Petrol hits record

Written By: - Date published: 7:55 am, August 22nd, 2012 - 210 comments
Categories: peak oil, transport - Tags:

Z has set a new record for petrol prices with 91 up to $2.23. The others are expected to follow. We are in a new oil shock due to peak oil. The once unimaginable $2 a litre is now the low price. Ironically, the high dollar that is killing our exporters is protecting us from much higher petrol prices. So why is our government investing $12 billion on deepening our oil addiction?

210 comments on “Petrol hits record ”

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  1. Tom Gould 1
    22 August 2012 at 8:14 am

    Surely it is pretty obvious to most people that if the price of crude goes up, the value of the oil in the ground goes up. The higher the price at the pump, the more economic it is to chase the oil that’s harder to get at. And the more the Greenies dog whistle about peak oil, the more accepting the public becomes about ever increasing oil prices. Big oil must be laughing all the way to the bank, with the Greenies running their PR for them, for free.

    • mickysavage 1.1
      22 August 2012 at 8:21 am

      OK Tom

      Our precious world is facing two major issues, climate change and peak oil.  Essentially we are either going to bake our planet or grind to a halt or both.

      So what do you propose?  Rather than chipping at the Greens what would you do to resolve this?

      And besides the expensive oil is out there but can you afford to buy it?  If petrol is $4 a liter will you still consume as much, drive as far or take as many overseas trips?

      These are civilization ending issues and an acknowledgement that they are serious would be a good start. 

      • Tom Gould 1.1.1
        22 August 2012 at 8:58 am

        Again with the dog whistle. Why stop at $4 a litre? Why not use $10 a litre? Trying to scare people into behaving the way you want them to is never a good strategy. Nor is trying to pose a choice between driving the kids to school and “baking” the planet. The ‘zero sum game’ is silly. Time for the Greenies to get real.

        • RedLogix 1.1.1.1
          22 August 2012 at 9:06 am

          So what do you think is the highest price petrol can go?

          Are you telling us that it cannot go any higher?

          • Colonial Viper 1.1.1.1.1
            22 August 2012 at 10:29 am

            I think max oil prices will sit briefly at the US$150-$180bb range and not exceed it for more than a week or two, ever. Because at that price it will induce another deepening phase of the Great Global Recession, reduce oil demand once more and prices will drop back towards the “lows” of $100/bb.

            In other words, we might find that the world economy grinds to an energy depleting halt with petrol never really crossing $3/L by much. That’s the supply side. On the demand side, there will be FA people left who can afford even that seemingly reasonable price as wages and employment will be dropping through the whole period.

            • Lanthanide 1.1.1.1.1.1
              22 August 2012 at 10:38 am

              Depends if oil remains on the open market or not.

              • Draco T Bastard …
                22 August 2012 at 10:48 am

                It won’t. Yeah, I know I keep linking to it but it’s still the best analysis of the restrictions on oil (both physical and contractual) that I’ve seen.

              • Colonial Viper …
                22 August 2012 at 1:20 pm

                Depends if oil remains on the open market or not.

                Good point. Large amounts of oil are now spoken for under secretive supply contracts or traded via opaque “dark pool exchanges”.

            • AmaKiwi 1.1.1.1.1.2
              22 August 2012 at 1:29 pm

              CV is correct.

              A global recession/depression substantially reduces demand and therefore prices. That’s where we are now.

              Don’t worry about petrol prices, worry about whether you will have a job.

            • AmaKiwi 1.1.1.1.1.3
              22 August 2012 at 1:35 pm

              @Southern Limits. Wikipedia can explain the difference to you.

        • mickysavage 1.1.1.2
          22 August 2012 at 9:18 am

          Way to avoid the subject Tom.

          I guess you believe there is a magic fairy at the end of the garden that produces oil so that we will never run out.

          Why is it that two doomsday phenomena, the existence of which are backed by real world events are rubbished by some.  Is it that you are too terrified that your belief of ever increasing wealth may be constructed on foundations of sand?

          • insider 1.1.1.2.1
            22 August 2012 at 9:42 am

            They are usually rubbished because we keep hearing the same ones every 10 years or so from people with short memories saying that in 10 years we are doomed. We’ve been running out of oil in 10 years for the last 100 years. Peakies are the modern millerites.

            • Lanthanide 1.1.1.2.1.1
              22 August 2012 at 9:48 am

              Peak oil is not about “running out of oil”. Educate yourself more and we might be able to have a conversation.

            • Colonial Viper 1.1.1.2.1.2
              22 August 2012 at 1:22 pm

              We’ve been running out of oil in 10 years for the last 100 years. Peakies are the modern millerites.

              Uh, no, Hubbert’s theory only came to prominence in the 1960’s and 1970’s…when the US hit peak oil basically exactly when he predicted.

              • insider …
                22 August 2012 at 1:50 pm

                No there have been ‘running out’ fears going back to Spindletop.

                Hubbert is weird. He predicted 1965 as his best guess peak 48 production – it was 1971, right at the extreme of his error range (and he was predicting this in mid 50s so in that respect he was 50% out given the short horizon) and he was 30% out by volume. If the Nats were that out in their economic predictions you;d be all over them. More weirdly he revised his predictions in the 80s and predicted less production than had actually occurred.

                • Colonial Viper …
                  22 August 2012 at 2:00 pm

                  I disagree with your analysis of Hubbert’s “error range”. He did shift his timeframe slightly for peak production, and since peaking in 1971, conventional oil production in the US has been falling consistently.

                  If the Nats were that out in their economic predictions you;d be all over them.

                  Uh…the NATs are always out with their economic and fiscal projections. Treasury too. Balanced budget 2013/2014 anyone?

                  Regardless, its a poor comparison you propose. Hubbert was a scientist whose excellent theory on changes in oil field production rates over time has been borne out over and over again.

                  Edit

                  i also see you put 1965 as his Hubbert’s “best guess” which is dishonest of you as it was the near extreme of his predictive range. According to wikipedia, the first range he suggested was 1965-1970, the mean of which was 1967.

                  • insider …
                    22 August 2012 at 2:28 pm

                    Don’t rely on wikipedia when you can go to the source. Hubbert himself wrote “With due regard for these considerations, it is almost impossible to draw the production curve based upon an assumed ultimate production of 150 billion barrels in any manner differing significantly from that shown in Figure 21, according to which the curve must culminate at about 1965 and then must decline at a rate comparable to its earlier rate of growth.”

                    The 1965 curve was the one he focussed most of his analysis on. The 1970 curve was his upper range, which he didn’t seem to believe ” If we suppose the figure of 150 billion barrels to be 50 billion barrels too low -an amount equal to eight East Texas oil fields -” His 80s revision shows he did not truly believe this upper number

                    • Colonial Viper …
                      22 August 2012 at 7:40 pm

                      Citation please. Because I don’t believe you.

                    • insider …
                      22 August 2012 at 9:16 pm

                      aren’t you the person that has been lecturing me about what hubbert did and didn’t say, and now you are saying you have never read his key paper?

                      You’re the gift that keeps giving. It’s hilarious.

                    • Colonial Viper …
                      22 August 2012 at 10:25 pm

                      No citation then?

                • NTB …
                  22 August 2012 at 8:30 pm

                  I read Hubberts papers when study palaeo in 1974. Crap I said, he proved me wrong. The wierd ones out there are those in denial. They are the majority, which ultimately means a lot of pissed off wierd people, due to Hubbert being correct.

          • Macro 1.1.1.2.2
            22 August 2012 at 10:34 am

            “Why is it that two doomsday phenomena, the existence of which are backed by real world events are rubbished by some. Is it that you are too terrified that your belief of ever increasing wealth may be constructed on foundations of sand?”

            The short answer Mickey is most likely “Yes”. When humans are confronted by a doctor with evidence that they have a terminal illness – they may at first want to deny it, or they will behave an other ways that one would find hard to describe as “rational”. Humanity is now having to face up to the fact that we are dangerously warming the planet. In deed everything we have done over the past 150 years has lead to the condition we are in now! How devastating a revelation is that! No wonder many want to deny that at all costs.

        • Lanthanide 1.1.1.3
          22 August 2012 at 9:39 am

          Because when crude is at such a price to command $10NZ per litre, most likely you won’t be freely buying it from petrol stations. Think: ration coupons.

          However petrol at $4/litre is still likely to be freely available, if you can afford it.

          • insider 1.1.1.3.1
            22 August 2012 at 9:44 am

            if it is $10 you won’t need coupons. It will ration itself. We saw relatively large shifts in consumption and travel patterns with much lower recent price movements.

            • Lanthanide 1.1.1.3.1.1
              22 August 2012 at 9:47 am

              My point is that at $10/litre, you are unlikely to find (m)any petrol stations open because the fuel will be rationed for state and farm use, important productive things, not wasteful things like road trips or taking your kid to cricket.

