Rising Petrol Prices: Changing The Transport Landscape

By Feann Torr - 25/June/2008

Melbourne, Australia — The future of road transport is changing. As petrol prices rise and demand outstrips supply, the capacity of oil producing nations to feed the industrialised world will be strained.

The price of oil has skyrocketed in recent times and there is a growing body of evidence that suggests it may never return to the levels we have been accustomed to for so many decades.

The era of cheap oil could be well and truly over.

As the price of fuel in Australia gets ever closer to the $2.00 per litre mark, the Government is bracing the public for tough times ahead.

In the 1970s the entire world was beholden to rising fuel prices not dissimilar to the prices we see now, which wreaked havoc on global economies. When the price of fuel goes up, the flow on effects are staggering.

The Australian Resources and Energy Minister, Martin Ferguson, recently said that there is very little that can be done about rising fuel prices.

"The oil burden, as a share of global GDP, is fast approaching the level of the 1970s oil crisis, as are real oil prices," Energy Minister Mr Ferguson said. 

"As we all know, and as I have expressed to the Prime Minister, there are no simple solutions and, more importantly, no one nation can shoulder the burden of record oil prices," explained Mr Ferguson.

The Cause

One of the major reasons for the rising price of oil is that demand has increased dramatically compared to 10 years ago. 

Countries like Russia, China, and India require huge amounts of refined oil to grow rapidly expanding industry. As demand increases, supply becomes tight around the world and hence the price goes up.

There are also other theories, such as Peak Oil, that claim that the Earth's natural reserves of oil will begin to dwindle next decade.

Richard Heinberg, an author and educator who has written several books on the looming energy crisis, predicts that if motorised transport doesn't adapt soon, the consequences could be dire.

Mr Heinberg recently told the ABC's 7:30 Report "[What] the oil consuming nations really need to understand is that this is not a temporary blip in the oil market. What we're seeing is a fundamental and permanent change in the global energy economy. We will be dealing with the fallout of this for many many years to come as prices continue to escalate."

The Effect

As fuel prices begin to bite, more and more people are looking for cheaper ways to travel. One of the biggest shifts is the return to public transport.

In Australia and overseas this is already overloading the train and bus systems, causing wide ranging delays and problems for public transport users in many major cities.

Elsewhere around the world, truckies are blocking whole freeways in Thailand demanding a reduction in the price of diesel fuel. 

Even places like the U.K. have seen hundreds of truck drivers blocking major roads in a bid to force governments to take action. 

There are growing concerns that the European summer could the be the first of many holiday periods afflicted by huge road blocks, as thousands of Spanish truck drivers have already blocked the French border once this year. Protests and blockades are emerging in places like India as well.

There are even stories of kilometer-long queues for petrol stations in some western European countries, and reports of many petrol stations running out of petrol and diesel altogether are also making headlines.

"Whole industries are going to have to restructure and downsize as a result of this," opined Heinberg. "We're going to have to rebuild our transport infrastructure in much of the industrialised world, because we built it on the basis of cheap oil, and cheap oil is going to be a thing of the past."

There has also been a significant shift towards bicycles for the daily commute.

The Future

One way in which some car makers are planning to fight rising fuel costs, which is having an increasingly negative impact on new car sales, is to develop new hybrid and zero emission electric vehicles.

Almost every major automaker across the world is racing to deliver a raft of new hybrid petrol/diesel and also pure electric vehicles in the next few years.

General Motors hopes to be one of the first companies to sell an electric plug-in vehicle to the public in 2010 with the Chevrolet Volt, and Volkswagen is working away on it's own plug-in electric and hybrid vehicles ready for 2010.

Of course Toyota will be bringing a range of electric cars and plug-in hybrids to overseas markets in 2010 and Australia will get the home-grown Camry Hybrid in 2010 as well, plus Nissan will also rollout its own electric vehicle (EV) in the U.S. and Japan in 2010.

Another possibility that has been touted as a solution to the surge in demand and rising price of oil are biofuels.

Despite a host of car makers pushing for ethanol and other biofuel replacements in the previous decade, many car makers now appear to be moving away from 'biofuel' cars and are instead heading straight into zero emission electric vehicles or low emission hybrids.

"Expert opinion on biofuels has shifted almost 180 degrees in the last year," says Richard Heinberg. "As recently as a few months ago most energy experts were touting biofuels as a great opportunity, both for environmental reasons and energy reasons to supplement our oil supply. Now most expert commentators are saying that this has in fact turned out to be not a very good idea."

Biofuels are pushing up the price of food as farmers - particularly in the United States - switch to more lucrative crops destined for fuel tanks and not dinner tables. 

Together with the increased transport costs from rising oil prices, this is causing food shortages and even food riots in some countries, as was widely reported on news wires.

"Also the energy return on the energy invested in growing these crops and turning them into liquid fuels is enormous," says Heinberg. The process involved in refining ethanol, from when its harvested as corn or sugar cane, is inefficient.

There are some other ideas for alternative fuels, such as 'green crude' that we reported on in early June. 

This fuel uses waste water, algae, and sunlight to create a petrol replacement. But biofuels such as these are still in the early stages of testing and could take decades before they're reading for mass consumption.

Impending carbon emission and carbon trading schemes, which will be introduced around the world and also in Australia in the near future, could also affect the price of oil into the next decade, which is already changing the way we travel.

Suffice it to say, how we respond to this potential energy crisis will be one of the important issues facing this generation.

Related articles:
- Green Crude: Algae Biofuel (2008)
- Ethanol & E85 Issues (2007)
- Volvo Bioethanol 'Flexifuel' Cars (2007)