Thursday, April 24, 2008

Record petrol prices, when do we hit $5 per litre?

Yesterday in Melbourne, petrol prices hit an all time high of $1.55 per litre, with some motoring groups voicing concerns that the price could reach $1.60 per litre and that "petrol stations were 'pushing the envelope too much' by charging such high prices" and that "new prices reflected the industry's agenda to keep pushing up fuel prices".

While there is some possibility that oil companies and petrol stations can raise their prices without warning in an opportunistic manner, I think it must now be obvious that the basic supply and demand law of economics is the real concern here.

The world demand for oil now exceeds supply, the phenomenon known as "peak oil". So the price is going up.

As oil supplies dwindle and demand continues to increase (e.g. from China, India and other growing economies) then the price will continue to rise.

How high? Well, I can imagine that $2.00 per litre could be reached by the end of 2009, and a $5.00 per litre is possible by 2012. When will it reach $10.00 a litre, perhaps by 2020.

In Europe (e.g. Norway and Italy), the price is over $2.20 per litre already. In the United States, where Hummers and 8 litre V8s are still bought, the price is currently $0.70 per litre.

Petrol 9(and other fossil fuel) price rises will have dramatic effect on our lifestyles and our economy. Fossil fuels such as petrol, diesel, LGP and CNG (which is more abundant) are used heavily for food growing, transport and distribution. Private cars using fossil fuels are used heavily for personal transport, often for simple commuting to and from work.

So the price of food and transport will rise dramatically in coming years unless governments take action to put policies in place to shift towards alternative renewable energy sources for food production and transport and indeed to fabric of our society.

Unfortunately the current state of play in Australia is not good, as per the following:
  • Freeways and roads are being built rather than rail and cycling infrastructure
  • CNG is being shipped overseas rather than used locally, and no effective CNG refuelling infrastructure is in place
  • Many thousands of trucks (mostly diesel) are used daily for goods and food transport, including thousands doing routine trips such as along the Melbourne Sydney route
  • Their is no significant low emissions and/or hybrid car manufacturing in Australia; the Ford and General Motors plants are still focussed on building six and eight cylinder cars (such as the new GM ute for export to the United States, and Governments are still buying them for their car fleets.
When will our politicians wake up from their fossil-fuel fugue? Hopefully before petrol reaches $5.00 per litre. They are elected to provide leadership on such matters, but currently they are not. Some, like Senator Kim Carr, are trying to get hybrids built in Australia, but he is a lone voice and he is not succeeding. And he drives a Ford Territory gas guzzler. Actions speak louder than words.

For the record, I drive a 1993 Mitusbishi 4WD van, which I bought as the 2.5 litre motor uses half the fuel of a comparable 6 cyclinder 4WD. I also ride my bike a lot.

Making green cars is a good option.



Anonymous said...

Too true Peter. I shall be doing a post soon on this and shall link your post into mine.

Hope you got around to changing the the link. Cheers,


Peter Campbell said...

Reuben, petrol is actually well over $2.00 per litre in Europe already! I have changed the link to your blog.

Anonymous said...

Thanks for the change.

Regarding Europe - they're really setting the high standard in terms of sustainability. I just find it so amazing that cults like the IPA tout Europe as being a 'socialist collective' whilst shining America in the light of so-called "economic growth". America will stumble over and fall from oil dependence.

Danny Yee said...

The Europeans have started burning more coal because of oil/gas prices...

Peter Campbell said...

Interesting. I wonder when the gas converters that were used in WWII to power cars (from burning wood, coal and charcoal) will put in a reappearance here too. They were towed behind as trailers and connected to the carburettors.

We have to reduce consumption drastically to stop building more large scale power stations.