              • insider …
                22 August 2012 at 9:59 am

                My point is that at $10/litre, self rationing will mean the state has ample available without imposing controls, because we won’t be taking the kids to cricket or on Sunday drives. Service station numbers are not historically linked to prices. Educate yourself and we might be able to have a conversation.

                • Lanthanide …
                  22 August 2012 at 10:22 am

                  We can look at what historically happened last time there was a petrol price spike in this country. There was rationing, just as I’m suggesting.

                  • insider …
                    22 August 2012 at 10:31 am

                    In the mid 90s oil was $10bb1 it’s now $110. in 2007 it was under $50 and in 2008 over $130. Quite sustained series of spikes and no enforced state rationing in sight.

                    We didn’t ration petrol in the 70s either. They tried to ration demand through carless days (I think in response to an IEA directive) and it was a near complete failure with all sorts of perverse outcomes.

                    • Lanthanide …
                      22 August 2012 at 10:36 am

                      You’re missing the point of where this discussion started. Tom Gould complained about why we chose $4/l instead of just any number like $10/l. I provided a reason: because the market mechanics at $4/litre is likely to be close to our market mechanics now, just with a higher price. Market mechanics at $10/l is likely to be significantly different, with, for example, the state enforcing rationing and conserving petrol for it’s own use.

                      I also found this from Googling, which appears to be a re-print of a stuff article about the government planning for petrol rationing should there be a price spike:

                      http://mitglied.multimania.de/davd/R/050816NZplansForReducedOilinPlaceNxtYear.html

                      The other thing you’re missing here is that you’re assuming oil can simply be bought if you’re willing to pay the price. That may not be the case. In a serious supply shock, a lot of oil may simply not be traded on the global market. For example, rather than putting it’s oil on the market, Saudi Arabia might come up with a private deal to supply France with oil. If you’re not France, you don’t get the oil. For a country like New Zealand, we’d be quite far down the pecking order. In a case like this, where say we’re able to import something like 60% or less of our current usage, the government *would* impose rationing, which in turn would mean whatever was left would cost $10/l.

                      So actually $10/l is likely to be a result of government rationing, rather than the cause.

                    • insider …
                      22 August 2012 at 10:57 am

                      If rationing were introduced price would be irrelevant because supply would be controlled. Rationing is about controlling amount not price. A sudden increase to $10 would not require rationing controls (assuming supply lines are not compromised) because consumers would control themselves.If supplies were suddenly compromised then it is a different situation, but no-one is talking about that… (although I note you have now shifted the goalposts in that respect)

                      That report you quote was in response to a sudden supply shock scenario eg closing of the Straits of Hormuz, at which time the IEA might call on countries to reduce demand. it was not about a response to the market ramping up of prices.

                    • Lanthanide …
                      22 August 2012 at 12:17 pm

                      …

                      If the amount of oil we import dropped to say, 60%, it logically means we’ll be paying more for that oil because we’ll be desperate for it. Supply and demand and all that.

                      So again, the government will take the first cut and dole it out as it sees fit, and then ration what is available to the public for general retail spend. And the retail price will be high because the product itself was expensive.

                    • insider …
                      22 August 2012 at 12:57 pm

                      Well yes, but, maybe. Unfortunately no-one but you is talking about that kind of sudden change except in a major international emergency, so it’s a bit of a red herring.

                    • Colonial Viper …
                      22 August 2012 at 10:28 pm

                      We didn’t ration petrol in the 70s either. They tried to ration demand through carless days (I think in response to an IEA directive) and it was a near complete failure with all sorts of perverse outcomes.

                      You’re full of BULLSHIT

                      You are pushing the usual neolib line that government regulation does not work because you are so scared of how well it does work.

        • Murray Olsen 1.1.1.4
          22 August 2012 at 7:37 pm

          Pretending things can continue as they are is beyond silly, it’s criminally negligent. Following your logic, we wouldn’t put warning lights at accident sites, because that would be scaring people into slowing down. Time for you to get real.

        • Georgecom 1.1.1.5
          22 August 2012 at 10:18 pm

          Tom, no need to ‘scare’ people into any form of action. High oil prices will force people in certain actions.

      • Draco T Bastard 1.1.2
        22 August 2012 at 9:54 am

        These are civilization ending issues…

        Well, climate change is but rising oil prices is capitalism ending.

        • TheContrarian 1.1.2.1
          22 August 2012 at 10:10 am

          “rising oil prices is capitalism ending.”

           Why would that be? Capitalism doesn’t require oil to operate. The capitalist system can operate using oil, nuclear, electricity or solar as a trade-able energy source

          • Lanthanide 1.1.2.1.1
            22 August 2012 at 10:27 am

            Yes, and none of those alternatives are ready as a drop-in alternative to power the transportation systems that globalised capitalism in it’s current form relies on.

            Some 70% of oil consumed in the world is used for transportation, and some 95% of transportation is fueled by oil.

            • TheContrarian 1.1.2.1.1.1
              22 August 2012 at 10:39 am

              Indeed, that is right.

              Nonetheless though – if we use a hypothetical situation – rising oil prices may push the market into investigating/bankrolling other projects which will then be taken advantage of in a capitalist manner. 

              Hypothetical of course.

               

          • Draco T Bastard 1.1.2.1.2
            22 August 2012 at 11:00 am

            Without the cheap energy that oil provided there is no growth. As an example, NZ will not be able to export food as there simply won’t be enough energy to maintain the needed controlled environment such as freezing.

            Now, it’s possible that we will be able to maintain a reasonable living standard based around manufactured goods made sustainably but the growth needed to maintain capitalism (specifically the interest payments) will be gone.

          • Southern Limits 1.1.2.1.3
            22 August 2012 at 1:35 pm

            Cheap oil can be replaced with absolutely nothing. Gas? Four times less energy dense, which in turn requires four times the storage space for the same amount of energy. Nuclear? Debatable if it is profitable without defence force subsidies and not very useful for personal transport. Wind? Can’t fill up a tank with it, same goes for hydro, tidal and other renewable sources of electricity generation. Biofuels may provide part of the answer, but once again there is nothing so far that comes anywhere close to the EROEI of oil which means its impact will be limited.

            “Only a few economists at the time, and even fewer since then, realized that these perplexities pointed to weaknesses in the most basic assumptions of economics itself. E.F. Schumacher was one of these. He pointed out that for a modern industrial society, energy resources are not simply one set of commodities among many others. They are the ur-commodities, the fundamental resources that make economic activity possible at all, and the rules that govern the behavior of other commodities cannot be applied to energy resources in a simplistic fashion. Commented Schumacher in Small is Beautiful:

            “I have already alluded to the energy problem in some of the other chapters. It is impossible to get away from it. It is impossible to overemphasize its centrality. […] As long as there is enough primary energy – at tolerable prices – there is no reason to believe that bottlenecks in any other primary materials cannot be either broken or circumvented. On the other hand, a shortage of primary energy would mean that the demand for most other primary products would be so curtailed that a question of shortage with regard to them would be unlikely to arise” (p. 123).

            If Schumacher is right – and events certainly seem to be pointing that way – at least one of the basic flaws of contemporary economic thought comes into sight. The attempt to make sense of energy resources as ordinary commodities misses the crucial point that energy follows laws of its own that are distinct from the rules governing economic activities. Trying to predict the economics of energy without paying attention to the laws governing energy on its own terms – the laws of thermodynamics – yields high-grade nonsense.” http://www.energybulletin.net/node/49332

      • Polish Pride 1.1.3
        22 August 2012 at 10:38 am

        Investigate whether hemp and cannabis are an effective biofuel crop that could supply the oil needs of this country for a start. If it turns out to be able to do that legalise it and start production on a large enough scale. Half the size of land used for darying by my last calculation when I firts saw informtion on this. That said the information was from someone wanting to legalise the stuff so the validity of the figures would need to be checked. Interestingly their is information that supports a view that Henry ford envisaged this as the way to fuel all automobiles and farm machinery.
        Not sure if it is feasible but it seems it would be worth looking at and ruling in or out

        • Draco T Bastard 1.1.3.1
          22 August 2012 at 11:02 am

          Investigate whether hemp and cannabis are an effective biofuel crop that could supply the oil needs of this country for a start.

          They can’t. Growing plants takes resources out of the soil. If we then turn around and burn those resources we won’t be able to sustain the crops.

          • Polish Pride 1.1.3.1.1
            22 August 2012 at 11:12 am

            Not necessarily as it is a green manure crop – it may still be worth some investigation

            http://edis.ifas.ufl.edu/tr003

            Similarly potatoes cn be grown over and over in the same patch of soil as they like a low ph

            • weka 1.1.3.1.1.1
              22 August 2012 at 12:41 pm

              Yes, but you still can’t grow enough oil by cropping without cheap fossil fuel oil to support that way of farming. Also you need shit loads of land, and that usually comes at the expense of growing food.
               
