Rising Fuel Costs and the Consequences Thereof

RichardAnd · 02-04-2012 08:07AM #1

I'm aware that there is a currently active thread discussing the rising fuel costs at the pumps. However, I think that a separate thread to talk about the effects that might arise from ever rising fuel costs would be an interesting and distinct topic. Thus, I'm starting this thread.

For myself, the cost of petrol has always been something I paid alot of attention to. I have always kept track of the prices at my local stations and I check the national averages on pumps.ie regularly. The reason I do this is that I know well that fuel is like blood to an economy and there lack of it means trouble. It has also been said that high gas prices were a contributor to the global recession (article). Given that we are still in a dark place, I can't imagine that the high cost of petrol will being auspicious tidings.

Thus, the question arises; what will come of this? Well I don't like to think of Ireland descending into a Mad Max state of affairs but what such a film does illustrate well is social breakdown. Less fuel will mean more hardship and when humans suffer, they tend to loose faith in any larger sense of self and become more insular. The basic reasoning behind this can be drawn from Maslow's Hierarchy of Needs. In a nut shell, this espouses the belief that a person will look for certain things in sequence and only move on to a more advanced need when a basic need is fulfilled. Article

But that's getting into the human psychology which isn't my intention. Thus, my question would be this; what do you think will happen here as fuel costs continue to rise?

shedweller · 02-04-2012 08:45AM

Some possible outcomes (assuming savings has ceased):

Local shops will suffer as people will be driven more by price and therefore go to "ald-idl" etc.

The sale of very warm clothes will rise. This being cheaper than filling the home heating oil tank an extra time per year.

More of the extras we buy will simply stop. Holidays, internet, satellite tv, etc.
A lot already do this.

Those with cars will take it easy and cut down fuel usage. They will learn to service them themselves. The sale of part worn tyres will rise more than it has so far.

Taxes will rise to offset the above. Look at the CO2 tax fiasco on cars!

pacquiao · 02-04-2012 09:06AM

RichardAnd wrote: »

I'm aware that there is a currently active thread discussing the rising fuel costs at the pumps. However, I think that a separate thread to talk about the effects that might arise from ever rising fuel costs would be an interesting and distinct topic. Thus, I'm starting this thread.

For myself, the cost of petrol has always been something I paid alot of attention to. I have always kept track of the prices at my local stations and I check the national averages on pumps.ie regularly. The reason I do this is that I know well that fuel is like blood to an economy and there lack of it means trouble. It has also been said that high gas prices were a contributor to the global recession (article). Given that we are still in a dark place, I can't imagine that the high cost of petrol will being auspicious tidings.

Thus, the question arises; what will come of this? Well I don't like to think of Ireland descending into a Mad Max state of affairs but what such a film does illustrate well is social breakdown. Less fuel will mean more hardship and when humans suffer, they tend to loose faith in any larger sense of self and become more insular. The basic reasoning behind this can be drawn from Maslow's Hierarchy of Needs. In a nut shell, this espouses the belief that a person will look for certain things in sequence and only move on to a more advanced need when a basic need is fulfilled. Article

But that's getting into the human psychology which isn't my intention. Thus, my question would be this; what do you think will happen here as fuel costs continue to rise?

Your thread is a waste of everyone's time. This has happened numerous times throughout the last century.

RichardAnd · 02-04-2012 09:21AM

pacquiao wrote: »

Your thread is a waste of everyone's time. This has happened numerous times throughout the last century.

Civil discussion on a pertinent topic is a waste of time to no-one with an opinion worth sharing. As you seem to have nothing constructive to say, please stay out of this discussion until you do. If you feel the need to dismiss my efforts of using a discussion form to discuss things in a derisive manner again, I will report you to the moderators. Just because this is the internet, you don't have licence to be rude.

Thank you.

bbam · 02-04-2012 06:17PM

Spiralling inflation has to be the biggest problem.
Fuel directly affects the price of everything from bread/ milk to apples.

