May 23, 2008


Recently Oil prices reached a high of $135/barrel, this appears to have caused consternation amongst many. Gordon Brown has noted this as a problem when reflecting on his loss in Crewe and Nantwich, whilst it cropped up in this week’s Question Time. , that also contained the ever-annoying Hazel Blears.

There are many proposed solutions here – hybrid cars, more fuel efficient cars, better public transport. These all reduce the amount of fuel consumed by the economy. The ever-annoying Hazel Blears argued that we should seek to increase supply – newer fuel reserves. Whilst it is obvious that rising fuel prices, will make utilizing more expensive fields profitable, and thus actioned, as a government strategy this isn’t viable.

Firstly because fossil fuels are an inherently finite resource – they will run out, so this strategy is only ever going to work in the short term. On a more practical note, many scientists seem skeptical about the viability of further north sea exploration. Apparently we gave most of the oil to the Norwegians when drawing the borders.

Unfortunately many ignorant talking heads appear to have taken it upon themselves to propose a tax decrease. This, again, is a short term solution – tax decreases, so the cost of fuel decreases, demand increases, so the price increases. This would encourage exploration – due to the long term price rise, but either way it encourages increased consumption – so the fuel reserves run out sooner. After the immediate gain, we loose out in the long run.

There is another alternative for improvement. It involves a fantastic piece of technology. Its very cheap. By consuming less fuel it also reduces environmental problems. Additionally its healthy for you (though not as much as people think). My suggestion is …


Overwhelming people’s transport options can be fulfilled by cycling – very few people in the UK travel long distance as part of their daily journeys, many of those who do can get their fuel costs subsidized by their business (e.g. sales Reps, road haulage), most of our journeys consist of urban driving. These needs can nearly always be fulfilled by bicycling.

I don’t know how to ride a bike (I never learnt whilst a child) and I’m almost sorry that this isn’t more of a stigma. Does this make me a hypocrit? Of course not … I walk to work.

- 2 comments by 1 or more people Not publicly viewable

  1. An interesting theory in the Times yesterday suggests that the rising price of oil isn’t a problem of supply and demand but as much a financial market bubble as for example the or the mortgages bubbles were. Despite the price more or less doubling/trebling, the figures in the article were suggesting that though demand has risen slightly, it has not risen by enough to explain what is going on in the dealing rooms and, anyway, there is no shortage presently because it is still flowing out of the ground in sufficient amounts to satisfy current demand and a bit more. And it therefore hinted that at some point there should be some sort of correction when dealers realise that there is no point in hedging against future shortages (in the short term, at least) and promptly unload all their futures at knock down prices.

    Let’s hope so!

    23 May 2008, 15:19

  2. Scott Redding

    The price rise is not down to financial speculation on demand … it’s down to financial speculation on supply. Traders simply don’t believe that Saudi Arabia will be able to turn on the tap in a year’s time. I mean, really, despite two decades of pumping, Saudi Arabia maintains it has the same reserves as it did in 1988.

    06 Jun 2008, 14:07

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