Having chosen to swallow the red pill...

Tuesday, June 20, 2006

Can a high petrol price be a good thing?

There is much speculation at the moment that the recent 'hot dialogue' with Iran and the Bush administrations refusal to rule out the possibility of military action can be linked to, dare I say it, an artificially high oil price. Whatever the reason, oil prices have been gradually increasing over the past year or two, much to the chagrin of every motorist and a great many owners of oil-heated homes. Whether or not you drive a petrol or a diesel car, heat your home from oil or via a wind turbine, the rising oil prices hits everyone's wallets as many of the bi-products of oil that we use every day, such as plastics have also gone up in price.

Whether you are convinced that the rise in oil prices is a result of global geo-political power play or whether it serves as further proof of globalisation and the multinationals ability to steer politics, I would like to look instead at the positive side of the price rise.

For the first time in a long time, American consumers are feeling the pinch and sales of SUV's has taken a negative plunge. Just last week, Hummer announced that they were ceasing production of the civilian version of the Hummer H1 due to a weak demand, and in the worst example of cross branding I have seen in a while, I noticed an advert in a magazine for Hummer after-shave, which might be an indication of where the company feels it future lies.

Every other car brought in Europe today is a diesel. Gone are the dirty exhaust spitting diesels of the past, the latest development is leading to cleaner and more efficient engines. In response to the change in consumer attitudes brought on by the rising oil prices, car manufacturers are suddenly able to produce smaller engines that produce more power. Volkswagen, for instance, recently launched the Golf GT, which develops 150hp from a 1,4l engine, where previously they had a 1,8l engine. Take Toyota's PRIUS and other hybrid cars that run on electricity and petrol and which leave a very small environmental footprint. Take the new range of cars from a variety of manufacturers including Ford, Volvo, BMW that are so-called bi-fuel cars that can run on either petrol or ethanol. Match that to the recent announcement from the Norwegian oil retailer, Statoil that it will be investing in ethanol pumps across Scandinavia. What you have got is a trend lead by consumers that is leading to a development and a direction that consumes less petrol and leaves a smaller environmental footprint.

This trend has maybe been jump-started by the high oil prices, but it is definitely there and it is definitely growing. People are starting to think strategically, or should I say, environmentally. Do I really need to make this trip? Can I cycle or take public transport instead? There has been a marked increase in car sharing and considerable interest in schemes such as Zipcars (see www.zipcar.com) in major cities where instead of owning a vehicle, people can pay to 'borrow' a vehicle as and when they need it, resulting in better planned vehicle use, less traffic congestion, less pollution, less vehicles to be scrapped...

The trend has also moved beyond the realms of transport and into the home, where the cost of oil-fired burners is causing home owners to re-think and, such as here in Sweden, the government is responding by giving tax breaks to those who purchase environmentally-friendly heating systems such as the one we have installed in our house that takes the temperature differential from the air and uses it to heat a liquid with a very low boiling point. The energy released as this liquid turns to vapour is then converted and used to heat the water that heats our house and hot water.

Each time I fill up the car and the guy or lady next to me calls over to complain about the pump price, I have started inwardly smiling to myself as that little extra cost may just have started a ball rolling that will prevent us from having far larger and more serious costs in the future.


  • Let's just hope it's not too late...

    Or that when the next oil reserve is found (Alsaka/Antartic...) people don't suddenly realise that with all this fuel efficiency and cheap surplus oil supply the demand for even more short term consumption can increase again...

    Also - let's make sure India, China, Russia etc... also use this new clean technology from day one...(ok, day three)

    (PS how do I find my blogger user name & password again!?)

    By Anonymous Anonymous, at 12:29 pm  

  • Hi James,

    thanks for dropping by and leaving your comments, it makes it more fun for me writing!

    I have currently deleted both you and Mark as administrators, but you are most welcome to join once again. Just let me know and I'll set-up another invite which will enable you to create a new username and password.


    By Blogger Paul, at 1:03 pm  

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