As both the prices of fuel and everything associated goes up people will be forced into cutting back more and more on discressionary spending thus things get worse

Rising fuel prices are a huge risk to any potential recovery and may even worsen the current recession we are seeing.

Farmer Pudsey · 02-04-2012 08:08PM

Another reason if you are unemployed not to look for a job as the cost of going to work will be more expensive

spank_inferno · 02-04-2012 09:12PM

Food costs will continue to rise, as the costs of diesel and fertalizer increase.

Less disposal money overall in peoples wallets.
Less incentive to create jobs with demand depressed.

woodoo · 02-04-2012 09:32PM

Rising fuel costs can only be bad for the economy. With less money in your pocket at the end of the week it will affect your spending power.

It will obviously be extra tough on people with long commutes. But even for the average motorist it will reduce disposable income.

I used to do a lot of driving around at weekends for leisure. I don't do as much now.

The_Honeybadger · 02-04-2012 11:11PM

Farmer Pudsey wrote: »

Another reason if you are unemployed not to look for a job as the cost of going to work will be more expensive

I don't see much sense in this approach, maybe if you have kids and are in receipt of RA and medical card etc, but not the case for most people who are unemployed. Even for folks with childern there is FIS when you do go back to work, either way the dole is not a good long term option no matter what way you look at it.

Chuck Stone · 02-04-2012 11:31PM

Interesting interview with Professor Michael Greenberger on the manipulation of the oil market by speculators/manipulators.

TL;DW.

The real price of a barrel of oil is thought to be in the region of $60 to $80 rather than $120 but isn't due to market manipulation by speculators.

Last year Obama asked the Justice Dept to convene a task force to look into the issue of price manipulation.

Professor Greenberger reckons that a serious criminal investigation would drive the manipulators out of the market which would cause the PPB to fall to its 'natural' level.

Bullseye1 · 02-04-2012 11:31PM

Inflation is the biggest problem. Rising food prices as a result of transportation costs increasing.

But the biggest rise will be in those people who take pleasure in seeing people who live in commuter towns suffer as a result of "lifestyle choices". You know the type.

Farmer Pudsey · 02-04-2012 11:40PM

mickeyk wrote: »

I don't see much sense in this approach, maybe if you have kids and are in receipt of RA and medical card etc, but not the case for most people who are unemployed. Even for folks with childern there is FIS when you do go back to work, either way the dole is not a good long term option no matter what way you look at it.

Tell that to the 200,000 odd long term unemployed also people need to wake up any old car will do you if you are unemployed and you will be spending 30-50 euro a week less on fuel at least that is 1500-2500 after tax. It is bad enough that long term unemployed do not want to take on employment as it takes too long to get back on the benifits but now the cost of transport to work is a big discentive to taking a job

beeftotheheels · 03-04-2012 12:16AM

The oil crisis in the '70s and its impact on Icelandic inflation was a catalyst for their increasing expenditure on domestic renewable energies. While economists from Krugman to our own Kinsella love to claim "ironically" that "Ireland is not Iceland" they fail to recognize the fact that relative energy independence is a major factor in Icelandic inflation not shooting through the roof while they devalued the Krona and is cushioning their adjustment.

Perhaps high oil prices will continue to spur interest and investment in wind power here, and reduce the "not in my back yard" opposition to it which was allowed to prevail in the Celtic Tiger era.

Good for the planet, good for Ireland so long as protectionism risk remain in the global economy, good for Ireland longer term given oil production has peaked.

RichardAnd · 03-04-2012 08:23AM

Some interesting points raised thus far. I suppose the cost of traveling will prompt more people to work from home, if that have work. I already know of some people doing this to save money and if I drove to work, I'd probably do the same.

