The price of oil has surged over the psychologically important $100 a barrel and once again our reliance on oil looks foolhardy.
Economists are telling us that the Australian motorist has been largely shielded from the skyrocketing oil price by the Australian dollar, which seems to be on an equally steep upward path against the greenback.
Certainly the price of petrol in Australia is much cheaper than in Europe. In England recently we were paying about $2.50 a litre to fill our rental car with diesel. In Norway, the price of fuel is similarly way above the Australian price at the bowser, even though Norway is the world’s 10th largest oil producer. Norwegian coffers are so full with oil cash it has set up a ‘sovereign wealth fund’ to invest its money elsewhere in the global economy. That is after is has set itself social targets at home, such subsidised kindergartens for every child.
In the USA, the world’s largest consumer of oil, it is not nearly so painful to fill up a gas-guzzler. The difference in the prices is largely explained by the tax component.
The business of America is business, as US President Calvin Coolidge said in the 1920s, but the trouble is that the price signals that business responds to are not felt in the USA, the world’s largest economy, as they are in the much of the rest of the world.
In USA, Canada and Australia, where people need their vehicles to cover the vast land masses, governments have kept the fuel prices comparatively low. Transport is vital to the way of life in these countries, so businesses there should be at the forefront of research to reduce dependence on oil. However, because of the relatively low price of petrol, they do not get the full force of the message that research and development of alternatives to fossil fuels is urgent.
The World Solar Challenge, the Darwin-Adelaide race for solar powered cars, has been going for 20 years, and the cars have become progressively more efficient and closer to mainstream. It shows what can happen when imagination teams up with money.
Sooner or later, as the peak oil lobby keep telling us, oil is going to run out. The rising price of petrol in Sydney has seen an increase in people wanting to use public transport- reportedly about 10 per cent more have tried the trains and buses - some have soon returned to their cars in frustration. Our public transport systems simply won’t cope if, say, an extra 25 per cent of the population suddenly decided to use them.
We have others saying that there are petrochemicals other than oil which the world has yet to exploit. Unfortunately those sources of fuel are particularly filthy and/or expensive to mine or drill for, which presumably is why they have not been utilised until now.
We have seen oil shocks before, notably in 1973, 1979 and 1999. I remember President Jimmy Carter in 1979, working in the White House with his shirt sleeves rolled up after urging Americans to reduce the use of air conditioners. He also had solar panels installed on the roof of the White House. Ronald Reagan had them taken down because they leaked, and they were never replaced. If oil had been more expensive new, more efficient ones would probably have been installed.
The price of oil is volatile: it may well go down again at some stage. But even if it does, we need to keep investing in alternatives, so our children can enjoy what we take for granted.