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Posts Tagged ‘fuel

Australia Pumping Empty

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Australia Pumping Empty
Fuel rationing may be just one of a series of shocks facing drivers and commuters in Queensland, Australia. Looming oil shortages will produce the biggest change in society since the industrial revolution, Sustainability Minister Andrew McNamara warned yesterday.

To underscore his concerns, Mr McNamara will appear in a documentary film premiering May 20th in which he says the days when Queenslanders could “travel on a whim” in oil-powered vehicles are numbered. The documentary, ‘Australia Pumping Empty‘, argues southeast Queensland is squandering billions on road, bridge and tunnel projects on which few will be able to afford to travel.

A report by Mr McNamara for the Queensland State Cabinet on the impact of the fuel crisis is expected to include recommendations on rationing, the future of public and private transport and sustainable population issues. It has been ordered on the premise that there is overwhelming evidence world oil production will peak in under a decade. It is expected to recommend risk mitigation measures such as cuts in fuel consumption and encouraging the development and use of alternative fuels, technologies and strategies. It will also outline demographic and regional changes as Queenslanders change travel, work and living habits.

“I think people are going to be in for a shock when they find it’s too expensive to drive their cars to work and then, when they get down to the station, they find the train is full and they can’t get on board,” Mr McNamara said. He will recommend the State Government focuses urgently on ways to cut private-car use. “I cannot overstate this – we need to adopt a wartime mentality. We’re going to face a level of urgency that will require dramatic change.” Private car use is expected to trend towards hybrid vehicles and then to electric. “But will we have enough electricity generating capacity when everyone comes home and plugs their cars in to recharge?”

Mr McNamara said no government would want to introduce fuel rationing but it could not be ruled out. It might become an option as fuel supplies run down and prices rise to avoid a situation where only the rich can afford private transport. “We face the need for a whole new economy, from the way we generate power, to how we deliver water, to how we live”.

It’s good to see that someone, somewhere, is taking all this seriously.

‘Queensland’s vulnerability to rising oil prices’ – taskforce report April 2007

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Written by Pete Smith

May 18, 2008 at 8:38 am

Goodbye To Cheap Air travel

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Popeye Express

Shares in British Airways rose sharply this morning after preliminary results for the 12 months to March revealed annual pre-tax profits up by 44.5% to £883 million. These excellent figures are bucking the trend in airlines around the world, and particularly in the US, where the airline sector as a whole posted an $11 billion loss in the first quarter of this year. BA warns that the next year will be “challenging”, in the light of continuing economic slowdown and oil prices showing no sign of a significant retreat below the $125 a barrel mark. The airline expects its fuel costs for the past year to have been more than £2 billion, around a quarter of its cost base, rising to £2.5 billion in the coming year.

In the last 90 days, jet fuel prices have jumped 38%. As oil has hit record high after record high, fuel costs have exceeded labour costs for many airlines, accounting for as much as 40% of operating expenses. Airlines can’t set their ticket prices high enough to keep their businesses in the air. According to Delta CEO Richard Anderson, ticket prices would have to rise 15-20% just to cover increased fuel costs. Of 769 million passengers on US flights last year, many are thought to be on non-essential trips which will be cut back as times get harder.

The budget carriers’ business models have always relied on the thinnest of margins, and fuel price rises have so far caused eight airlines to go under, with more tipped to follow. One of them, ATA Airlines, left US soldiers stranded in Iraq, unable to get home to Vermont as the company went bankrupt.

The larger carriers have responded to mounting fuel costs by eating into their cash reserves to keep prices artificially low. At its current spend of $3.3 million a day, American Airlines could have spent its $5 billion cash reserves, the largest in the industry, in four years. There’s only limited scope for cutting costs by tricks such as economising on maintenance, taking safety risks like flying with inadequate fuel reserves, and skimping on customer service. Carriers are hoping that mergers will ensure their survival, at least for a while. Northwest Airlines and Delta have a proposed merger under review, with United Airlines thought to be in talks with both Continental Airlines and US Airways.

Cheap air travel is almost certainly doomed. Depending on how you feel about flying, that may or may not be the downside. The upside is that rail travel is bound to gain market share in the years ahead. Rail is the cheapest and most fuel-efficient form of transport, using a third less fuel than air for personal travel, and as little as 3% of the energy for freight. Rail companies have recently been attracting substantial investments from some of the wealthiest US investors:

These are all freight companies, the North American passenger business having withered in the face of cheap, aggressively-marketed air travel, but there is good reason to expect that passenger services will follow growth in freight traffic. In their book ‘Transport Revolutions: Moving People & Freight Without Oil’, Richard Gilbert and Anthony Perl predict that in 2025, no more than 25 airports will be operating. Electric powered transportation and rail will be the standard transport options. In a post-peak oil world, rail is probably the longest safe bet one could possibly make.

Written by Pete Smith

May 16, 2008 at 12:31 pm

Running On Empty

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The Australian reports that China is running out of fuel.
(‘Chinese tiger has nothing in tank‘).

  • Police are guarding petrol stations in several inland provinces to prevent fights, as shortages of petrol and diesel are causing huge queues of trucks, buses and cars.
  • In Kunming, capital of the southwestern province of Yunnan, 1000 trucks are stranded.
  • A truck driver named Li told the Chuncheng Evening News he had been stranded at the Stone Tiger Gate petrol station for three days after searching for fuel in other places, but failing. He said his delivery date was way overdue.
  • Another driver, at Geiju city, said a job that would have taken one day in the past, now took three: one on the road, two queuing for fuel.
  • Nine days ago, a truck driver was reported to have been stabbed to death in central Anhui province after a row about queuing.
  • A few days earlier, at Ezhou in Hubei province, 100,000 people were stranded, unable to get to work, because city buses had run out of fuel.

With economic growth running at 11.5%, China is the second-biggest consumer of oil after the US. Diesel imports in the first nine months of the year were up 46.5%, compared with the same period last year. Inflation is at a 10-year high of 6.5% and the Government is reluctant to let the price of oil ‘float’ in line with international markets. As inflation took off this year, the Government announced it was capping the prices of key commodities it still controlled, including oil, until the end of the year. However, under strong pressure from refiners and distributors, it conceded a 10% rise from this month. This still leaves the price well beyond international levels, and China has to import about half its oil, for which it must pay world prices.

Could good old-fashioned supply and demand act as a brake on China’s runaway growth? Now where did I put that old economics textbook?

Written by Pete Smith

December 1, 2007 at 9:41 am