The oil price is a risk to economic recovery, say the International Energy Agency (IEA).
Hopefully the Tories are listening. They seem to be intent on expanding car ownership and car use, as they're making car parking less expensive and increasing rail, tube and bus fares. It's clear that electric cars won't be displacing fossil-fuelled cars in numbers anytime soon. Which means the transport sector is becoming more oil dependent. An oil-dependent transport strategy is very dangerous because it makes the economy very sensitive to oil price movements and the higher the oil price gets, the more of our money will be going to some of the less savoury regimes in the world.
What is dangerous as the high oil price is the ability to predict the future oil price. The world economy is barely out of recession yet, but in spite of this, the oil price is higher than many had predicted. If the world economy recovers strongly, and demand in emerging economies strengthens, the oil price could surge. Predicting oil prices is an inexact science, partly because the amount of reserves or the spare extraction capacity is regarded as commercially sensitive information by producers.
The Tories might ask why this is an issue. In a free market, people make their own choices. If they want a Range Rover or a Prius, it's up to them to pay the fuel bills, right? Not really, because a vehicle stays in the national car fleet long after the initial buyer has sold it on. Secondhand buyers have the choice made for them by new car buyers, for many of whom image and luxury trump fuel consumption. The nation won't be able to react quickly to an increasing oil price - it will take years for a generation of more frugal cars to reach the secondhand market, and years for people to adjust their travel requirements and habits.
A sensible transport policy would start today in attempting to reduce our downside risk of oil price increases. This doesn't seem to have registered with the Tories, who have declared our transport problems solved with electric car charging points and high-speed rail, and the 'war on the motorist' over. The real threat to motorists is the actions of overseas (not UK) governments and the expansion of oil demand. We'd be better advised to put up defences in the form of incentives to reduce car travel and improved alternatives to car travel, instead of - uh - doing the opposite.
It really is madness to commit yourself for a decade or more to continue buying a commodity that has a finite supply and that everyone else wants, at an unknown future price. But that's what our Government is doing. Rest assured that if and when the oil price rises, Cycalogical will be here to remind the Tories what they should've done.
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ReplyDeleteWhile AFAICT, everything you say is true, this:
ReplyDelete"Predicting oil prices is an inexact science, partly because the amount of reserves or the spare extraction capacity is regarded as commercially sensitive information by producers."
Doesn't tell the whole story.
There is strong evidence that oil reserves in the Middle-East and elsewhere are based, in part upon pure invention.
I direct you to this:
http://www.energyandcapital.com/articles/opec-oil-reserves/436
And to this:
http://images.energyandcapital.net/20070524_opecreserveboosts.JPG
IIRC, there were no major discoveries. However, reported reserves jumped suspiciously in sequence:
In Iraq 1982-1983 reserves jumped from 29.7 bbl to 41.0 bbl, a jump of 38%.
In Kuwait 1984-1985 reserves jumped from 63.9 bbl to 90.0 bbl, a jump of 40.8%.
In Abu Dhabi 1987-1988 reserves jumped from 31.0 bbl to 92.21 bbl, a jump of 197%.
In Dubai 1987-1988 reserves jumped from 1.35 bbl to 4.0 bbl, , a jump of 196%.
In Iran 1987-1988 reserves jumped from 48.8 bbl to 92.85 bbl, a jump of 90%.
In Iraq 1987-1988 reserves jumped from 47.1 bbl to 100.0 bbl, a jump of 112%.
In Saudi Arabia 1989-1990 reserves jumped from 169.97 bbl to 258.00 bbl, a jump of 52%.
In Venezuela 1987-1988 reserves jumped from 25.0 bbl to 56.0 bbl, a jump of 124%.
E&OE
These additional reserves are fictional, related more to OPEC's internal politics, rather than oil in the ground.
It's in OPEC's interests to keep us in the dark. While we swallow the lies, they will benefit from increasing prices, and we'll have to pay, whatever the price, because we're just as hooked as an addict is. We'll buy and burn every last drop of oil. If we knew the true state of reserves, we'd be serious about reducing our oil dependency and moving to renewables.
Oil in the ground is worthless if nobody wants it, as OPEC knows only too well. It's a shame that our politicians can't acknowledge this.
Reposted to correct errors / minor rewording.
