Cutting Fuel Costs

Petrol duty rises today by 1p/litre.

Have you had that email forwarded and re-forwarded from a friend of a friend of a friend? The one that urges you to boycott Esso and BP when buying petrol, to force the wicked oil companies to bring prices down to £0.90/litre?

I class it as a "quasi-virus". It urges you to send it to all your contacts and if everyone does that it truly means millions of messages. Why a virus? Because it's just setting out to clog up and slow down the internet with all these messages.

What about the boycott of Esso and BP?

First, it's not true when they claim that the oil price is "as low as it has been for a while." It hit $147/barrel in July 2008 and then fell back, but it's been climbing since the beginning of last year and today is at $83. In sterling that's £73 in July 08 and £55 now - the gap is closing because sterling has fallen against the dollar. The long term average for oil is around $30, but as it runs out and we have to get it from increasingly remote and unstable regions the cost of production goes up and up. Industry experts predict the $200 barrel within 5 years!

So what happens if we stop buying from Esso and BP? The truth is that Morrisons, Sainsbury's, Tesco and all the rest don't own oil wells or refineries. They buy petrol from the oil companies - like BP and Esso. Even if we managed a 100% boycott there would be no change to the price - though there might be queues at the supermarket forecourts! As with electricity and gas, we cannot do anything to drive down the price of what is becoming a scarce resource in the face of growing world demand and population increase. The only solution is to get the very maximum out of every gallon: drive carefully, drive only when you have to, choose an economical car. Very boring, but I'm afraid it's the truth.

Liberal Helping

As the LibDem conference comes to a close we’ve seen another expression of green policies. The LibDems are particularly upset, because alone of the three major parties they have been talking about environmental issues for years. Both Labour and the Conservatives now have a green agenda, but the worrying thing is that there’s no consensus.

Measures that will really make a difference to our carbon emissions will not be popular with the voters. Two million signed a Downing Street petition against road pricing, and last week I saw one of those chain emails claiming that high petrol prices were an oil company conspiracy and we could drive prices down to 69p a litre if we only stopped buying from Esso and BP. If all the political parties adopted the same policies on the environment then elections would change nothing. Unfortunately there is still argument between the parties – and argument within parties. One LibDem was heard to say that green policies were about as realistic as perpetual motion! More public education clearly needed.

And will the parties stop arguing about green issues and work together to actually do something? As the Labour Party gathers for this week’s conference we can only wait and see.

A World Without Oil (and Gas and Coal)

Yesterday the Independent published a front-page article about the coming oil crisis. At last the media, or this part of it at least, have recognised that there’s an energy crisis ahead. The article was triggered by the publication of the latest edition of BP’s Statistical Review of World Energy. A number of industry experts have taken issue with the rosy view they claim the report is taking. Some of them believe that oil supplies will begin to run out in four years. Some believe that cheap oil has run out already.

Paradoxically, taxation is one of the factors that have cushioned the British public against the evidence of an increasing oil price. Petrol is taxed at a fixed sum per gallon; unlike VAT which is calculated as a percentage of the selling price. Because UK petrol duty is relatively high, the cost of the oil at the pump is only a small portion of the price paid. If the cost goes up, the petrol duty per litre does not. Thus in the UK the price of petrol has risen from 85p to 97p over the last few months; an increase of some 14%. Over the same period US prices have risen from $2 to $3 – a 50% increase caused by the same underlying rise in oil prices. Another factor is the dollar rate: as oil prices have gone up the dollar has declined, offsetting the increases for us in Europe. This cannot continue, however. The signs are that the oil producers are less willing to accept payment in dollars as the American economy weakens. This will push prices up for the rest of us.

Going back to the BP review; there are some startling figures. The report calculates R/P - the reserves to production ratio. So if a country has 100 barrels and uses 10 barrels per year the R/P is 10: they have enough reserves for another 10 years.

Take a look at the UK figures:
Coal R/P = 12 years
Oil R/P = 6.5 years
Gas R/P = 6 years

Of course we will not be able to maintain our production rates as these resources get harder to find and more difficult to extract, so they will last longer than implied. They are still running out, though, and the UK is increasingly dependent on foreign supplies.

Learning to commute/commuting to learn

Today the nation's 10 and 11-year-olds learn which school they will be allowed to attend from next September. Parents are determined that their offspring will attend a "good" school and make every effort, including moving house into the right area, to make sure this happens. If it doesn't many are expected to appeal.

Unfortunately, the "good" school is all too frequently not the local school. Children are learning to commute for hours each day to get to the chosen establishment. Parents drive them or fetch them, or put them on buses or trains. Some even go by taxi. One father was heard to remark that all this commuting would "prepare them for later life."

You can make up your own mind whether commuting is part of a desirable lifestyle. As long as people can afford it, they'll do it. Whether the planet can afford it is not a question that most people take into account. If Peak Oil truly happens in the next few years then the spiralling cost of petrol will make many people think again. Economy is the only long-term solution, and that means self-sufficient communities which provide the full range of amenities within minimal travelling distance. The government will have to think again about closing local post offices, maternity and A&E departments, and centralising schools. Mind you, that might be more expensive, because governments don't count the extra travelling costs for individuals.

And what would it really be like without a car? Several thousand people in SE England are finding out today as their cars shudder to a halt and need repairs costing hundreds of pounds. Contaminated petrol is supposed to be the cause, but no-one has yet taken responsibility and the actual contaminant has not been identified.