              The key difference between fossil fuels and biofuels, is that the embodied energy in oil, gas and coal built up over a massive time frame. Think about it in terms of solar energy personified over millenia. You can’t get the same amount of solar energy via photosynthesis in the short time frame we have.

              • Polish Pride …
                22 August 2012 at 1:33 pm

                Yes, but you still can’t grow enough oil by cropping without cheap fossil fuel oil to support that way of farming. Also you need shit loads of land, and that usually comes at the expense of growing food.

                That was the thinking when looked at with ‘traditional’ (wrong word) biofueld crops such as corn which are very low yield, require a large amount of nutrients to be ploughed nback into the land and produce one maybe two crops per year at most. Hemp and Cannabis on the otherhand is supposed to be able to do 3 – 4 crops per year and has a (biofuel) yield 2.5 times per crop compared to that of corn quite possibly making it very viable. It has never been looked at seriously as an option however because of its legal status.

                I ran some numbers on the figures I was given a while back and used the latest stats I could find on NZs petroleum and diesel consumption and worked out it would take just over half the amount of land we use for dairying. It can also be done on much more marginal land not suitable for dairying so does not necessarily have to compete with it.
                The thing that I couldn’t confirm was the accuracy of the figures I had been given 100% – they were given to me by someone wanting to legalise cannabis after all.

                “The key difference between fossil fuels and biofuels, is that the embodied energy in oil, gas and coal built up over a massive time frame. Think about it in terms of solar energy personified over millenia. You can’t get the same amount of solar energy via photosynthesis in the short time frame we have”

                See that arguement makes a lot of sense in theory but then look at Brazil who run at about 80% biofuel with their vehicles. so it would seem it is possible.
                The question is still around cannabis and hemps having a far better conversion rate than what is being used today. Then their is its potential use in textiles, paper and other manufacturing.

                just saying that maybe it is time to see if there is any validity to it or not by putting it to some scientific testing.

                • weka …
                  22 August 2012 at 1:44 pm

                  “The question is still around cannabis and hemps having a far better conversion rate than what is being used today.”
                   
                  I completely agree with that, and we should definitely be developing that. But it will never replace cheap oil. I think you will find that even if the Brazil figure is correct (and I’d like to see the citation for that), those crops are being grown and processed using fossil fuels.
                   
                  You do understand that oil underpins everything, not just transport fuels, right?
                   
                  Plus, what Draco is talking about. Even though hemp is much more efficient, esp if you can green manure and harvest the crop offsite, you still have a net loss of nutrients over time. I would like to see the analysis of hemp and how much nutrients it uses to grow. But I still don’t believe that you can monocrop in the way you are suggesting (to replace fossil fuels) and do that sustainably. At best it would be a useful transition fuel in the powerdown. Once our consumption has dropped, we can of course use hemp at a local level (probably in a polyculture/rotation system).
                   
                  btw, I think that if you grow potatoes continuously in the same site you either need artificial fertiliser and pesticides (both dependent on cheap oil), or you end up with a potato famine (the blight will eventually take hold). Again the problem is large scale monocropping. Once the ratio of potato to land gets to a certain point, disease will dominate.
                   
                  AFAIK, sustainably farming systems rotate potato crops.

            • Draco T Bastard 1.1.3.1.1.2
              22 August 2012 at 1:27 pm

              You’re talking about mono-cropping large fields of the stuff, cutting it down to ground level and then letting it grow again while taking away that which was cut down. Sure, you’ll get a few crops out of it before the ground loses all it’s minerals and other stuff that the plants need to grow but it will lose them. You have to replace what was used up and if you’re burning the produce then you can’t do so.

              • Polish Pride …
                22 August 2012 at 1:46 pm

                I do agree with this in theory it would mean that you’d need to factor the oil requirements for fedrtilisers production into the mix also which I never did. Even as a solution to reduce current traditional oil consumtion until a non oil based alternative is found (or until surpressed free energy tech is made available). Of course not doing this and oil running out provides a massive driver to find a viable alternative very very quickly.

                – maybe chlorine and peroxide
                or
                sulphur trioxide and H2O

                but don’t know if either would be vible from an environmental stand point or mass production.

              • Clashman …
                22 August 2012 at 4:20 pm

                In reply to DTB @1.27 pm

                In theory that is correct, but as a commercial organic orchardist for over 20 years I can tell you it doesn’t necesarily work that way in practice.
                I was told the same sort of thing by all and sundry when I changed to an organic system. The common refrain was that all I would be doing was “mining” all the nutrients from the soil and that in ten years time my orchard would be stuffed.
                Under conventional agricultural theory, with the inputs available to me I am nowhere near replacing the nutrients that my crop removes from the soil but 20 odd years later my yields are stable (above the conventional average) and my plants have never looked better.
                Its clear to me that there is stuff going on within the soil and general enviroment that we still dont recognise or understand. I have had several instances over the years were I have been told by highly regarded and qualified soil scientists that some of the things going on in my orchard are impossible and they are at a complete loss to explain it, yet the evidence is there that it clearly isn’t impossible.
                Obviously certain “poor” soil types are not going to be able to sustain production without conventional fertilisers but it then becomes a case of growing the right crops in the right places.
                Thats a long post for me, hope it makes sense.

                • Draco T Bastard …
                  22 August 2012 at 4:30 pm

                  What sort of orchard?
                  Are you using any fertiliser at all?
                  Are you using field rotation?
                  In what ways would it differ from what growing hemp to turn into fuel?

                  • Clashman …
                    22 August 2012 at 4:55 pm

                    Kiwifruit so field rotation is impossible in my case. Hemp obviosly can be rotated so thats another + over my situation.
                    I use compost and worm castings as “fertiliser”. These at the moment of course use machinery in thier production and application but this is a case of ease rather than necessity. I’m thinking that under a no or minimal oil economy there will be plenty of labour available to replace the machines.
                    From what I know about hemp production (which isn’t a lot) the main difference would be that the hemp is probably a more intensive system than what I have but being able to fallow fields will aleviate this to a large degree.
                    I also understand that pests and diseases aren’t really an issue with hemp but even if they were it would be largely due to the method of production
                    Another “impossibility” I have discoverd after changing from a conventional to an organic sytem is that when you stop spraying chemical based pesticides and fungicides that the pests and diseases largely go away.

                    • Draco T Bastard …
                      22 August 2012 at 6:21 pm

                      So you are using compost. My main point is that if you take away that which was grown and burn it you lose that compost. This doesn’t apply for food crops as the compost can be returned to the earth via treatment plants and field rotation. Now, the hemp can use field rotation but it’s still going to need boosting from other inputs but we’ll be losing some of those inputs by turning it to fuel. Over time growing hemp for fuel just isn’t sustainable (this is also the reason why I get pissed off with people who go on about how sustainable wood burners are – they’re not).

                      Without the use of artificial fertilisers we’re back to using real economics rather than the inflated and delusional economics that we’ve used for the last 50+ years. In other words, we’ll be choosing where the resources we actually have will be used rather than wondering where the money is going to be coming from and burning them won’t be an option.

                      Another “impossibility” I have discoverd after changing from a conventional to an organic sytem is that when you stop spraying chemical based pesticides and fungicides that the pests and diseases largely go away.

                      And that doesn’t actually surprise me. Plants have been around a lot longer than we’ve been farming them and probably already have all the defences that they need.

                • fnjckg …
                  22 August 2012 at 4:59 pm

                  Did.Amen

                  • Clashman …
                    22 August 2012 at 7:23 pm

                    DTB-
                    90% to bio fuel the rest to compost? There will still be plenty of other “waste” to utilise for making compost.
                    There’s gonna be plenty of logistical issues to overcome but I would hope the seriousness of the situation would provide the will to achive this.
                    Gotta have some hope to cling to!

                    • weka …
                      22 August 2012 at 7:55 pm

                      Clashman, a couple of points. One is that organic orcharding is going to take much longer to show up net loss of nutrients than annual monocropping. This is because trees have much deeper access to nutrients than hemp does (and less disturbance of the soil micro-organisms needed to maintain fertility).
                       
                      The other is that, of course it is possible to grow crops sustainably, you just can’t do it on the scale that PP is talking about, because the removal of material happens too often and too fast for the soil to regenerate. There are agricultural technologies that build soil, but afaik they can’t be used for industrial export cropping. Not sure where the line is exactly, but there is a point whereby removal of the crop outstrips soil building capability. Industrial farming is well over that line. So far over the line that we don’t even have to consider it in sustainability terms.
                       
                      I don’t believe that industrial organic orcharding is sustainable either, but I am very glad that people such as yourself are developing good practice (as well as producing healthy food). When we get to the point of having to grow our own food again, it will be much easier to adapt organic orchards from the industrial model to the local food model than conventional farms.

                    • Polish Pride …
                      22 August 2012 at 9:44 pm

                      Ok so what if tice the land was used and crops harvested only twice a year.. would tht theoretically be anymore feasible. Also how is it that potatoes can be grown in the same patch of land year after year after year with no nutrients added. This doesn’t make sense to me so what is different about potatoes??