While AFAICT, everything you say is true, this:
ReplyDelete"Predicting oil prices is an inexact science, partly because the amount of reserves or the spare extraction capacity is regarded as commercially sensitive information by producers."
Doesn't tell the whole story.
There is strong evidence that oil reserves in the Middle-East and elsewhere are based, in part upon pure invention.
I direct you to this:
http://www.energyandcapital.com/articles/opec-oil-reserves/436
And to this:
http://images.energyandcapital.net/20070524_opecreserveboosts.JPG
IIRC, there were no major discoveries. However, reported reserves jumped suspiciously in sequence:
In Iraq 1982-1983 reserves jumped from 29.7 bbl to 41.0 bbl, a jump of 38%.
In Kuwait 1984-1985 reserves jumped from 63.9 bbl to 90.0 bbl, a jump of 40.8%.
In Abu Dhabi 1987-1988 reserves jumped from 31.0 bbl to 92.21 bbl, a jump of 197%.
In Dubai 1987-1988 reserves jumped from 1.35 bbl to 4.0 bbl, , a jump of 196%.
In Iran 1987-1988 reserves jumped from 48.8 bbl to 92.85 bbl, a jump of 90%.
In Iraq 1987-1988 reserves jumped from 47.1 bbl to 100.0 bbl, a jump of 112%.
In Saudi Arabia 1989-1990 reserves jumped from 169.97 bbl to 258.00 bbl, a jump of 52%.
In Venezuela 1987-1988 reserves jumped from 25.0 bbl to 56.0 bbl, a jump of 124%.
E&OE
These additional reserves are fictional, related more to OPEC's internal politics, rather than oil in the ground.
It's in OPEC's interests to keep us in the dark. While we swallow the lies, they will benefit from increasing prices, and we'll have to pay, whatever the price, because we're just as hooked as an addict is. We'll buy and burn every last drop of oil. If we knew the true state of reserves, we'd be serious about reducing our oil dependency and moving to renewables.
Oil in the ground is worthless if nobody wants it, as OPEC knows only too well. It's a shame that our politicians can't acknowledge this.
Reposted to correct errors / minor rewording.
While AFAICT, everything you say is true, this:
ReplyDelete"Predicting oil prices is an inexact science, partly because the amount of reserves or the spare extraction capacity is regarded as commercially sensitive information by producers."
Doesn't tell the whole story.
There is strong evidence that oil reserves in the Middle-East and elsewhere are based, in part upon pure invention.
I direct you to this:
http://www.energyandcapital.com/articles/opec-oil-reserves/436
And to this:
http://images.energyandcapital.net/20070524_opecreserveboosts.JPG
IIRC, there were no major discoveries. However, reported reserves jumped suspiciously in sequence:
In Iraq 1982-1983 reserves jumped from 29.7 bbl to 41.0 bbl, a jump of 38%.
In Kuwait 1984-1985 reserves jumped from 63.9 bbl to 90.0 bbl, a jump of 40.8%.
In Abu Dhabi 1987-1988 reserves jumped from 31.0 bbl to 92.21 bbl, a jump of 197%.
In Dubai 1987-1988 reserves jumped from 1.35 bbl to 4.0 bbl, , a jump of 196%.
In Iran 1987-1988 reserves jumped from 48.8 bbl to 92.85 bbl, a jump of 90%.
In Iraq 1987-1988 reserves jumped from 47.1 bbl to 100.0 bbl, a jump of 112%.
In Saudi Arabia 1989-1990 reserves jumped from 169.97 bbl to 258.00 bbl, a jump of 52%.
In Venezuela 1987-1988 reserves jumped from 25.0 bbl to 56.0 bbl, a jump of 124%.
E&OE
These additional reserves are fictional, related more to OPEC's internal politics, rather than oil in the ground.
It's in OPEC's interests to keep us in the dark. While we swallow the lies, they will benefit from increasing prices, and we'll have to pay, whatever the price, because we're just as hooked as an addict is. We'll buy and burn every last drop of oil. If we knew the true state of reserves, we'd be serious about reducing our oil dependency and moving to renewables.
Oil in the ground is worthless if nobody wants it, as OPEC knows only too well. It's a shame that our politicians can't acknowledge this.
Reposted to correct errors / minor rewording.