The end of cheap oil?

Rising fuel prices are starting to hurt our economy. Qantas, one of Australia’s common airliner is effectively grounding the equivalent of 6 aircraft carriers, by reducing amount of passengers on these aircraft, cancelling production and by a reduction in the amount of routes available. At the current time oil is trading at about $US133 and this is the impact we are starting to see. However we are also experiencing higher food prices, higher consumer goods, and an increase in just about everything from the rising cost of oil.

While a strong Australian dollar and weak US dollar is having a cushioning effect, it won’t be long before more dramatic measures need to be taken for businesses to maintain profits while still providing a high level of service to its customers.

A growing number of people, professors, analysts and critics are voicing concerns about peak oil. This is where supply equals demand, and henceforth every day after this the demand will still continue to grow, while oil supplies dwindle. Don’t be fooled into believing that we will just “run out” of oil one day, it won’t happen, for the reason of peak oil. It will be a gradual process, a gradual process of economic failure.

Armed with this information, governments may reduce or relinquish barriers that will cause oil companies to mine oil in protected areas such as the Artic, where an estimated 25% of the worlds undiscovered oil supplies may be found.

But what does this all mean, well in 5 years time we may dream of the time when oil prices were only a measly $133 a barrel. For now a reduction in our spending on petrol, a critical review on whether we need the two 4WD in our garage and a smarter approach to transport. These are the only things we can do for now, but maybe investing more in renewable energy may be the way to go.