If this keeps up, I'd imagine that many will start to question their need for a private car. It's nice to have the option of convenient travel but for people living in Dublin, this is often more of a luxury than a need. No car means no NCT, no motor tax, no insurance nonsense, no service bills and no danger of being volunteered to pick people up. Given all the problems cars cause, if they also cost a fortune to run, I don't think it's hard to see those with the option to hand in the keys.

bbam · 03-04-2012 11:54AM

I agree that rising prices will pressure a more vigerous look at wind and other alternative energies. The NIMBY crowd have a sin to answer for that there wasn't huge investment in this area during the boom.
However for those of us born and living in rural Ireland high fuel prices will be very destructive. This isn't a lifestyle choice, it's our life!
The rising price of fuel for many is making travel to work less and less attractive. There is no work local to where I grew up, only closures of existing business. Travelling 80/100 km a day to work is not unusual but is becoming a non runner for many.
I've seen FIS mentioned, does this take account of travel costs to work?

High fuel costs will signal the death of many rural communities

Dannyboy83 · 03-04-2012 02:07PM

This is an examination of the collapse of the Soviet Union and comparing it to a potential collapse of the US.
http://www.energybulletin.net/node/23259

Slide [10] Soviet public transportation was more or less all there was, but there was plenty of it. There were also a few private cars, but so few that gasoline rationing and shortages were mostly inconsequential. All of this public infrastructure was designed to be almost infinitely maintainable, and continued to run even as the rest of the economy collapsed.

The population of the United States is almost entirely car-dependent, and relies on markets that control oil import, refining, and distribution. They also rely on continuous public investment in road construction and repair. The cars themselves require a steady stream of imported parts, and are not designed to last very long. When these intricately interconnected systems stop functioning, much of the population will find itself stranded.

Ireland with the exception of parts of Dublin is entirely car dependent so I imagine we will be earlier adopters of next generation technology given the necessity.

maninasia · 03-04-2012 09:02PM

I recall that a huge part of fuel cost in Ireland is tax, carbon and VAT.
So failed government policies are largely to blame.

There will be no miraculous next generation public transport system in Ireland when the existing one has not been properly upgraded in 100 years.

There are alternatives to oil and diesel dependent cars, but again it depends on govt policy

- petrol scooters
- LPG cars
- electric cars
- electric bikes
- electric scooters
- privately run buses

I foresee small electric cars becoming incredibly popular within 5 to 10 years. It costs less than a euro to 'fill the tank'. This is a no brainer.

The other massive change will be in teleworking, this is the decade that teleworking will finally take off due to cost, cultural acceptance and technological advancements.

The_Honeybadger · 03-04-2012 09:47PM

maninasia wrote: »

I recall that a huge part of fuel cost in Ireland is tax, carbon and VAT.
So failed government policies are largely to blame.

There will be no miraculous next generation public transport system in Ireland when the existing one has not been properly upgraded in 100 years.

There are alternatives to oil and diesel dependent cars, but again it depends on govt policy

- petrol scooters
- LPG cars
- electric cars
- electric bikes
- electric scooters
- privately run buses

I foresee small electric cars becoming incredibly popular within 5 to 10 years. It costs less than a euro to 'fill the tank'. This is a no brainer.

The other massive change will be in teleworking, this is the decade that teleworking will finally take off due to cost, cultural acceptance and technological advancements.

Agree with this, electric cars with petrol or biodiesel range extenders are the future, all charged up at night by the wind. Will take a decade or two to get there but the technology already exists and with the right policies it can be done. Of course if we weren't broke it would help immensely

.
Also expect to see the public sector enter into ESCO (see below) contracts to retrofit govt buildings with insulation and biomass heating etc, with the private sector following. The west simply has to break its dependence on fossil fuels, and none are more dependent than Ireland, despite having some of the best renewable resources in Europe.

