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Monday Message Board

June 16th, 2008

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

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  1. Ian Gould
    June 16th, 2008 at 18:41 | #1

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/11/npetrol111.xml

    Several newspapers are reporting that British petrol demand supposedly fell 20% last year due to high prices.

    That seems a remarkably high figure but if it is correct it suggests that a sufficiently high petrol price – around A$1.80 a litre – will indeed produce major changes in consumer behaviour.

  2. Ikonoclast
    June 16th, 2008 at 20:54 | #2

    I am not a share market investor except by proxy through my super fund so I can’t pretend to any great knowledge of it. However, my thinking is that anyone with shares in airlines and/or tourism companies should get out now. Those industries will not be viable soon. Fuel costs will see to that.

    The Qld and Australian Govts should not be wasting any money around to help tourism in Australia. It will be one of the first casualties of an energy price induced world recession.

  3. observa
    June 16th, 2008 at 22:37 | #3

    Tend to agree Ikon. Looks like buying oil futures is a sound bet now-

    ‘IRAN has withdrawn about $75 billion from Europe to prevent the assets from being blocked under threatened new sanctions over Tehran’s disputed nuclear ambitions, an Iranian weekly said.

    “Part of Iran’s assets in European banks have been converted to gold and shares and another part has been transferred to Asian banks,” Mohsen Talaie, deputy foreign minister in charge of economic affairs, was quoted as saying.

    Iranian officials were not immediately available to comment on the report in Shahrvand-e Emrouz, a moderate weekly, which did not specify the time period for the withdrawals which it said were ordered by President Mahmoud Ahmadinejad.

    “About $US75 billion of Iran’s foreign assets which were under threat of being blocked were wired back to Iran based on Ahmadinejad’s order,” the weekly said.’

    It’ll be interesting to see where the no-nukes crowd line up on this if Ourmadjihad doesn’t back off. I have a feeling Bush isn’t exactly on hols in Europe at present and the mad mullahs know it.

  4. observa
    June 16th, 2008 at 22:49 | #4

    Nice of the ladies to press the flesh while the West’s men get down to busines deciding who, how and when to hit those nuclear facilities and drive oil sky high isn’t it? Good luck with your Pricewatchers then Kevin, but no price is too high now it seems.

  5. Ian Gould
    June 16th, 2008 at 23:58 | #5

    Yes, time grows short on Iran.

    Ahmedinajad’s term in office ends in just over a year and while he’ll likely run for re-election all the evidence (such as local council elections and elections for the Council of Experts) says he’ll likely lose decisively.

    So the Islamohysterics will need to find a new bogie man to obsess over.

    Considering how little power Ahmadinejad actually has even now, it’s all rather sad really.

  6. observa
    June 17th, 2008 at 00:02 | #6

    You might recall this was the same revolutionary Iran that was going to lead Arab oil street to ditch the dollar for the Euro. That seemed to get Putin interested in sucking up to the mullahs until he came away thoroughly convinced they were all totally crackers. Now if Iran’s black gold is suddenly and unfortunately indisposed, that leaves energy rich Russia in the same happy place as Asians holding Iran’s gold gold. Would somebody care to drop a big hint to the mad mullahs as to precisely where that leaves them now?

  7. observa
    June 17th, 2008 at 00:14 | #7

    Perhaps I can be of some small diplomatic assistance here chaps. Start praying for the coming of the Fifth Imam!

  8. observa
    June 17th, 2008 at 09:04 | #8

    Yikes! Forget peak oil, mad mullahs and nukes, things are getting seriously serious -http://www.news.com.au/technology/story/0,25642,23876509-5014108,00.html

  9. Steve
    June 17th, 2008 at 09:27 | #9

    Not exactly news, just a link to the data:

    Inflationdata recently updated its graphs of inflation-adjusted world historic world oil prices, now charting from 1946 to May 2008:

    http://www.inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm

  10. Ian Gould
    June 17th, 2008 at 10:25 | #10

    Turning again to a previous discussion.

    It appears turboprops use 64% as much fuel as jets per passenger mile.

    The trade-off is that they’re slower and have a shorter range.

    So we may return to the days of the three day transpacific flight with lay-overs in Hawai’i and New Zealand.

    Bombardier which makes midsized short range commercial passenger turboprop aircraft reports sales quadrupled in 2007.

    http://www.treehugger.com/files/2006/12/perhaps_flying_1.php

    http://www.q400.com/q400/en/home.jsp

    http://www.ainonline.com/Publications/era/era_04/era_newturbop18.html

  11. O6
    June 17th, 2008 at 10:26 | #11

    It’s the upwards slope of the curve that’s unsustainable, not the current price of USD140 or so. One can’t plan for exponentiality.

  12. Smiley
    June 17th, 2008 at 11:24 | #12

    It appears turboprops use 64% as much fuel as jets per passenger mile.

    I heard not too long ago that the boeing 787 Dreamliner could get you from Australia to Europe for about the same cost as driving a hybrid the same distance. More recently I heard (on ABC radio) that while there were a huge number of orders for this plane, Boeing were having difficulties delivering because of the curing time for making the carbon fibre parts.

