Image for Peak oil will hit Tassie too ... as Libyan crisis drives upward spike

How much will Australians (Tasmanians) be paying for petrol by year’s end?

My prediction is towards the $2 per litre mark. $200 to ‘fill the tank’ within four years. I’m willing to lay bets.

In late January the Egyptian uprising pushed Tapis Crude (the Malaysian oil price that sets Australian pump prices) above the magic $100 dollar-per-barrel mark. With the Middle East in continued turmoil, Tapis Crude is still rising (follow the red line on this chart) – fuelled not only by political instability in North Africa but by the inexorable rise in world oil demand coupled to oil depletion amongst some of the world major oil suppliers.

Now at $1.40-plus per litre, most motorists have noted that petrol pump prices have by risen to the same heady heights achieved just before the economic meltdown in 2008. But we’ve become psychologically accustomed to those prices, so those same prices are not hitting sales of large SUVs. Not yet anyway – but there’s much more to come.

Electricity prices have caused some ruckus throughout Australia during the past year, especially amongst pensioners and low income groups. The bad news is that a combination of electricity and petrol pump rises will pose a double whammy for those groups and the stress will move upwards with a greater slice of the Tasmanian population becoming increasingly stressed by growing energy prices. When energy costs rise above a family’s disposable income then something has to give.

It is precisely these same cost spirals that is causing insurrection in many poorer nations. Despite our relative wealth, we will not be immune to social unrest as food and fuel prices reach unprecedented levels.

Most Tasmanians are not prepared for the reality of Peak Oil, and that includes most of our decision makers. Our state and local governments are almost totally unprepared. Communities are unprepared. Our energy dependent businesses are unprepared.

What do we need to do to be prepared? There are strategies being deployed all around the world. Most of them are built around building resilience for harder times. The first thing each of us needs to do is to understand that oil depletion will fundamentally change society as we know it – and more rapidly than our economy and most people can adjust to. We owe it to ourselves to understand and come to grips with these dynamics.

Chris Harries

(Chris is editor of a new educational website, Peak Oil Tasmania, an offshoot of a Transition Tasmania gathering in 2010.). The website is permanently in TT Links under the Category, Think

Earlier on Tasmanian Times: WikiLeaks Peak Oil bombshell. The Great Battery Race

Karen Maley, Business Spectator:

Could oil derail our boom?

Karen Maley

Published 8:26 AM, 24 Feb 2011 Last update 10:15 AM, 24 Feb 2011

Oil prices continued their relentless upward surge overnight on signs that the Libyan conflict is intensifying, with the forces of strongman Muammar Gaddafi opening heavy fire on anti-government protestors in the country’s capital city.

The fighting in Tripoli came as the rebels – who already control much of the east of the country – reportedly seized control of the cities closer to the capital.

Concerns about a serious interruption to oil supplies sent Brent oil futures above $110 a barrel overnight, for the first time since the collapse of the US investment bank Lehman Brothers. The international benchmark price has jumped 7.7 per cent since Monday.

Some within the industry estimate that the uprising has cut by more than half the country’s oil output of 1.6 million barrels of oil. There are also reports that Libya’s national oil company has declared force majeure – a legal clause allowing default under certain conditions – on some of its export contracts.

Traders are anxious that the uprising that has spread through the Middle East in recent weeks could widen. Algeria, which produces around 1.3 million barrels of oil a day, is seen as particularly vulnerable.

In a recent report, Nomura analyst, Michael Lo warned that the oil price would climb above $US220 a barrel if Libya and Algeria were to completely halt oil production.

At the same time, some analysts believe that the surging price of oil could be enough to tip the US economy – which is still struggling with high levels of unemployment and an ailing housing market – back into recession. Business and consumer confidence will plunge, as the steep increase in the oil price squeezes the profit margins of companies, and leaves consumers with little choice but to scale back their spending on non-essential items.

They argue that the recent drop in long-term US interest rates is an indication that the bond market is predicting trouble ahead for the US economy. The yield on the 10-year bonds which climbed as high as 3.8 per cent in recent weeks on concerns of growing inflation, has since edged back to 3.46 per cent.

And although growing Middle East instability has pushed up the price of gold and silver, base metal prices have suffered a sharp downturn in recent days, as traders have fretted that slower global economic growth will translate into less demand.

Overnight, on the London Metals Exchange prices for copper, aluminium, zinc, lead and tin all dropped sharply. In Shanghai yesterday, the price of zinc fell nearly 6 per cent, its biggest daily drop in three years.

The current turbulence in global commodity markets gives extra weight to the position of Reserve Bank boss, Glenn Stevens, who yesterday urged the country to make sure it saved, rather than spent, the extra income it’s receiving as a result of the surge in commodity prices.

Stevens noted that the current “very large” boom in commodity prices has delivered windfall gains to Australia. But, he added, the trouble is that we don’t know how long …

Red the rest in The BusinessSpectator HERE