A newer breed of ESCO evolving in the UK now focusses more on innovative financing methods. These include off-balance sheet vehicles which own a range of applicable equipment configured in such a way as to reduce the holistic energy cost of a building. The building occupants, or landlord, then benefit from the energy savings and pay a fee to the ESCO SPV in return. At all times, the benefit (saving) is guaranteed to exceed the fee. In all instances, The ESCO starts by performing an in-depth analysis of the property, sometimes at risk, designs an energy efficient solution, installs the required elements, and maintains the system to ensure energy savings during the payback period.[1] The savings in energy costs are often used to pay back the capital investment of the project over a five- to twenty-year period, or reinvested into the building to allow for capital upgrades that may otherwise be unfeasible. If the project does not provide returns on the investment, the ESCO is often responsible to pay the difference

mrsdewinter · 03-04-2012 10:12PM

bbam wrote: »

However for those of us born and living in rural Ireland high fuel prices will be very destructive. This isn't a lifestyle choice, it's our life!
The rising price of fuel for many is making travel to work less and less attractive. There is no work local to where I grew up, only closures of existing business. Travelling 80/100 km a day to work is not unusual but is becoming a non runner for many.
I've seen FIS mentioned, does this take account of travel costs to work?

High fuel costs will signal the death of many rural communities

This.
I live in Dublin but members of my family live in rural Ireland and I simply don't see how families can continue to run 2 cars.
There's already anecdotal evidence of quieter roads - fewer people hopping in the car to visit friends or relatives during the day - and I've heard of at least one instance of a determinedly middle-class family simply ditching the second car because fuel, tax, NCT, etc. are making life too expensive.

Brussels Sprout · 03-04-2012 10:20PM

This video of a lecture given by an unassuming old man has got a ridiculous title and the quality is pretty bad but it ties in well to this topic. It's about population growth but a huge part of it is about energy depletion. It's over an hour long but it's absolutely worth setting aside some time for. You'll never look at percentages the same again!

https://www.youtube.com/watch?v=umFnrvcS6AQ

Edit: if you only have time to watch 20 minutes then fast forward to 49:00, where he talks specifically about oil

Dirk Gently · 04-04-2012 07:30AM

RichardAnd wrote: »

what do you think will happen here as fuel costs continue to rise?

My wages will continue to fall as the company fuel bill increases.

WillieFlynn · 06-04-2012 08:02PM

Another problem with rising fuel costs, is fuel poverty.

People who cannot afford to heat there homes, the obvious ones people will think of such as unemployed, old. But it also effects students, both when I was a student and later worked in a university, it was not uncommon to meet students who would go to the library or other university building just to get warm.

Joe1919 · 07-04-2012 10:16AM

Food prices at present are still relatively low.
I would be concerned that rising fuel prices will rise food costs. Fuel is necessary for food production, transportation, fertilizer manufacture etc. & also increased fuel prices may change land usage to biofuels, thereby reducing food output.

Even a mild food shortage could drive up prices considerably.

RichardAnd · 07-04-2012 10:39AM

WillieFlynn wrote: »

Another problem with rising fuel costs, is fuel poverty.

People who cannot afford to heat there homes, the obvious ones people will think of such as unemployed, old. But it also effects students, both when I was a student and later worked in a university, it was not uncommon to meet students who would go to the library or other university building just to get warm.

I've heard that before. In the early 90s when I was about 7, my aunt (was was in college at the time) related a story like to to us over a family meal. I don't recall too much of what I thought but it was what my grandmother said that stuck with me. With a wistful smile, the old woman gave us these words of wisdom: "Ara, sure they're young!"

I love the Irish attitudes towards the young.

_Kaiser_ · 08-04-2012 03:14PM

maninasia wrote: »

I foresee small electric cars becoming incredibly popular within 5 to 10 years. It costs less than a euro to 'fill the tank'. This is a no brainer.

Do you really think that the price and taxes on it won't shoot up if your theory is right? You only have to look at the current talk around increasing the CO2 tax bands because everyone went and bought "low emission" BMW 520Ds. Rest assured if these cars take off in any serious way, "fuel" will cost well over €1 per unit as well.

Leaving aside the current impracticality of these cars for anyone who does more than a shop/school run (although that will change as the technology evolves, granted) and the cost involved in installing fast-charge points everywhere (which if I recall a thread from Motors, the Nissan Leaf isn't even compatible with anyway?), not everyone WANTS to drive tiny, bland little boxes on wheels anyway.

