High fuel prices impact on rural communities

The Peak Oil debate is raging around the world ... but in Australia we hardly hear about it. Whilst oil remains over $65/barrel, this topic will be revisited on a regular basis. The fact is that oil will run out and it will be within our lifetime.

We are getting clues from the federal government. In 2003, we had the ethanol in petrol debate. More recently, we see the nuclear power debate emerging and we have just seen an agreement to secure the natural gas supplies from the Timor Sea.

Oil prices have more than doubled in the last 12 months and there is no relief in sight. Oil prices have passed the $67/barrel price which is $14/barrel higher than the 1980 peak. There seems to be a relationship of 2:1 with the price of oil:price of petrol. (That is $66/oil = $1.30/l at the pump)



For the sake of this discussion, let us assume that the current fuel price rises are brought about by the depletion of oil and that prices will continue to rise into the future. How will this affect our way of life?

As fuel prices continue to rise, the flow-on effects to small communities like the Upper King Valley will be felt in different stages.

Being 50 kilometres from Wangaratta or Benalla, the cost of a round trip to buy supplies will increase by 15 cents for every cent of petrol/diesel price rise.

The first to be affected will be those who work in Wangaratta or Benalla. With five round trips each week, every cent rise in fuel costs takes an extra $5/week out of their pocket. The logical step for these people will be car pooling - sharing the trip with one other person will halve the cost of transport. Once carpooling has become an accepted option, there may be an opportunity to operate a small commuter bus service between the major rural towns of Benalla, Wangaratta and Mansfield.

In the cities, they are already promoting the use of bicycles. In the rural areas, this will probably translate to motor bikes and 4 wheel farm bikes for running local errands or travelling to work.

At some point, the higher prices charged by the local store will look as attractive as paying the premium to travel to a major centre for supplies. This might offer enough incentive for local stores to develop buying groups to operate mini-supermarkets or maybe develop the old time general store/trading post of our forebears.

Of course, Internet shopping will become more popular. You will buy lotto tickets online, pay your bills, and buy goods by mail order - probably from the other side of the world.

The time has come to investigate all those fuel savings modifications we hear about on TV. Obviously, converting to gas is now economically back on the agenda. The experts say that if you travel more than 20,000 kilometres/year, gas conversion will cost you nothing. My Ford ute operates on gas or petrol. It costs me $30 to fill the 75 litre gas tank and I get 400 kilometres on a tank. That is less than half the price of operating the same vehicle on petrol.

Nationals Senator Boswell raised the ethanol issue in a speech to Parliament last Thursday stating, “There is overwhelming evidence that ethanol blended fuels were necessary for a cleaner and healthier nation.” Interestingly, he stayed away from the economics or the peak oil debate.

The car makers are currently promoting their hybrid vehicles but they can do more. You can read more on this subject here. The Hirsh Report showed that it will take 10 years for enough cars to be replaced with better fuel options before the oil will run out.

Governments won't let national economies collapse so the answer will have to be along these lines. So, while fuel prices rise, think before you drive.

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Related: Petrol barrels towards $1.30

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