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The Permacultivator - Journal of Cool Climate Permaculture
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The Oil Price's Silver Lining

Damien Lynch gives insights into rising petrol prices.

Oil prices are on the rise, and petrol prices at the pump follow. Motoring is becoming more expensive and eventually, to a smaller extent, public transport costs will increase too. While this is a disadvantage to those who rely on the car, there are positives to be found in a rising oil price.

Over the last 25 years there have been three 'spikes' in crude oil prices, all in real terms (after inflation) higher than the current price. However this tune, rather than a 'spike' I think we are seeing a trend, with prices going slowly higher and less chance of a large fall.

Increased economic activity and no increase in supply are driving the price rise. Economic activity in the US and Europe is increasing, and with it a higher need for oil for energy. China currently accounts for 40% of the world's growth in demand for crude oil. In 1993 China's demand grew by 12% and it is expected to grow by a further 22% in 2004, according to our own Steve Wyatt in the Financial Review (19/8/04, p26). China has limited oil and gas reserves and needs to source supplies from the rest of the world to meets its growing needs.
So where is the silver lining in all this gloom?

Over the last eighty years oil has been such a cheap source of energy that it has caused distortions in economic activity which have been negative for the environment and local communities. Cheap transport costs have assisted the globalisation process and hurt local economies.

Higher oil prices will have positive consequences for the environment and local communities.
The transport of goods, especially by road, is cheaper when energy costs are low. With higher oil prices we can expect less movement of goods around the world and more local growing and manufacturing. As transport costs increase, the forces towards globalisation will decrease.Small country towns, for example, could expect to see locals shopping locally more often and locally grown produce and locally manufactured goods being cheaper than such items sourced from the other side of the world.
Perhaps, the corner shop could come back as a community meeting place.

More people may decide not to use the expensive car and take to public transport instead. Even small moves in this direction will make public transport more widespread, more frequent and more efficient. The resulting economies of scale for public transport operators could counteract the effect of higher fuel costs on public transport charges.
As the price of non-renewable sources of energy grows, renewable energy sources such as geothermal heat, wind, solar and hydro, will become more attractive. There will be proportionally less pollution.

Rail is a more efficient user of energy than road and it can be expected to become more popular.
All of these changes use less eco-damaging fuel and there could be benefits for community building as well. That's not silver, that's gold!

From Permaculture North Newsletter

J 46 Summer 2004 - Autumn 2005