(goes out to pat his big "polluting" 2L TDI Passat)

maninasia · 08-04-2012 03:31PM

I am well aware of the tax component cost of fuel, but if they want to increase electricity cost again there will be a lot of resistance. Yes they may add tax to other components but electricity can be generated and sourced in many ways.

Also, just ask yourself if you could have predicted smartphones suddenly becoming so ubiquitous and powerful in the space of 3 years?
There's a technological and infrastructure nexus being built now and with favorable economics electric cars are a certainty, sooner rather than later. All batteries need to do is to double storage capacity and you can get 300 miles out of them in a single charge.

Most cars are used for short daily commuting trips, I envisage one run around electric and one petrol/diesel will be common. The idea that it will be one or the other is from people who are not thinking about how it will work with families and couples. Ultimately the extra diesel/petrol car will be abandoned as electric range improves. If I had an electric car for my daily run arounds or 1 hour trips that would cover me for 90% of my travel.

maninasia · 08-04-2012 03:39PM

Joe1919 wrote: »

Food prices at present are still relatively low.
I would be concerned that rising fuel prices will rise food costs. Fuel is necessary for food production, transportation, fertilizer manufacture etc. & also increased fuel prices may change land usage to biofuels, thereby reducing food output.

Even a mild food shortage could drive up prices considerably.

This is true, however it can be ameliorated by cheaper natural gas, oil is not the only option. The economics of gas vs oil is going to become an important influence.

_Kaiser_ · 08-04-2012 04:14PM

maninasia wrote: »

I am well aware of the tax component cost of fuel, but if they want to increase electricity cost again there will be a lot of resistance.

And since when does Irish "resistance" to increased taxation work? You could use the new Household Tax as an example I suppose, but over half (and rising) DID pay it and the rest no doubt will as the penalties and scare tactics (linking it to the dangled offer of an exemption for people who paid high stamp duty in the boom for example.. IF we pass the Austerity Treaty of course!) force them into line.

Personally I disagree completely with the Household Tax but that's because our government is still as wasteful as ever while telling the rest of us to tighten our belts... and as for the above "carrot" - why should I (who didn't go mad in the "good times") pay for someone else's decision to "get on the property ladder" regardless of cost, ability to repay or consequence.... but that's another thread!

Also, just ask yourself if you could have predicted smartphones suddenly becoming so ubiquitous and powerful in the space of 3 years?

Well personally I'm not at all surprised as I work in IT and have seen technology change dramatically in the last 30 years, plus we as a country have one of the highest levels of mobile ownership so put the two together and it was inevitable.

There's a technological and infrastructure nexus being built now

In Ireland? Where broadband is still unavailable in a large part of the country, never mind "high speed" broadband.. and 3G dongles don't count as broadband incidentally

and with favorable economics electric cars are a certainty, sooner rather than later.

That's the key.. in a country up to its eyeballs in debt and officially back in recession, where people are struggling to pay their utility bills, I think this is a ways off yet myself.

All batteries need to do is to double storage capacity and you can get 300 miles out of them in a single charge.

Not everyone can afford to splash out on a new car, certainly not now given that most of these new cars were historically bought on credit which of course is no longer available - but we've seen what happens then already with the Co2 system.. those who can't afford to "upgrade" get penalised twice: first with the cost to change as their pre-08 but still perfectly fine car drops like a stone in value cause it doesn't have the "cheap tax", then again with stupidly high rates (like over €600 a year for a pre-08 2L)

Most cars are used for short daily commuting trips, I envisage one run around electric and one petrol/diesel will be common.

Maybe these people should get buses or the LUAS or walk? Oh wait that's just in Dublin - I forgot about most of the country where cars and long commutes to work are a way of life

Ultimately the extra diesel/petrol car will be abandoned as electric range improves. If I had an electric car for my daily run arounds or 1 hour trips that would cover me for 90% of my travel.

But that's you... as I say there's a substantial amount of others who do a lot more driving than that. Incidentally where does the electricity come from that is charging these cars? Or even building them? Or transporting them to dealerships? That's right.. fossil-fuel powered plants/trucks which use far more diesel and oil than cars ever will.