                      Also is it not worth at least confirming scientifically if the yields are there (i.e. hemp into biofuel produces X per acre)?

                    • weka …
                      22 August 2012 at 10:45 pm

                      Who says potatoes can be grown in the same place indefinitely?
                       
                       

                      Also is it not worth at least confirming scientifically if the yields are there (i.e. hemp into biofuel produces X per acre)?
                       

                      Sure. See if you can find anything.

      • Glg 1.1.4
        22 August 2012 at 1:39 pm

        Build more roads, build more roads…….

      • Majella 1.1.5
        22 August 2012 at 2:51 pm

        Not “civilisation-ending”…just “extreme-change-inducing”.

        Personally, I’m in business that has always relied on face-to-face interaction (for trust/credibility) requiring a lot of travel, but since petrol has been north of $1.50 a litre, I have more and more contact on Skype and documentation/reports etc by e-mail. Where once I might have see a client in person 3 or 4 times through a process, that will now likely be only once. So, I have adapted (and continue to).

        However, perhaps of greater concern than the personal inconvenience of expensive fuel, is the inflationary effect on the basic goods we buy & consume each day, due to the direct transport component (and the more indirect costs of fagri-chem fertilisers and the like…)

        Would a re-vitalised railway system deliver a more cost-effective bulk transportation service? Too right it would, but fuel is still “too cheap” for that paradigm to take hold, in the absence of a bit of good-old-Polish-shipyard-Fed’rashunLabour command economics.

    • deano 1.2
      22 August 2012 at 9:29 am

      Tom, learn the difference between a dog whistle and an alarm bell.

      • Tom Gould 1.2.1
        22 August 2012 at 12:13 pm

        I know lefties prefer to accuse others of dog whistling, but the peak oil scare tactic is clearly dog whistle. Mention peak oil and all the greenies stab their Dan Akerson voodoo dolls and spit on the motorway.

        • exit lane 1.2.1.1
          22 August 2012 at 9:49 pm

          Yeah all those Greenies like the US and German military, The IMF, Lloyds of London, Chatham House UK Energy Research Centre … who have all warned of oil scarcity

  2. ad 2
    22 August 2012 at 8:40 am

    Not a great time to be relying on petrol excise tax for a whole lot of public transport funding.

    Petrol price goes up, petrol useage goes down, petrol tax income goes down.

    Less funding to subsidise passengers, less funding to subsidise new routes, less funding to build better public transport stations.

    In petrol price spikes, this current fully hypothecated system is no good for anyone.

    • crashcart 2.1
      22 August 2012 at 9:02 am

      No thats not a problem at all because the government have just removed the limit on borrowing for roads. I can’t wait to see these beautiful expanses of under used highways streaching across the country. Of course we will see if by that time I am one of the lucky few who can still afford petrol to put in my car and use it.

      • ad 2.1.1
        22 August 2012 at 9:26 am

        Honestly if you’re applying for funding for PT it’s a real problem. And getting worse.

        Capacity to loan will just get them over a few programming humps like Christchurch.

  3. Jimmie 3
    22 August 2012 at 8:46 am

    The recent increase has nothing to do with peak oil.

    Its due to jitters about rumours that Iran & the US are going to have a scrap sometime soon.

    If we really wanted lower oil prices OPEC is the problem – they are basicly a monopoly cartel that adjusts oil production to artificially keep oil prices high.

    If they were gone and the oil producing countries were actually in competition with each other the oil price would be considerably lower than it is currently.

    Oh well I guess if that happened the government would just up the excise tax thus providing no benefit to the motorist.

    • Kotahi Tāne Huna 3.1
      22 August 2012 at 9:39 am

      Pretty simplistic analysis Jimmie. Politics has affected supply for as long as I can remember; the OPEC nations do not speak with one voice.

    • Lanthanide 3.2
      22 August 2012 at 9:41 am

      “The recent increase has nothing to do with peak oil.”

      No, but the underlying and sustained price of $80+ barrel is.

      “If we really wanted lower oil prices OPEC is the problem – they are basicly a monopoly cartel that adjusts oil production to artificially keep oil prices high.”

      Actually the only country in OPEC that can raise production by any meaningful amount is Saudi Arabia. All the other countries are pumping full-tilt, and in some or many cases likely to be exceeding the quotas set by OPEC (which have seldom been fully obeyed by all players). Saudi Arabia’s excess capacity tends to be heavy, sour crude that few refineries can actually process anyway, which is exactly what we saw when Iran’s production dropped and Saudi came to the market with a heavy blend that no one wanted.

      • Draco T Bastard 3.2.1
        22 August 2012 at 10:03 am

        Actually the only country in OPEC that can raise production by any meaningful amount is Saudi Arabia.

        And we don’t even know if they can.

        • insider 3.2.1.1
          22 August 2012 at 10:10 am

          It has proven capacity to move about 2mbpd

          • Lanthanide 3.2.1.1.1
            22 August 2012 at 10:30 am

            If your definition of “proven” is “whatever Saudi Arabia claims without allowing outside auditors”, then yeah.

            • insider 3.2.1.1.1.1
              22 August 2012 at 10:36 am

              In the last five years their production has shifted up and down. It is currently over 10mpd up from 8mbpd two years ago.

              • Lanthanide …
                22 August 2012 at 10:41 am

                Which actually doesn’t mean they can produce 12m barrels right now.

                There’s such things as field declines, as well as an awful lot of expensive facilities required to pump and process their oil. If those facilities are down for maintenance or repair or simply shut down because they’re uneconomic, raising production up to previous levels may not be possible.

                • insider …
                  22 August 2012 at 11:03 am

                  you are the only one to have suggested swing capacity to 12mbpd. I said they had 2m swing and have been using it between 8 and 10mbpd

                  • Lanthanide …
                    22 August 2012 at 12:20 pm

                    “It has proven capacity to move about 2mbpd”

                    Then the above statement is pointless, because it was in reply to this:

                    “Actually the only country in OPEC that can raise production by any meaningful amount is Saudi Arabia.

                    And we don’t even know if they can.”

                    The statement from myself and Draco was saying that Saudi may not be able to produce much more than they currently are. You reply with “they have proven they can move from 8m to 10m because that’s what they’re currently pumping”. Well great, but that has nothing to do with the statement that Draco and I made, in fact if anything you just agreed with us.

                    • insider …
                      22 August 2012 at 12:31 pm

                      The Saudis have said they can do 11.5mbpd to 12. Iran’s production is constrained by about 1mbpd by politics and Iraq’s production is steadily growing.

                    • Lanthanide …
                      22 August 2012 at 12:39 pm

                      I repeat my earlier comment:

                      “If your definition of “proven” is “whatever Saudi Arabia claims without allowing outside auditors”, then yeah.”

                    • insider …
                      22 August 2012 at 12:53 pm

                      Well I am talking verifiable production -ie stuff measured out of pipes – rather than guesses around reserves. The Saudis have a track record of delivering what they say they will.

                    • Lanthanide …
                      22 August 2012 at 4:20 pm

                      Up until fairly recently, Saudi was saying they would eventually produce 15m.

                      Now they say 12-12.5m is tops.

          • Macro 3.2.1.1.2
            22 August 2012 at 10:37 am

            Yeah Right!

        • Colonial Viper 3.2.1.2
          22 August 2012 at 10:24 am

          They most likely can’t, or alternatively will refuse to. Saudi Arabia’s previous maximum production is around 9.5 mmb/day. They might be able to exceed this by a few percent (max) if they wished.

          However, they can also sit back and let sight global capacity shortages maximise their return on each finite barrel of oil they pump.

          OPEC figures over the production drop due to the Libyan crisis, show the Saudis were happy to keep their own production level, and suggests that they are happy to do the latter.

          • Lanthanide 3.2.1.2.1
            22 August 2012 at 10:30 am

            Yeah sorry, when I said Iran I meant Libya.

          • insider 3.2.1.2.2
            22 August 2012 at 10:38 am

            You might need to lend them your expertise cos these crazy arabs think they are producing over 10. The fools.

            • Colonial Viper 3.2.1.2.2.1
              22 August 2012 at 11:09 am

              Yeah currently 10.1/bbd.

              Which is 6% over the figure I said.

              Which is exactly the range I described. Idiot.

              • insider …
                22 August 2012 at 11:28 am

                6% is more than a few and you said it was ‘max’. It still has capacity to go higher based on recent production, which was over 10.3mpbd. But of course you know better because it was apparantly only 9.5…max, genius

  4. Peter 4
    22 August 2012 at 8:54 am

    Can you not call it “investing 12 billion” please. Instead call it for what it is – squandering, wasting, borrowing, pilfering etc

  5. muzza 5
    22 August 2012 at 8:55 am

    Actually James I think you might find that there is more than the singular factor.

