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Price rise an ill omen for cheap oil addiction

6 May 2004

Petrol price rise is an ill omen for cheap oil addiction

Green Co-Leader Jeanette Fitzsimons is warning that rising petrol prices are "the shape of things to come" and that tough policy decisions need to be made now if New Zealand is to adjust peacefully to the imminent end of cheap oil.

Oil companies have blamed this week's four-cents-a-litre petrol price rise on an increase in the cost of crude oil and renewed volatility in the Middle East. In recent days London's Brent crude has risen 74 cents to US$36.67 a barrel, the highest price since October 1990 and US gasoline has reached a new all-time high of US$1.315 a gallon.

"The oil bonanza is nearly over," said Ms Fitzsimons, the Green Spokesperson on Energy and Transport.

"Sources within the industry predict that oil production will peak and start to decline sometime in the coming decade. This outlook is based on the same analytical methods that correctly predicted in the 50s that reserves in the continental US would peak and trail off in the mid 70s.

"This doesn't necessarily mean that oil will 'run out' anytime soon, but people have to understand that the low cost of oil has always been dependent on the capacity to increase production quickly. We are soon going to reach a point where the amount of energy needed to extract the remaining oil starts to seriously weigh against the total energy that can be extracted from that oil. That simple equation means petrol will cost more and more and be only affordable for the most essential and efficient applications.

"The Greens have put enormous effort into putting better transport legislation and funding in place so that New Zealanders will have some transport and freighting choices in the years ahead. Campaigning for public transport, rail and cycling is not just about encouraging healthier people and a cleaner environment, it is also about trying to get the appropriate infrastructure in place before the monetary and energy costs of building it make it unattainable.

"If anything, the Greens have generally limited our policy objectives to what we see as politically attainable and yet we have been lambasted for causing traffic jams! Really New Zealanders need to recognise the threat we face and demand that our governments aggressively pursue alternatives, because if all our transport options become untenable, our society will experience an unpleasant social and economic shock.

"The prospect of more expensive oil is the principle reason the US invaded Iraq, the country with the largest remaining oil deposits. George Bush himself may well believe his invasion-rhetoric, but the wider ruling class in the US knows full well that their political survival relies on putting off the day when Americans' insatiable demand for cheap oil can no longer be fulfilled," said Ms Fitzsimons.

ENDS

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