Brendan Kenneally (Fianna Fail)

I welcome the Minister of State, Deputy Michael Ahern, to the House. I also welcome the Bill before the House which focuses on the security of our supply of oil, the life blood of economic life in any country today. I can think of no other substance whose loss would have such a profound effect on the workings of this planet and we, in common with just about every other country in the world, are entirely dependent on a steady, guaranteed supply of oil. If I were to be flippant about it I would suggest that it is oil which really makes the world go round, and Ireland with it.

A guaranteed supply of oil is vital for the development of the economy and, in so far as it is possible, we should maintain our oil reserves to a prudent level. Most Members of this House will remember the oil shortages of 1973 and 1979, caused not by a visible diminution of the oil reserves of the Middle East but by a refusal of the oil states there to pump enough oil from the ground to meet world needs.

The 1973 shortage was caused by an embargo as a direct result of the Yom Kippur war between Israel and Egypt and we got squashed between the two factions. The result was alarming across the world, with people no longer able to drive their cars with the same freedom as heretofore and economic activity threatened across the board. It was the first time there had been a fuel shortage since the Second World War and people did not like it. There were long lines of motorists at the petrol pumps queuing for the precious petrol, with negative consequences.

First, many were away from their work because filling stations were open for only a few hours a day and there was consequent loss of productivity. Second, as a result of the long queues, engines were left running for long periods with consequent loss of fuel. There was a feeling of doom and gloom over the country and an air of general insecurity. It was pointless even for Governments to try to promise action, much less an increase in the availability of petrol. We just had to sit there and take the punishment.

The point is that our economy, while dependent on oil even then, was not a fraction of what it is now. A serious oil shortage, for whatever reason, be it a political act, a sense that world supplies are running out, or the result of conflict, would be disastrous, not only for Ireland but for the entire world trade.

This was not an energy shortage per se. There was no shortage of any type of energy except that derived from petroleum and there was no real shortage of petroleum, just that those who provided it had decided they were not being paid enough for it. It is tempting to blame the oil suppliers of the Middle East for their greed, but they were only doing what any businessmen would have done and what most unprincipled businessmen would have done a lot sooner.

The result was that the price of a gallon of petrol jumped by 150%, which bit deep into the economy. The only benefit may have been that it made us aware of the limitations of the supply of petroleum and brought us a new consciousness of the realities of energy limitations. However, we have not done much different in the meantime.

Like every other developing country, we have become very dependent on oil and gas and we must ask ourselves if those sources of energy will always exist in sufficient quantity to serve our needs. We must begin to pursue and develop other sources of energy and there is no point in waiting until supplies of oil and gas begin to run out in earnest or become unavailable through political instability, natural disaster or other crisis.

We have seen such things happen in the past and paid the price through greatly inflated energy bills. We must start now on the practical development and further research of solar energy, wind and wave power and hydro sources. We should pursue an active programme of developing alternative forms of fuel in our transport fleet, especially biomass and ethanol.

Between 1990 and 2004, there was a large increase in oil imports to this country and, in that same period, the cost of oil rose from $15 a barrel to approximately $65 currently. It has even been higher in recent months and the Iran crisis and the possibility of US military action against that country will not help to stabilise prices, except at an exorbitant level.

There is no reason to believe the price of oil on the international markets or at the pumps will drop significantly in the near future. In the past, the OPEC countries increased output to stabilise the price of oil on the world market, but this in turn has its own dangers in the faster reduction of reserves, which will also help to hasten a scarcity. There was great uncertainty at that stage, something which we cannot afford to see happen again. We live in a most uncertain age.

I know the National Oil Reserves Agency is responsible for maintaining emergency oil stocks in Ireland and Irish stocks held in other EU states under bilateral agreement. Under these agreements, the host country agrees that it will not oppose the transfer of the oil in question to Ireland in the event of an emergency. This is fine in theory and in the easy-going peaceful times of today, but we should face the possibility that if there were to be a worldwide shortage, and economies and national survival depend on oil supplies, it may well be a case of every country for itself and the principle of "What I have, I hold" may well come to the fore.

