multinationals. I call for the development of a long-term strategic plan for the oil and gas industry in Ireland.

A number of matters should be considered in developing such a policy. In the event of international supply disruption, the Government must have the power to divert Irish supplies to the domestic market and increase the supply of gas and oil from Irish fields during that period. The fiscal terms governing oil and gas finds must be revised to ensure an adequate return to the State. High taxation, royalties and equity shares are required to compensate the people for the pollution and global warming effects of the exploitation of fossil fuels. These revenues should be ring-fenced and used for investment in and development of renewable forms of energy. In other words, energy policy should be directed towards the development of renewable sources with oil and gas finds used only as transitional fuels and to finance the transition.

Communities affected by the exploitation of oil and gas finds require compensation and investment. The Grianán model, whereby 10% of gross profits are diverted to affected communities should be enforced in legislation. The Shetland Islands model, whereby the local community exercises considerable control over the industry, also offers possible options. The debacle of the Corrib gas project illustrates what happens when community concerns are ignored by the industry.

The Government should develop a State oil and gas company which could take shares in new finds and develop the processing capacity to manage them. Such a company could act in strategic partnerships with multinational oil and gas companies or with new and emerging indigenous exploration companies. This company could be a key instrument of public policy, ensuring benefits that would include health, safety and investment in new forms of energy.

On 8 May, I introduced a private motion on behalf of the Technical Group, which called on the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, to investigate Ireland's exploration regime. During the debate on the motion, the Minister stated that he would seek tenders for an expert review of proposed changes to the Irish exploration and production fiscal regime. I welcome his commitment as a major change of heart and a victory for those who seek a change in the regime to the benefit of this country. The motion received great support in the House and the Government's amendment was only passed by a narrow majority of 61 to 55 votes.

A review of the exploration licensing terms is sensible in light of the increase in oil prices from $26 per barrel to more than $70 per barrel, with a corresponding increase in the price of natural gas. The potential returns to oil companies have greatly increased, so it is only proper that the terms be revisited. The resistance to the Corrib gas pipeline project has focused attention on how little County Mayo and Ireland will earn from the find. When the people of County Mayo see an offshore terminal in Kinsale and the proposal for a similar facility for County Donegal, they wonder why they are being treated like lepers. With an offshore terminal, the Corrib gas field could produce hundreds of permanent jobs and its gas could flow to towns and villages in County Mayo. North County Mayo has a deep water port and a power station located in that area could generate electricity for the national grid. The local resistance from the Rossport five, the Shell to Sea campaign and Ireland's true Independent Deputies are helping to bring Ireland closer to a balanced regional development strategy and a better deal from the exploration of our natural resources. Since the resistance campaign began, attempts have been made to go beyond the election promises made by successive Fianna Fáil Deputies.

Yesterday's The Irish Times reported that the "State needs to find more oil and gas", according to Fergus Cahill of the Irish Offshore Operators Association. Round up the usual suspects — once again vested interests want us to provide for them. Another article in the same edition reported: "Irish exploration group Providence Resources and oil giant ExxonMobil have defined the location of the wells for the Dunquin prospect off the west coast, Providence chief executive Tony O'Reilly Jnr. told shareholders yesterday". Providence Resources claimed the Dunquin find "has the potential to produce enough oil and gas to power the whole of western Europe". Where will this wealth go, however? The article goes on to state:

Under the terms of the agreement, ExxonMobil will explore the site in return for 80 per cent of the prospect. Providence's existing 80 per cent stake will fall to 16 per cent, while its partner in the venture, Sosina Exploration, will see its stake fall from 16 per cent to 4 per cent.

In other words, the State is giving away natural resources to multinationals for nothing. Why should the State give the money away to private companies which merely sit back and reap the benefits? It is an absolute disgrace. In the article, Mr. O'Reilly stated:

I would describe 2006 as a year of transition...It's a year of getting all our ducks lined up, bringing in new partners and working together on a drilling programme for next year.

He is lining up the sitting ducks of Ireland who have already been treated badly by these Irish and multinational oil companies, which presume they can take our resources without giving us anything in return. Maybe we should follow the example of County Donegal, in which a different Irish company is willing to share a 10% stake in its operations.

We are getting very little out of these arrangements. Our 25% tax rate is the lowest in the world. No royalties or other production levies are demanded, oil companies are allowed 100% write-offs and we continue to issue frontier licences ad infinitum. In other words, we are being taken to the cleaners. Under Article 10 of the Constitution, the common good must be satisfied. Where is the common good when we are giving away our resources?