    You can add the wars, and even threat of wars which throttle the oil supplies as opposed to free them up, and scare the “markets”, along side the ability for entities to control up to 25% of the oil market, in cahoots with the futures & commodities exchanges, working feverishly to hike the price, and keep it there..Oh and dont forget OPEC of course, because they are working for us all!

    Be good to see some more rounded explantions, than the tired “peak” musings, which serve little more than to remove deeper discussions from debates…

  6. Wayne 6
    22 August 2012 at 9:02 am

    The change to electric cars is over the next decade will reduce demand for oil, at least toward the end of the peroid. For instance if your car can go the equivalent of 20 km per litre compared, to 10 at present then a doubling of oil prices will have no efffect.

    Cars are just too convienient for people to easily give them up. People are much more likely to buy a diesel, or a hybrid or electric, or a smaller car. For instance my diesel VW Passat does 1300 k on a tank. Ten fills a year is enough. And diesel is just over $1.50 a litre at the pump, though there are road user charges, which are about $600 per year.

    In any event we seem to have had prices around these levels for some years now, with ups and downs. Only a month or two ago prices were below $2 per litre, so peak oil is not the current cause. Mind you the current overall oil price levels may be part of the reason why the global economy is struggling to grow. But the price is also forcing innovation, like fracking for gas!

    • mickysavage 6.1
      22 August 2012 at 9:19 am

      Sorry Wayne there is not enough rare earth metals in the ground to make enough batteries to replace all of the existing cars.

      • higherstandard 6.1.1
        22 August 2012 at 9:27 am

        I’ll think you’ll find that rather than being rare, which they are not, it’s that the compounds in question are not usually concentrated in deposits that are easy to tap, and as a result, most of the world’s supply comes from just a few sites.

        • Lanthanide 6.1.1.1
          22 August 2012 at 9:49 am

          Yes, and you didn’t actually disprove his point, that there aren’t enough of these minerals to go around.

          • insider 6.1.1.1.1
            22 August 2012 at 10:07 am

            rare earth elements are in similar concentrations to metals such as chromium, nickel, copper, zinc, molybdenum, tin, tungsten, or lead. Rumours of their demise are greatly exaggerated.

            • Lanthanide 6.1.1.1.1.1
              22 August 2012 at 10:31 am

              And yet the global production of those minerals isn’t as high as the others you have listed.

              It doesn’t really matter if you have 2 billion tons of something and you need 1 billion tons to make a new product if the most you can extract in any single year is 5 million tons.

              • insider …
                22 August 2012 at 10:39 am

                have you considered relative production levels might be linked to relative demand….?

                • Lanthanide …
                  22 August 2012 at 10:44 am

                  And that production on large scales takes multiple years to ramp up, or may be constrained by physical factors that are extremely expensive to overcome. For example you might need so many litres of water to mine the minerals, and the nearby river only supplies X litres but you’d really like it if supplied X + Y.

                  • Colonial Viper …
                    22 August 2012 at 11:12 am

                    insider is of the free-market school of thought…as long as prices are high enough, the resources will magically appear.

                  • insider …
                    22 August 2012 at 11:14 am

                    Similarly demand takes time to build. See earlier comment on hybrids

                    • Colonial Viper …
                      22 August 2012 at 11:18 am

                      I don’t think there is going to be any demand growth for a long time. In a related example, oil refineries are going out of business and being mothballed; new investment is extremely rare. (Good on NZ…!)

                    • insider …
                      22 August 2012 at 11:39 am

                      yep no one has ever heard of any refineries being built in China or India or Africa. Just becasue shoe factories close in NZ doesn’t mean fewer shoes being produced. Same with refineries.

                    • Colonial Viper …
                      22 August 2012 at 11:42 am

                      insider – the key is that places like China and India see having their own refineries as a strategic advantage.

                      Africa has very few refineries because although they have very oil rich regions, they are far from where most of the usage for refined products is located.

                      The other point that you have missed is that economic decline in the west is deep – as is the decline in demand for refined petroleum products.

                    • insider …
                      22 August 2012 at 11:49 am

                      What’s happeneing is that demand is shifting and production is moving with it. In the West we are seeing peak demand with saturation of vehicle numbers, saturation of travel, lower relative growth and increases in efficiency.

            • mike e 6.1.1.1.1.2
              22 August 2012 at 7:13 pm

              Outsider its time you had your latest lithium treatment.
              the worlds largest reserves of lithium are in afghanistan funny that.

          • higherstandard 6.1.1.1.2
            22 August 2012 at 10:39 am

            Ah no, I’ll think you find I corrected his incorrect statement.

            • Colonial Viper 6.1.1.1.2.1
              22 August 2012 at 11:13 am

              yours is the more correct version, certainly. If we could refine the entire earths crust through a smelting furnace we would have enough basic elements to last humanity forever. (Just nowhere to live…)

              • higherstandard …
                22 August 2012 at 11:24 am

                And if halt or reverse population growth and continue at the same pace of scientific advances that we have over the previous century we might just find some alternative energy sources much to the chagrin of the doomsayers.

                • Colonial Viper …
                  22 August 2012 at 11:45 am

                  Just remember it takes 25-50 years for an energy transition to be made. Its a significant lag time. And I’m betting that we won’t come up with commercial fusion reactors, dilithium chambers etc in time for widescale deployment.

                  and continue at the same pace of scientific advances that we have over the previous century

                  You’ll note that the pace of scientific growth has slowed significantly in the last 20-30 years – at the same time as middle class incomes have deteriorated.

                  • BM …
                    22 August 2012 at 11:55 am

                    In the 80’s we switched all the governmental fleet to CNG as well as numerous private vehicles and it only took a few years.
                    IN the USA there is a real glut of Natural gas, don’t be surprised if you see vast amounts of vehicles switched to Natural gas.

                    • insider …
                      22 August 2012 at 12:07 pm

                      Americans won’t even buy diesels. Can’t see them switching to CNG. It may help them cut fuel oil use though.

                    • Lanthanide …
                      22 August 2012 at 12:24 pm

                      Yes, that is one thing that, of late, has moderated my view of how peak oil will play out in the next decade.

                      It still seems likely that we’re facing an oil shortage, but the massive gas resources available to some countries means those countries will have an escape route for some of their consumption.

                    • Draco T Bastard …
                      22 August 2012 at 12:43 pm

                      In the 80′s we switched all the governmental fleet to CNG as well as numerous private vehicles and it only took a few years.

                      And then we stopped switching them as the gas ran out.

                      IN the USA there is a real glut of Natural gas, don’t be surprised if you see vast amounts of vehicles switched to Natural gas.

                      Personally, I’d be highly surprised.

                      For several years, we have been asked to believe that less is more, that more oil and gas can be produced from shale than was produced from better reservoirs over the past century. We have been told more recently that the U.S. has enough natural gas to last for 100 years. We have been presented with an improbable business model that has no barriers to entry except access to capital, that provides a source of cheap and abundant gas, and that somehow also allows for great profit. Despite three decades of experience with tight sandstone and coal-bed methane production that yielded low-margin returns and less supply than originally advertised, we are expected to believe that poorer-quality shale reservoirs will somehow provide superior returns and make the U.S. energy independent. Shale gas advocates point to the large volumes of produced gas and the participation of major oil companies in the plays as indications of success. But advocates rarely address details about profitability and they never mention failed wells.

                      Basically, you’re just an ignoramus looking for straws to cling to while you watch the stable world you’re so used to crumble.

                    • insider …
                      22 August 2012 at 12:49 pm

                      I don’t think it was the supply of gas that stopped CNG. I suspect the consumption was a fraction of that by say gas power stations built in the last 10 years – remember it was only available where there was reticulated gas so none in the SI or big chunks of the North. I think it was the cost of the conversions (something like $2k which would never have been recouped), the low efficiency/capacity of the systems, combined with supply fears declining around oil.

                    • BM …
                      22 August 2012 at 12:50 pm

                      Basically, you’re just an ignoramus looking for straws to cling to while you watch the stable world you’re so used to crumble.

                      I couldn’t care less if the world crumbles.

                      The only reason CNG died was because the price of oil dropped to around $10.00 per barrel.
                      At 2k installation cost it just wasn’t worth it.

                    • Colonial Viper …
                      22 August 2012 at 7:22 pm

                      In the 80′s we switched all the governmental fleet to CNG as well as numerous private vehicles and it only took a few years

                      YEah and look how quick it was switching from leaded petrol to unleaded *sigh*

                      25 to 50 years to switch to a brand new energy technology. Which doesn’t exist yet. Good luck people.

                      IN the USA there is a real glut of Natural gas, don’t be surprised if you see vast amounts of vehicles switched to Natural gas.

                      The shale gas bubble is going to be here one moment and gone the next. Further, the energy density of natural gas cf. diesel or petrol is poor.

    • insider 6.2
      22 August 2012 at 9:38 am

      Electric cars over 10 years? Sorry to burst your ubble but the interia in the car market is huge. Hybrids have been available in NZ for nearly 15years and they still only make up less than 1% of new car sales. The maths is against you.