There is nothing like being totally independent, as any farmer will say, for regardless of how friendly and helpful neighbours are, there is always some obligation when a machine, fodder or other item is loaned. In times of crisis, it is better to be independent and have it oneself, and this is what I want to see in this country. Quite simply, how can we guarantee the holding state will release whatever is being held in that country for us? If the country has a problem, the natural instinct will be to keep it. When the time comes, will our agreements hold up? In times of crisis, principles can go out the window and practicalities take over. We might well ask where this oil will be stored. Will it be in the UK, elsewhere in Europe or even in western Europe?

We have seen in recent years and months how Russia more or less held its neighbours to ransom by not releasing gas supplies until they were virtually on their knees. We do not want to be that dependent or that vulnerable to pressure or blackmail. Storage will have to be near this country and within the control of governments which will guarantee release of our stocks when required.

Do we not have sufficient oil capacity ourselves, and should we provide further capacity within our jurisdiction, perhaps on an uninhabited island? It strikes me that even if we were to store crude oil, the chances of getting it back in a crisis situation after it has been refined abroad may be rather slim. Do we have the refining capability to produce petrol from crude oil and should we provide or extend it? I have no doubt that the Minister of State will clarify these matters through the course of the debate.

Under section 23, a member of a local authority who becomes a director of the National Oil Reserves Agency would need to stand down from office. I am somewhat puzzled by this because that member would have been democratically elected to administer public affairs. I could understand more readily if the director were a Member of the Oireachtas or a Member of the European Parliament because NORA will report to both bodies and there could be a conflict of interests.

The right of a local authority member to sit on certain agencies has been curtailed by several recent Acts. It is a provision with which I am uncomfortable. It would appear that public representatives are being penalised for being elected and I am asking the Minister of State to re-examine this provision. Such people are appointed to bodies such as NORA because they have expertise in a particular area and it would be unwise to lose that expertise if a member needed to resign or forgo membership of the board. I am not in agreement with the principle that members of local authorities should not be included in any of these agencies or boards.

It is important to fund research into the practicalities and provision of other forms of energy in Ireland, such as hydroelectric, wind, biomass, solar energy, etc. These have worked well elsewhere and we have an abundance of wind and wave power that no other European country has.

Waterford City Council is providing an affordable housing scheme in Ballygunner where the houses have not yet been allocated. Solar panels have been installed in a number of houses for heating purposes and I commend the council on leading the way in this respect. After some time, further information on the usefulness and economic viability of such energy generation will become available and local authorities and, perhaps, those in the private sector might follow suit. I look forward to the day when solar energy panels or some other simple, but as yet unheard of, technology will be incorporated in every house to reduce the overall demand on public energy supplies. Not that long ago, double glazing was non-existent or installed in only the more expensive and upmarket houses. Now, it is standard practice in virtually every house being constructed or refurbished.

This and other initiatives would go towards a reduction of our dependence on oil and I commend the Government on providing grants towards the provision of wood chip and other alternative energy boilers in houses. There may be some difficulty in providing the burning material for these systems in sufficient quantities, which is a sure sign of growth in the market, but the market will react to ensure an adequate supply in due course.

I welcome the Taoiseach's statement last weekend to the effect that he would like to ease planning regulations for the provision of solar panels and turbines in houses to generate electricity. Currently, a small wind turbine on the side of a house needs planning permission, but encouraging this kind of innovation among new house providers would add to a growing independence from the use of oil and other fossil fuels with consequent benefits for our environment and balance of payments. However, the planning process must be simplified and made more user-friendly. It seems odd that the provision of a satellite dish on the side of a house does not need planning permission while a smaller wind turbine, which would be far more productive, does. I welcome that the Taoiseach made this practical suggestion and I hope it will be implemented in the not too distant future.

I regret that we are not making full use of our railways and that, through our history, they have been under-utilised. This may have been justified in the economically slow decades after the foundation of the State, but we are well into our second decade of unprecedented growth and production. There have been 15 years of expansion in the demand for consumer goods and it has been necessary to transport them around the country primarily by road. We must take more transport vehicles off the road. The port tunnel initiative was an excellent venture and, when fully facilitated, will further ease traffic congestion with greater fuel efficiency. Trains would be even more fuel efficient and CIE must be encouraged to be more proactive in looking to expand its freight business because even our limited rail network has the potential to take a significant number of vehicles off the roads. The development of any element of our rail transport system, whether freight or passenger, to attract more users has the same potential and we must work more diligently in that direction.

The Bill is a bold and far-sighted measure and deals with a subject which is vital to our national interest. I commend it to the House.