Electricity isn't the way.. hydrogen maybe

oppenheimer1 · 08-04-2012 04:25PM

Kaiser2000 wrote: »

Do you really think that the price and taxes on it won't shoot up if your theory is right? You only have to look at the current talk around increasing the CO2 tax bands because everyone went and bought "low emission" BMW 520Ds. Rest assured if these cars take off in any serious way, "fuel" will cost well over €1 per unit as well.

Leaving aside the current impracticality of these cars for anyone who does more than a shop/school run (although that will change as the technology evolves, granted) and the cost involved in installing fast-charge points everywhere (which if I recall a thread from Motors, the Nissan Leaf isn't even compatible with anyway?), not everyone WANTS to drive tiny, bland little boxes on wheels anyway.

(goes out to pat his big "polluting" 2L TDI Passat)

Not everyone wants to drive bland little boxes but economic necessity often forces people to adopt changes they don't really like.

Rising fuel costs will have some short term impacts and a number of medium to long term impacts.

In the short term there will be a stabalisation in the amount of money people spend on fuel. With rising price this equates to a reduction in use. This can be achieved with higher efficiencies but most likely with people not driving as much and opting to telecommute where possible.

In the medium term it will see a diversification of the fuel supply for the national fleet. With improvements in electric car and battery technology I expect to see a major adoption in electric vehicles in cities. The elecrtic car for the short commute will be common in a few years. We will also have road pricing as it won't be feasible to tax "motor electricity". There will be a renaissance in public transport use also. Cheap air travel will however be a thing of the past.

It will also hasten the demise of rural communities and destroy the non agricultural sector in those areas, while agriculture has the potential to boom. The question is can this provide enough employment ro replace the other industry? How this is managed by the political class will shape the future of the nation. Expect to see rural fuel protests soon (within a few years) imo.

In the long term, pragmatism will also win over and nuclear will become an option for Ireland and will become part of a wider fuel mix of nuclear, renewables and fossil fuel.

Ireland has the cohesion and the necessary natural resources to cope with a fuel shock. Other countries do not, and this may lead to some nasty conflicts. We produce enough food to feed this country many times over and we have considerable renewable energy resources. Ireland, compared to other countries (such as the UK and much of continental europe) is actually well placed to take advantage of the end of the fossil fuel era.

We just have to grasp the opportunity. My 2c anyway

oppenheimer1 · 08-04-2012 04:37PM

Kaiser2000 wrote: »

Electricity isn't the way.. hydrogen maybe

You've actually exposed your own ignorance there. Hydrogen is just an energy storage mechanism as there are no hydrogen reserves in the earth. Hydrogen is produced by the electrolysis of water (which is energy intensive) or the decomposition of methane. As you can see both of these require fossil fuels as the primary energy source. Hydrogen is just an intermediary.

The argument for using electricity is that it is easier to produce it efficiently and many base load electricity stations operate at efficiencies of 60% while cars have efficiencies of no better than 25% typically. If we can increase the electricity base load we can potentially half our fossil fuel use - just through the use of a more efficient existing technology.

thebman · 08-04-2012 11:53PM

maninasia wrote: »

All batteries need to do is to double storage capacity and you can get 300 miles out of them in a single charge.

Oh right, p*** easy to achieve that, don't know how they haven't done it already, got 3 in my garage ....

Most cars are used for short daily commuting trips, I envisage one run around electric and one petrol/diesel will be common. The idea that it will be one or the other is from people who are not thinking about how it will work with families and couples. Ultimately the extra diesel/petrol car will be abandoned as electric range improves. If I had an electric car for my daily run arounds or 1 hour trips that would cover me for 90% of my travel.

Well that is an ever bigger negative impact on the environment to have 2 cars, one electric and another internal combustion.

Electric cars need to last about a week, most people don't want to refill/recharge every day. They are reluctant enough to do it with their phones, cars are essential to have running every day in this country for most people.

Rising Fuel Costs and the Consequences Thereof

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