    • Lanthanide 6.3
      22 August 2012 at 9:46 am

      There are approximately 2 billion cars in the world with 100m new ones being added each year.

      Electric cars aren’t going to be making any sizeable inroads into the fleet any time soon.

    • Tom Gould 6.4
      22 August 2012 at 12:20 pm

      At last, someone is thinking, Wayne. But even this confounds the Greenies. We can have plenty of renewable electricity to power all our electric vehicles, but that might mean building a dam or two, and we can’t have that either. What are these latter day luddites going to do, other than chant slogans and preach doom? They remind me of those poor folks who wander the streets with a sandwich board declaring ‘the end is nigh’.

      • weka 6.4.1
        22 August 2012 at 12:51 pm

        How are you going to build the dams without cheap oil?

      • mike e 6.4.2
        22 August 2012 at 4:09 pm

        TG even bill english said hydro dams are now to expensive to construct.
        not coming up will credible alternatives makes you the luddite burying your head in the oil sands.
        NZ has a history of not adapting to the new realities until it is to late atleast we are discussing the alternatives just bullying every body is not discussing, lets have some more ideas TG.

      • Draco T Bastard 6.4.3
        22 August 2012 at 5:52 pm

        but that might mean building a dam or two

        No places left to build dams. Don’t need them anyway as wind and solar will work fine. Doesn’t mean that we’re going to have cars though – they’re far too inefficient and thus living sustainably will rule them out. Basic economics.

        What are these latter day luddites going to do…

        Why don’t you ask John Key – he’s the one in charge of the party that wants to take us back to feudalism.

    • Colonial Viper 6.5
      22 August 2012 at 2:05 pm

      The change to electric cars is over the next decade will reduce demand for oil

      Yes I can see half a million new electric cars coming online in NZ over the next 10 years Wayne.

      Hands up everyone who is prepared to shell out $80,000 on a new GM Volt.

      • fatty 6.5.1
        22 August 2012 at 2:08 pm

        I’m gonna hold out till 2015 for those hover-cars that run on rubbish

      • Wayne 6.5.2
        22 August 2012 at 3:58 pm

        OK, so electric cars will take time to really affect the market , though I think the shift will take place faster than hybrids, since they have a more obvious advantage. Manufacturers do look like they are gearing up for a major production boost from 2015 onward. The price will fall pretty quickly from current levels.

        However, diesel cars have already got a major market presence and that is because they are very efficient. My annual fuel bill in the VW Passat for 12,000 kms is $1800 including road user charges. The latest model apparently uses even less fuel.

      • Draco T Bastard 6.5.3
        22 August 2012 at 5:44 pm

        GM Volt? Stuff that, I’ll has me a Delorean.

  7. insider 7
    22 August 2012 at 9:29 am

    It’s not really a record. No account is taken for inflation and tax increases.

  8. travellerev 8
    22 August 2012 at 9:46 am

    Sweet Jesus,

    Enough with the peak oil already.
    The oil production is not diminishing but the banksters are printing money out of thin air buying oil in order to speculate with it.

    Do we have a Peak oil situation? Not yet.

    • Draco T Bastard 8.1
      22 August 2012 at 10:16 am

      We’ve had a Peak Oil situation for the last 5 or 6 years. Yes, the banksters are speculating as well but that doesn’t remove the underlying physical reality.

      • muzza 8.1.1
        22 August 2012 at 1:26 pm

        Quite, but the peak argument is not the key ingredient to the prices, speculation is!

        • travellerev 8.1.1.1
          22 August 2012 at 2:13 pm

          Demand is down in China, India, the US and Europe.

          There is oil being produced at record amounts and we have a run away situation with Europe collapsing financially and both the Reserve bank of New York and Europe bailing out banks countries with digital 0’s and 1’s in order to kick start economies hollowed out be the destruction of their production i.e. real world wealth creation in favour of fraudulent financial derivatives and speculative commodity trading as the only source of “wealth” and you keep going on about peak oil?

          The way the collapse is shaping up the global population will be gone before the oil runs out.

          • Lanthanide 8.1.1.1.1
            22 August 2012 at 4:23 pm

            First time I’ve heard that demand is down in China and India. Can you produce evidence to back that up?

            • vto 8.1.1.1.1.1
              22 August 2012 at 6:01 pm

              There s heaps. Can be read in the dailys. Can be seen in the asset sale drama with solid energy (coal demand down leading prices way down).

              This is like th slowest train wreck

              • Colonial Viper …
                22 August 2012 at 6:07 pm

                Agreed. If you look at Solid Energy press releases, Q4 last year and Q1 this year, they were trumpeting high coal prices and major profit growth.

                All of a sudden, by Q3, things have changed a lot. There are some reports that China is refusing to let ships full of contracted coal and iron ore dock in its ports because it has unused stockpiles up the wazoo.

                This is like th slowest train wreck

                Yep. And no official economic numbers out of China can be trusted.

                Australia is screwed. Watch for the tide of Kiwis starting to flow back next 6 months.

            • GregJ 8.1.1.1.1.2
              22 August 2012 at 7:06 pm

              Lanth,

              In the case of China perhaps this: China oil demand posts first fall

              However it hardly indicates a trend at this stage and India’s demand seems to be rising: India crude oil demand…

              I suspect it is all a bit more complex than Travellerev might think though.

              • travellerev …
                23 August 2012 at 7:56 am

                No GregJ, It is actually not that complicated. US + Europe collapsing means China and India collapse too since their economies were based on selling slave labour to the US and Europe and not on an internal build up of their economy based on their own populations.

                And GregJ a word of advice: By the time you, like me, read about a hundred publications a day in order to educate myself you can get back with the patronising OK. Until you do you might want to simmer down a bit.

    • Southern Limits 8.2
      22 August 2012 at 1:27 pm

      Conventional oil production has grown only 0.5% between 2005 and 2010. The gap has been mostly filled by unconventional production.

      Speculation only plays a small amount into the overall price of oil.

      “According to St. Louis Fed economists Luciana Juvenal and Ivan Petrella, speculation in oil markets was the second-biggest factor behind the past decade’s price run-up, behind increased global demand for oil, which accounted for 40 percent of the increase.

      “Speculation was the second-largest contributor to oil prices and accounted for about 15 percent of the rise,” the economists wrote. “The effect that speculation had on oil prices over this period coincides closely with the dramatic rise in commodity index trading — resulting in concerns voiced by policymakers.

      The most recent Fed study concludes that economic fundamentals are still the primary determinant, saying only that speculation can “exacerbate” price swings.”

      http://www.huffingtonpost.com/2012/03/20/wall-street-speculation-oil-price_n_1367896.html

      • Colonial Viper 8.2.1
        22 August 2012 at 2:08 pm

        Yep. The economic and demand destruction of relatively high oil prices will mean that few will be able to afford oil even as there is still quite a bit of it around.

        One expected consequence: economic and bureacratic systems are all going to decomplexify. As the energy to keep complex arrangements going becomes scarcer.

        • Southern Limits 8.2.1.1
          23 August 2012 at 9:35 am

          Exactly. To quote JMG again on his theory of catabolic collapse:

          “The only reliable way to solve a crisis that’s caused by rising maintenance costs is to cut those costs, and the most effective way of cutting maintenance needs is to tip some fraction of the stuff that would otherwise have to be maintained into the nearest available dumpster. That’s rarely popular, and many complex societies resist it as long as they possibly can, but once it happens the usual result is at least a temporary resolution of the crisis. Now of course the normal human response to the end of a crisis is the resumption of business as usual, which in the case of a complex society generally amounts to amassing more stuff. Thus the normal rhythm of history in complex societies cycles back and forth between building up, or anabolism, and breaking down, or catabolism. Societies that have been around a while – China comes to mind – have cycled up and down through this process dozens of times, with periods of prosperity and major infrastructure projects alternating with periods of impoverishment and infrastructure breakdown.”

          http://thearchdruidreport.blogspot.co.nz/2011/01/onset-of-catabolic-collapse.html

  9. Hilary 9
    22 August 2012 at 9:47 am

    I am surprised that there seem to be so many (mainly men) who assume that the private car will always be around, everyone will have one, and that something will just turn up to fuel them. Whereas the reality is that this is probably the last generation with access to such transport.

    I also know so many people who don’t drive who are completely overlooked in the current obsession with big motorways. Our remaining precious resources need to go into widespread public transport infrastructure fuelled by renewables such as electricity.

    • Carol 9.1
      22 August 2012 at 9:53 am

      Indeed, Hilary.

      I use my car mostly for short journeys about once or twice a week, these days. I do prefer it for going out at night. But, as I get older I’m looking towards giving up driving completely.

      Among other considerations, I’ve just had enough of the (minority) of selfish, and dangerous drivers on the roads, who treat car driving as some kind of competition. I don’t understand what they think they achieve by getting 2 inches further down the road than another driver.

