Shane McEntee (Meath, Fine Gael)
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Question 116: To ask the Minister for Enterprise, Trade and Employment his views on the recent report by Forfás entitled A Baseline Assessment of Ireland's Oil Dependence; the implication for industry here; and if he will make a statement on the matter. [17875/06]

Micheál Martin (Cork South Central, Fianna Fail)
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I welcome this report which has provided some significant food for thought as to the future availability of oil and the subsequent implications for the enterprise sector and for the economy as a whole. The report highlights the need for very careful consideration as to the way in which our future competitiveness and prosperity may be affected if we do not make careful use of a finite resource and provide for its replacement. Oil supply is not unlimited, yet world consumption has steadily increased. By comparison with other countries, Ireland's enterprise sector is not very energy-intensive, at least directly. Our emphasis on modern industries and advanced sectors has meant that the amount of energy used by the sector in proportion to output has decreased in recent years. A focus on less energy-intensive sectors in the future should help this trend to continue.

Oil is used as a direct input into some production processes but mainly as an input to electricity generation and to transport. If world oil prices continue on an upward path, all countries will be affected, but we will be affected more than most. We depend mainly on gas and oil for generating electricity, but oil and gas prices move more or less together, so the costs of electricity would have to rise for both enterprise and consumers as long as our dependence is so high. Our pattern of oil use, as the Forfás study points out, has made us one of the most oil-dependent countries in the world. Our transport sector depends on oil with most of our freight and passenger transport by road. Given our position as one of the most open economies in the world, with exports and imports combined much greater than our GDP, and the fact that we are an island nation on the periphery of Europe much of our international trade and connectivity is absolutely dependent on oil. So our imports and exports, on which the economy depends in different ways, will all be affected by shortages of oil at a reasonable price. This means that transport costs are more important to us than to many other countries and therefore oil price increases will impact on our competitiveness.

The message of the Forfás report is clear: oil dependency means vulnerability, and whether world oil production peaks in a few years or in ten or fifteen years, there is an urgent need to prepare for this and for significant increases in the price of oil. I am particularly conscious of the way in which our oil vulnerability affects the enterprise sector both directly and indirectly: our heavy dependence on roads, road freight and passenger cars can translate very quickly into higher costs for everyone, and can put at risk the spatial patterns of development that we have pursued up to now. I am convinced that there is much scope for the enterprise sector to adjust, and that the time for action is now. Investigation of alternative sources of energy, together with serious efforts at energy conservation, will help to reduce the vulnerability and to give Ireland a competitive edge in energy-related industries and innovation. The Government will be very supportive of such action: my colleague the Minister for Communications, Marine and Natural Resources is preparing a long-term strategy statement, a Green Paper that will be published shortly. I understand that the Forfás report has been taken fully account in the preparation of the Green Paper, and I think that we will have policies in place that reflect the significance of the issue for the enterprise sector and the need for a major shift towards more sustainable energy policies to ensure our competitiveness for the future.