We should learn from the example of Norway. The value of these resources are continually increasing, even where they remain in the ground. We are all in favour of exploiting the Corrib gas field but let us do it safely and make it benefit our people. The Minister is preparing to issue further licences to potentially rich oil and gas prospects off the west coast. Oil companies are cherrypicking these prospects without any benefit for Irish people.

The full extent of the scandal is highlighted by the ExxonMobil saga. Exxon had Irish offshore interests in the 1970s and 1980s but had not applied for licences in recent years. Had Exxon been interested it undoubtedly would have been granted the licence that was instead issued in November 2004 to Sir Tony O'Reilly's companies, Providence Resources and Sosina Exploration. The US oil giant would have been given preference over Tony O'Reilly's company if it had applied at the time. However, because it did not, it is now paying a high price for coming in late. The fact that it is willing to pay that higher price confirms the ridiculousness of the Government's licensing policy.

Providence and Sosina were able to demand a continuing 20% stake in the licence, although ExxonMobil will pay all exploration costs, estimated to be more than €100 million. Had the Minister not issued the licence 16 months ago, he could have demanded a 20% stake for the people in any of ExxonMobil's finds. Instead, the 20% stake will be allocated to Providence and Sosina Exploration. In the meantime, it would be irresponsible for the Minister to issue any more offshore licences until the people are fully consulted and agree how much they wish to grant the oil companies. That is the people's prerogative but, under the current terms, they have no right to this. By the time 50% of Corrib gas has gone, the investors will begin, perhaps, to pay 1 cent in tax. Where is the logic in failing to reconsider the offshore licensing terms in light of spiralling energy prices and the recent Forfás report on Ireland's oil dependency that highlighted Ireland's vulnerability to a looming crisis in liquid energy supplies? Enough is enough and too much has been given to corporate interests. The 1992 Act should be scrapped and a realistic tax take introduced, including royalties and a 50% stake in any oil or gas discovery. It is time the people demanded what belongs to them.

This Irish company is run by people who do not have the interests of Ireland at heart. The company can approach the Government, receive permission to explore, sell that right to others who would carry out the work at a cost of €100 million and still make a profit. It is a disgrace that the resources of Ireland are being given to people who do not have the interests of Ireland at heart. In areas such as health and waste, the Government seeks to give everything to the private sector to make money to the detriment of the Irish people. People lie on hospital beds or die while on waiting lists. The Minister of State at the Department of Justice, Equality and Law Reform, Deputy Fahey, has played a major part in the shenanigans that result in the disgraceful surrender of our natural resources. We owe it to our children to exploit these resources for the benefit of the people. I ask the Government to urgently reconsider this prospect. The Minister for Communications, Marine and Natural Resources should attempt to recover what we had before.

We are all in favour of Corrib gas but we want it to come ashore safely from a deep water port in north Mayo. A proper tax return should be included in this. The Irish people have an opportunity to retrieve what is theirs. Our resources are becoming more valuable and the oil companies are now trying to extract whatever oil and gas they can. There is so much available but they would have us believe there is little available. There is great dependency on oil and natural gas.

The Economist recently published an article on whether the world was about to run out of oil. It questioned whether the crisis point is as near as people suggest. It states:

In 1894 Le Petit Journal of Paris organised the world's first endurance race for "vehicles without horses". The race was held on the 78-mile (125km) route from Paris to Rouen, and the purse was a juicy 5,000 francs. The rivals used all manner of fuels, ranging from steam to electricity to compressed air. The winner was a car powered by a strange new fuel that had previously been used chiefly in illumination, as a substitute for whale blubber: petrol derived from oil.

Despite the victory, petrol's future seemed uncertain back then. Internal-combustion vehicles were seen as noisy, smelly and dangerous. By 1900 the market was still split equally among steam, electricity and petrol — and even Henry Ford's Model T ran on both grain-alcohol and petrol. In the decades after that great race petrol came to dominate the world's transportation system. Oil left its rivals in the dust not only because internal-combustion engines proved more robust and powerful than their rivals, but also because oil reserves proved to be abundant.

Now comes what appears to be the most powerful threat to oil's supremacy in a century: growing fears that the black gold is running dry.

But is the world really starting to run out of oil? And would hitting a global peak of production necessarily spell economic ruin? Both questions are arguable. Despite today's obsession with the idea of "peak oil", what really matters to the world economy is not when conventional oil production peaks, but whether we have enough affordable and convenient fuel from any source to power our current fleet of cars, buses and aeroplanes. With that in mind, the global oil industry is on the verge of a dramatic transformation from a risky exploration business into a technology-intensive manufacturing business. And the product that big oil companies will soon be manufacturing, argues Shell's Mr. Van der Veer, is "greener fossil fuels".