      • Lanthanide 9.1.1
        22 August 2012 at 9:58 am

        “I don’t understand what they think they achieve by getting 2 inches further down the road than another driver.”

        My favourite is pulling up alongside them at red traffic lights.

      • fnjckg 9.1.2
        22 August 2012 at 5:09 pm

        I have not renewed license which xpird this year and am in my forties. Just cycle.
        Cycle-cycle-Cycle

    • Southern Limits 9.2
      22 August 2012 at 1:24 pm

      It is one of the greatest myths of modern industrial society that we are somehow a “chosen people” that will never see hard times.

    • lostinsuburbia 9.3
      22 August 2012 at 2:03 pm

      Yep, the trick is to actually have smarter urban forms that don’t require people to travel long distances for work, education, and recreation. Of course that doesn’t deal with energy use for food production etc, but at least resources can be diverted to better use than being burnt in an idling engine at the traffic lights.

  10. DH 10
    22 August 2012 at 10:05 am

    My understanding is the recent oil price increase is down to the sanctions against Iran. The US has pushed Japan & Korea to stop buying Iranian oil which has led to increased demand from other suppliers & pushed the price up.

    I think oil has to go up in price more for us to wean ourselves off it. Basic economics says that the price of a finite resource will keep going up with increasing demand until it meets or exceeds the price of an alternative. When that stage is reached the demand will then switch to the alternative which is hopefully an environmentally friendly one.

    So for us car drivers it’s not good for the bank balance but in the longer term it probably is a good thing. I wonder how competitive rail would be against road today if we’d electrified our rail network 30yrs ago like we should have done.

    • Draco T Bastard 10.1
      22 August 2012 at 10:27 am

      I wonder how competitive rail would be against road today if we’d electrified our rail network 30yrs ago like we should have done.

      If trucks weren’t being massively subsidised by cars then they wouldn’t be on the road today. If we’d electrified the rail 30 years ago there’s no way that trucking would have had a chance to become competitive.

  11. Colonial Viper 11
    22 August 2012 at 11:03 am

    So English says Solid Energy is in no commercial condition to be sold.

    But with the sale now unlikely, the Government can’t rely on a cent.

    “This is the wrong time,” says Labour MP Clayton Cosgrove. “You have a global financial meltdown, you have Treaty claims court action now. This John Key has stuffed it up from start to finish.”

    Read more: http://www.3news.co.nz/Asset-sales-in-Air-New-Zealand-also-doubful-this-term/tabid/1607/articleID/266255/Default.aspx#ixzz24E0LvbXk

    Can Cosgrove please describe on Labour’s behalf when a ‘good’ time to sell Solid Energy would be.

    http://www.3news.co.nz/Asset-sales-in-Air-New-Zealand-also-doubful-this-term/tabid/1607/articleID/266255/Default.aspx

  12. weka 12
    22 August 2012 at 1:12 pm

    btw Richard Heinberg is back in NZ in Sept. Disappointing he is only speaking in Auckland, but here are the details
     
    http://richardheinberg.com/event/australia-speaking-tour

  13. Southern Limits 13
    22 August 2012 at 1:21 pm

    I just put this up today, may interest some of you: Mind the Gap: The Difference Between Brent and WTI

    “There is much talk in the media about “oil prices” especially when it begins to hurt consumers at the fuel pump. Prices are sometimes referred to as Brent crude or West Texas Intermediate (WTI) or sometimes just as oil. So what does this all mean and what are the differences?”

    http://www.southernlimitsnz.com/2012/08/mind-gap-difference-between-brent-and.html

  14. gareth 14
    22 August 2012 at 1:29 pm

    I guess the other thing softening the blow is ever increasing fuel efficiency… 10 Years ago my car would burn @12L every 100km, my current car burns @7L every 100km. For how long technological gains can keep up with rising prices is a different story…

    • Southern Limits 14.1
      22 August 2012 at 1:40 pm

      Many of these efficiencies are meaningless though when you taken into account people driving further, air conditioning, buying larger vehicles etc.

      “….Hybrid technology, it seems, is being used in much the same way as earlier under-the-hood innovations that increased gasoline efficiency: to satisfy the American appetite for acceleration and bulk….Consumer Reports, in an article published in May, found that in actual on-the-road conditions the Accord hybrid averaged 25 (miles per gallon), versus 24 mpg for the 4-cylinder model and 23 mpg for the nonhybrid V-6….If every car in the country were converted to a hybrid with that improved mileage, the gain would be swallowed up in three to four years by growth in driving demand.”
      -“Hybrid Cars Burning Gas in the Drive for Power”, New York Times, 17 July 2005

      “At the launch of the new-generation Toyota Prius in Sydney yesterday, chief engineer Akihiko Otsuka admitted the company had opted for a bigger, more powerful engine because customers had demanded it….”With a different approach, we could have done even better. However, customers told us they wanted more performance. In response, we selected a larger engine.””
      -“Prius a paler shade of green”, The Age, 7 July 2009

      Data from the Australian Bureau of Statistics shows that between 1995 and 2007 fuel economy of the average passenger vehicle has remained relatively unchanged.

    • insider 14.2
      22 August 2012 at 1:42 pm

      Change to a diesel, gain another 20to 30%, maybe add a hybrid to that diesel to get 3.8 L/100 km which the new Peugeot is getting

      • gareth 14.2.1
        22 August 2012 at 2:55 pm

        There ya go once the fleet starts getting that economical it absorbs a lot of the fuel price increase.
        Only snag is those that suffer through fuel price increases the most, are the least able to afford vehicles that achieve excellent fuel effiencey.

        • weka 14.2.1.1
          22 August 2012 at 3:19 pm

          How much cheap oil is needed to build all the new cars to replace the existing fleet? How long will that take? A reliable analysis please.
           
           

          • Colonial Viper 14.2.1.1.1
            22 August 2012 at 3:30 pm

            🙂

            Well there are all those diesel powered heavy machines to mine the iron ore. Then there are all those diesel powered heavy machines to transport the iron ore to the port. Then there are all those diesel powered ore ships to transport the iron ore to the refinery in Japan (or wherever). Then there is all the coal and fuel oil required to generate the electricity to power the refinery, and coke to smelt the iron ore and machines to form it into steel billets.

            etc. etc.

      • mike e 14.2.2
        22 August 2012 at 4:18 pm

        Outsider.Diesels are only more economical on long runs 97% of all car use is short runs.
        Hybrids are more expensive because they use more energy in construction as much as a v8 prado uses in construction and 400,000 kms of motoring.Thats before the hybrid actually does any running.
        Better off with a Honda Jazz.

    • Colonial Viper 14.3
      22 August 2012 at 3:37 pm

      10 Years ago my car would burn @12L every 100km, my current car burns @7L every 100km.

      2002 V6 Falcon would chug through 12L/100km no probs. How much does a comparable Falcon get now? 10.5L/100km maybe. Some minor improvement.

      But a 2002 Honda Civic would have been at 7L/100km no probs. And today maybe a fractionally better again.

  15. Fortran 15
    22 August 2012 at 1:38 pm

    When the Iranians block the Straights of Hormuz (35kms across) then watch the price rocket.
    25% of the World’s oil goes through there.

    • Southern Limits 15.1
      22 August 2012 at 1:42 pm

      I think that will be extremely unlikely. Blocking the Straight of Hormuz is effectively declaring war on the rest of the world.

      • Colonial Viper 15.1.1
        22 August 2012 at 2:10 pm

        Yep. The Iranian government will not do anything which risks bringing a direct military attack on themselves by the US/Nato. They are smart operators and self destruction is not what they have in mind.

        • Clashman 15.1.1.1
          22 August 2012 at 4:28 pm

          Unless they are attacked first, but then I think we may have bigger worries than the price of oil.

      • Draco T Bastard 15.1.2
        22 August 2012 at 2:35 pm

        Effectively, yes but the rest of the world won’t be able to do anything about it as they won’t be able to afford the gas bill 😈

  16. fatty 16
    22 August 2012 at 1:59 pm

    I had to buy a 2 new tyres for my cycle in April. $80. I think I bought a tube last summer too. $10.
    Cycling keeps me fit & healthy, is fun, saves me money, is environmentally friendly, and is often quicker than driving in Chch.
    I’m glad I cannot afford a car…it would effect my quality of life.
    One of my greatest pleasures in life is biking past a fat person who is stuck in their car, in traffic.
    Definition of stupid: A person that drives to a gym and then uses a treadmill/exercycle.

    • Carol 16.1
      22 August 2012 at 2:36 pm

      Definition of stupid: A person that drives to a gym and then uses a treadmill/exercycle.

      Unless they are like me with an injury disability that now prevents me from cycling (it was my dream to use a cycle as my main means of transport into my old age). I do walk, but also an exercise machine. The machine is lower impact than walking – too much fast walking on hard pavements is not kind to my body.

