10 July 2008

Rising Fuel Prices

A recent study by the CSIRO in Australia, Fuel For Thought, suggests that fuel (petrol) could reach AUD 8 per litre within ten years. This is expected to add about AUD 220 per week to the expenses of anyone running a medium sized car by 2018. This rapid rise is premised on an ever-decreasing supply in a time of ever-increasing demand. Simple economics really.

It would therefore make sense that now is a good time for investment in cars that are more fuel efficient and perhaps even into alternative fuels. It is much more than just reducing our carbon footprints and saving the world from a self-induced inferno. There is a genuine need for us to innovate with respect to energy in order to survive.

Once we have burned all our fossil fuel supplies and we have drilled every where there is to extract each and every last drop of the black gold, then what? Then what will be our chance to see Darwinian theory up close and personal, as only the fittest will survive!

Perhaps the report is not all gloom and doom, but it certainly does not paint a rosey picture of the future. There are a lot of assumptions and theorizing in the report that seems to require certain things to happen and certain times and quite often simultaneously in order to make the numbers work.

In a move to alternative fuels such as ethanol from maize there are inherent problems. One such problem has already come to the fore. More people are planting maize and selling it to fuel producers because they get a better price for it. This means that there is less maize in the market place and there will ultimately be food shortages which in turn drive up the cost of foodstuffs generally. Pressure from another angle.

These pressures will increase as the world reaches the peak oil limit. Peak oil simply is where production rises to a peak and then begins to decrease as no new reserves come on line or are discovered.

What is clear is that we should expect an increase in the price of petrol at the pump.

The report deals with the impacts in Australia. I might have to write a post on how peak oil might play out in the very inefficient Indonesian setting. It is scary just to think about as oil is still heavily subsidized here. The photo was taken from here.


Katadia said...

Hi Rob. My first time here. :)

I never ever used those shop-a-docket to get fuel discounts. Now, I've been collecting points on this reward cards from Woolworths.

My car (a sedan holden barina) is pretty fuel efficient. But with two car seats for the babies at the back, nothing else fits. Thank God my Indonesian genes gave me relatively short legs. Otherwise I'd have to drive around with my legs up the steering wheel.

I want cheap family sized fuel effiecient cars. Public transpot is just a nighmare with my toddler and infant :)

GJ said...

Hi Rob biofuels from maize have their prolems, one which you stated, but also maize is an inefficient way compared to sugarcane. This is purely US centric thinking to use maize, the world should look at the best way to produce biofuels and leave food production areas alone. This could be achieve via a tax regime in which the procedes could be spent on alternatives.
Just some limit wisdom from me

Rob Baiton said...


I have seen you commenting elsewhere :D

Thanks for finally dropping by and leaving a comment!

I used to own a barina harchback there for a while. I would imagine a toddler and an infant is no doubt a challenge. I guess once the kids get a little bigger then maybe public transport might be an option.

I would imagine that even with shopper dockets that fuel will ultimately become a luxury and people will be forced onto public transport.


As always on the money. Maize or corn for the rest of us has problems.

I was really pondering the idea that fossil fuels run out and we have been messing around on the idea of exploring alternatives and we miss the boat -- very Mad Max-ish don't ya think?

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