The race is on to manufacture such fuels for blending into petrol and diesel today, thus extending the useful life of the world's remaining oil reserves. This shift in emphasis from discovery to manufacturing opens the door to firms outside the oil industry (such as America's General Electric, Britain's Virgin Fuels and South Africa's Sasol) that are keen on alternative energy. It may even result in a breakthrough that replaces oil altogether. [The peak that was expected late last year never arrived].

In fact, oil production capacity might actually grow sharply over the next few years (see chart 1). Cambridge Energy Research Associates (CERA), an energy consultancy, has scrutinised all of the oil projects now under way around the world. Though noting rising costs, the firm concludes that the world's oil-production capacity could increase by as much as 15m barrels per day (bpd) between 2005 and 2010 — equivalent to almost 18% of today's output and the biggest surge in history. Since most of these projects are already budgeted and in development, there is no geological reason why this wave of supply will not become available.

It is true that the big firms are struggling to replace reserves. But that does not mean the world is running out of oil, just that they do not have access to the vast deposits of cheap and easy oil that are left in Russia and members of the Organisation of Petroleum Exporting Countries (OPEC). And as the great fields of the North Sea and Alaska mature, non-OPEC oil production will probably peak by 2010 or 2015. That is soon — but it says nothing of what really matters, which is the global picture.

When the United States Geological Survey (USGS) studied the matter closely, it concluded that the world had around 3 trillion barrels of recoverable conventional oil in the ground. Of that, only one-third has been produced. That, argued the USGS, puts the global peak beyond 2025. And if "unconventional" hydrocarbons such as tar sands and shale oil (which can be converted with greater effort to petrol) are included, the resource base grows dramatically — and the peak recedes much further into the future.

We must consider who is pulling the strings and who benefits. The Irish people are not benefiting and we must take the comments of offshore exploration organisations with a pinch of salt. They have a vested interest and experience shows that the Department has let us down in supervising the oil companies. The interests of the Irish people must be upheld. That has not been the situation to date and it must change. Otherwise the Irish people will lose out.

Finian McGrath (Dublin North Central, Independent)
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Hear, hear.

Bernard Durkan (Kildare North, Fine Gael)
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That was a fair attack.

Bernard Durkan (Kildare North, Fine Gael)
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A tear comes to my eye.

Bernard Durkan (Kildare North, Fine Gael)
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That is tough talk.

Jerry Cowley (Mayo, Independent)
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Corruption is about more than brown envelopes. It is about when good people do not do what they should do for the people.

Michael Woods (Dublin North East, Fianna Fail)
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Deputy Kelly without interruption.

Jerry Cowley (Mayo, Independent)
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It is a disgrace and the Irish people are paying the price.

Jerry Cowley (Mayo, Independent)
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We all are in favour of Corrib gas. All we want is to bring it in safely and that it can mean something to the Irish people. At the moment it means nothing.

Jerry Cowley (Mayo, Independent)
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Bring it in off-shore and create hundreds of jobs; that is the alternative. It is up to them to bring it in safely.

Michael Woods (Dublin North East, Fianna Fail)
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Deputy Cowley, please give way. You got some extra time when you were speaking.

Bernard Durkan (Kildare North, Fine Gael)
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Murphy's law.

Jerry Cowley (Mayo, Independent)
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So do we.

Finian McGrath (Dublin North Central, Independent)
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Fair play to NORA.

Finian McGrath (Dublin North Central, Independent)
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I welcome the opportunity to contribute to the debate. The Bill has arrived at long last. In recent years, the oil supply issue has been to the fore. The debate gives us an opportunity to examine how our natural resources are distributed on behalf of the people. We are at a crossroads regarding our natural resources, given that our citizens want a fair share of them. They want equality, decency and honesty in their distribution. We should not be afraid to consider best practice in other states. Every Member should accept this as part of his or her responsibility as a legislator. I strongly welcome the contribution of the Shell to Sea campaign and the Rossport five over the past 12 months on this issue. They are a group of individuals concerned not only about health and safety issues near their homes, but also about how we deal with our natural resources.

There is significant potential to develop such resources in the interests of the people, and other countries have adopted a sensible, commonsense approach. I am open to suggestions as to how such matters should be dealt with. However, I accept the genuine criticism of many people to the effect that in the past 20 years, many individuals have been allowed off the hook with regard to our natural resources. Members must be sufficiently brave to face up to and deal with the matter in hand.

In the context of the wider debate on this Bill, it is of great importance that Members should listen to constructive points. I reject DeputyKelly's earlier remarks. In particular, I reject his attack on Deputy Cowley regarding such issues. Members with objections and concerns have every right to put them on the record of the House.