  17. infused 17
    22 August 2012 at 2:33 pm

    The price is ‘artificially’ at this level. Look at the oil companies profits.

    “So why is our government investing $12 billion on deepening our oil addiction?”

    Try reading history. The price has always gone up, we’ve always built roads. You think when oil goes, we’re not going to use roads?

    This might be helpful: http://www.wtrg.com/oil_graphs/oilprice1947.gif

    So suddenly 9/11 and we are running out of oil?

    Give me a break.

    They will sustain this for as long as possible and drop it. If an alternative fuel comes out, they will drop it to make it nonviable.

    • Draco T Bastard 17.1
      22 August 2012 at 2:43 pm

      Try reading history. The price has always gone up, we’ve always built roads. You think when oil goes, we’re not going to use roads?

      So, tell us, what’s the difference in the amount of roads that the Roman Empire had compared to the amount of roads that we have today. Also, are there better alternatives today that the Romans didn’t have?

      So suddenly 9/11 and we are running out of oil?

      No, because the facts tell us that oil production isn’t increasing any more and is likely to decline.

      They will sustain this for as long as possible and drop it. If an alternative fuel comes out, they will drop it to make it nonviable.

      Ah, so it’s a conspiracy is it?

      • Colonial Viper 17.1.1
        22 August 2012 at 2:51 pm

        infused is going to have to come up with all kinds of BS for why economic decline over the next [foreseeable future] is occurring.

      • infused 17.1.2
        22 August 2012 at 3:57 pm

        That’s hardly a conspiracy. It happens in most industries.

        Also, your graph shows production increasing…. *likely* isn’t fact.

        • Draco T Bastard 17.1.2.1
          22 August 2012 at 4:44 pm

          Did you notice the nice horizontal blue line labelled Crude Oil: Fields yet to be found and did you know that oil finds have been decreasing since the 1960s and thus there’s no way that that blue line can exist. Yep, the IEA was lying on that one – probably didn’t want to scare the horses or something. Take away that blue line and production decreases. Unconventional oil? Well, we’ll see where that goes – suffice to say that I think the IEA was being a little over confident on that as well.

  18. AmaKiwi 18
    22 August 2012 at 4:32 pm

    The economy is going down because we, the participants in this 50 year long Ponzi scheme, borrowed trillions we assumed we could repay because prices and our incomes would always go up and “someone” would keep lending us more. “Someone” is scared (or broke) and not lending anymore.

    Is 2008-09 so long ago you don’t remember? Then it was sub-prime borrowers and their banks who could not repay their debts. This time it is countries. Does that increase the damage to come by a factor of 2, or 5, or 10?

    Don’t tell me you and I are not to blame. If we didn’t borrow personally, the crown, our local bodies, and NZ companies did. So did the owners of the house you rent, the stores you buy at, etc.

    The petrol price will go down, but so will everything else including your income and mine. CORRECTION: Taxes will go up.

    • Richard Down South 18.1
      22 August 2012 at 5:06 pm

      ^ This, people refuse to see this, but it always comes down to this (forgetting actual supplies of ‘easy to get to oil’) and it comes down to this, someone has to pay

  19. fnjckg 19
    22 August 2012 at 5:17 pm

    DTB and CV: alwys wisdom with wit. Keep up the Good Work on the Way

    Round

  20. Tamati 20
    22 August 2012 at 5:55 pm

    The stone age didn’t end because we ran out of stone, and the oil age won’t end because we run out of oil.

    In the 1950’s and 60’s people were concerned that we were running out of global stocks of copper and tin. (Used for food storage and telephone cables.) Along comes plastic and fiber optic cables and the rest is history.

    I could continue plagiarizing Owen McShane, but he’s much more articulate than me

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10120491.

    Interesting point, USA oil consumption peaked in 2008. They have been declining ever since.

    • Lanthanide 20.1
      22 August 2012 at 6:28 pm

      “Interesting point, USA oil consumption peaked in 2008. They have been declining ever since.”

      Yeah, and lets have a look at how the American economy has fared since 2008, shall we?

      • Colonial Viper 20.1.1
        22 August 2012 at 8:33 pm

        I keep telling Jenny that economic decline is the most effective way of reducing our use of fossil fuels.

    • Draco T Bastard 20.2
      22 August 2012 at 6:30 pm

      Oil has been so cheap and plentiful (two ways of saying the same thing) that it has not been worth looking for more of it.

      Yeah, I didn’t bother reading past that bit as he proved himself an ignoramus and not worth listening to.

    • Colonial Viper 20.3
      22 August 2012 at 7:36 pm

      The stone age didn’t end because we ran out of stone, and the oil age won’t end because we run out of oil.

      You do know that the “stone age” refers to an easily replaced material of fabrication whereas the “oil age” refers to a difficult to replace source of energy (and materials feedstock)?

      So your example is cute, but useless.

    • mike e 20.4
      22 August 2012 at 8:17 pm

      Tama you have rocks in your head developing economies are increasing their oil consumption exponentialy!

      • Colonial Viper 20.4.1
        22 August 2012 at 8:31 pm

        And it’s quite possible that developing countries are more resilient to increased oil prices than developed countries, because that energy is worth more to the people in the developing country.

        Example: someone in India who goes from 2 barrels of oil energy consumption per year to 3 barrels of oil consumption per year will experience a massive increase in lifestyle. Which they might deem to be worth paying an extra US$150 over the year.

        But that’s also a 50% increase in oil consumption per capita in one of the most populous nations in the world. Ouch.

        • lprent 20.4.1.1
          23 August 2012 at 12:50 am

          Doesn’t work that way fom what I have read. The time that an economy needs new sources of cheap portable energy is when they are expanding. It is a damn sight harder to build a dam or a road if you have to move coal to build it rather than oil.

          Developing nations tend to stop developing and start stagnating downwards because their growth doesn’t keep up with populations – and they usually lose the generational bulge that powers the growth. Developed nations get a recession and usually don’t stop developing. They already have the energy hungry infrastructure built.

          • Colonial Viper 20.4.1.1.1
            23 August 2012 at 1:01 am

            Hi lprent

            Stole the idea from here

            http://www.theoildrum.com/node/9386

            But why would developing oil-importing regions have also experienced consumption growth as oil prices climbed to record highs? Consider the change in the consumption habits of the United States and China over the past decade. In 2000, the U.S. consumed 19.7 million barrels of oil per day—25.5 barrels of oil per person per year. By 2010 the population of the U.S. had increased by 10%, but the country’s oil consumption had fallen to 19.1 million bpd—22.6 barrels per person per year.

            The trend in China was sharply in the other direction. In 2000, oil consumption in China was 4.8 million bpd, or 1.4 barrels per person per year. In 2010, consumption had grown to 9.1 million bpd, or 2.5 barrels per person per year. Incidentally, if per capita oil consumption in China was as high as it is in the U.S., China would consume more than 82 million barrels of oil per day—an amount equivalent to almost all of the world’s oil production.

            • lprent 20.4.1.1.1.1
              23 August 2012 at 2:10 am

              Yeah, but the actual difference comes in what the oil is used for. In the US most of it is used for transportation – mostly passenger or consumer products with limited economic benefit. In China it is mostly used for transportation – mostly for infrastructure construction or economically important materials like produce.

              Curtailing economic waste usually benefits a country. Curtailing economic development does not. So a rise in oil price tends to hurt a developing country more in relative terms than developed one because each barrel lost makes a hell of a difference to people living or dying in th future. It is just the screaming tends to be loudest when people are affluent enough to think that luxuries like personal vehicles are required.

    • Southern Limits 20.5
      23 August 2012 at 9:40 am

      So what is the commodity that is more energy dense, more transportable and more useful than oil?

      Wood?

      Sand?

      Uranium?

      Fairy dust?

      Flubber?

  21. Draco T Bastard 21
    22 August 2012 at 6:26 pm

    And Julie Anne Genter take Brownlee to the cleaners – again.

  22. xtasy 22
    22 August 2012 at 11:01 pm

    Spring is coming! I grow some own veges. It is great. They taste better than most the crap sold at vege shops and supermarkets (all fast grown, hybrid, partly greenhouse enhanced stuff, not allowing to “mature” and grow naturally).

    This oil hike is just a bit of a temporary occurence, I am afraid. It may be due to the hightened tensions in Syria, between Iran and Israel, some unrest in Eastern Province in Saudi Arabia, perhaps even set backs in ISAF controls in Afghanistan.

    Anyway, the energy crisis will not happen so swiftly, so do not get “drunk” on the hoped for pro Green doom prophecies. It will take longer, but still the greenies and sustainable thinkers are right. It is better to prepare for the inevitable now, rather than stick the head in the sand.

    NZers largely tend to be ostriches, I am afraid.

  23. Colonial Viper 23
    25 August 2012 at 12:21 pm

    I know see that petrol has hit a nominal record high in the USA: just under the magic $4/gallon mark.

    And economic decline in the US is accelerating.