  13. June 17th, 2008 at 14:53 | #13

    Unlikely, Ian. Oil would still have to get a lot more expensive to outweigh the costs of spending 4 nights in hotels along the way. Crunch the numbers yourself.

  14. Peter Pan
    June 17th, 2008 at 16:55 | #14

    Turboprops may not be not be viable for passengers at this point but there has been a gap in the transocean freight industry between jet airfreight (overnight Aus to US) and surface shipping (1 month Aus to the US) fro some time now. Maybe the rise in fuel prices will make slow but efficient turbo props viable in filling this gap. I think crew costs for the extended flight were making turbo-prop too costly but the equations have all changed now. In the last oil crisis I can remember Douglas coming up with a prototype of a turbo prop version of a DC9. It will be interesting to see what happens this time.

  15. Respighi
    June 17th, 2008 at 16:56 | #15

    Ian Gould writes the following:

    “Several newspapers are reporting that British petrol demand supposedly fell 20% last year due to high prices.

    That seems a remarkably high figure but if it is correct it suggests that a sufficiently high petrol price – around A$1.80 a litre – will indeed produce major changes in consumer behaviour.”

    Maybe it will. But surely the UK is better supplied with functional public transport (despite the notorious problems of its rail system) than Australia? Let alone America?

    After all, anecdotal evidence suggests that a surprisingly large numbers of Brits (compared to Australians) simply don’t possess driving licences. They get around by train or bus – or foot – without, it would seem, undue hardship.

  16. Ian Gould
    June 17th, 2008 at 17:28 | #16

    “Unlikely, Ian. Oil would still have to get a lot more expensive to outweigh the costs of spending 4 nights in hotels along the way. Crunch the numbers yourself.”

    The one tiem I travelled to the US Robert it involved a stop-over either way. Overnight in Hawai’i on the way there, three very dreary hours in Auckland airport in the middle of a cloud burst on the way back.

    So really what’s being suggested is adding another stop-over which need not be overnight.

    The Bonbardier Q400 is apparently the latest version of the plane we know here in Oz as the Dash 8.

    The Q400 has a maximum speed of 667 kilometres but I wouldn’t think you’d want to use it on a transpacific route because its maximum ranger is only 1500 miles.

    LA to Sydney is roughly 12,000 kilometres, so a full-sized turboprop with a top speed on 600 KPH could do it in around 20 hours. Maybe 24 allowing for acceleration, take-off and landing etc.

  17. swio
    June 18th, 2008 at 21:32 | #17

    There are two choices for higher fuel efficency engines. Contra-rotating turboprops (like on the Tu-95 Bear and AN-70 or geared turbofans like on the Mitsubish Regional Jet.

    Both are more fuel efficient than conventional engines, but contra-rotating turboprops are the most efficient. However contra-rotating turboprops have two major disadvantages. They are extremely noisy. This is not a problem for military applications but is a showstopper in civilian use. They can’t be used on conventional long range jets planforms and would require new and very expensive to develop designs. Geared turbofans are actually quieter than coventional engines and are cheaper to maintain.

    The fuel efficient aircraft of the future will be like the Mitsubishi Regional Jet. Geared turbofan engines and a lightweight carbon fibre structure. No need to worry about 3 day trips to the US.

    Unfortunately the development of geared turbofans is lagging a bit with none available for full sized commercial jets. This is one area where a bit of government intervention in the form of development assistance (or perhaps significant prizes) could have big payoffs in accelerating production of a key greenhouse reducing technology.

  18. wizofaus
    June 19th, 2008 at 14:29 | #18

    BTW, FuelWatch skeptics should enjoy this:

    https://www.getup.org.au/campaign/FuelWatch?id=357&dc=430,292818,1

    (I actually donated $50 towards it – much I’m generally skeptical of GetUp’s campaigns, this one might actually do some good)

  19. June 19th, 2008 at 15:09 | #19

    No – not turboprops, airships!

  20. MH
    June 19th, 2008 at 20:55 | #20

    Depressing report out in NSW which advocates handing over the last true commons in OZ, the ‘long paddock’ to the NSW Lands Department for ‘a suitable solution’. Why PP Boards do not make any money on the lands!!! I am sure the Iemma Government will find a way to flog off these gems to make some money to keep the cities going yet again. Truly we are beset by some form of collective insanity if this goes ahead.

  21. Socrates
    June 20th, 2008 at 16:24 | #21

    Speaking of oil prices I must ask, does anyone know much about what I would term “the economics of scarcity”? I have read some material (forecasts) from ABARE recently which I doubt very much but, it makes me realice that most conventional economic supply/demand models are not very good for commodities where the supply is fixed. Anyone know some good theories that might help with peak oil?

    Fromt a transport viewpoint, I can only see a meaningfull analysis via understanding at teh micro-level the charaacteristics of each market segment. I think the fixed supply and rising demand/price will eventually lead to three things happening:
    - the price will be sufficient for some uses (eg oil for power generation) being replaced by substitutes
    - the price will reduce demand for some uses (eg buying more economical cars) to achieve some equilibrium
    - some activities will simply cease if high oil prices remain (eg farming remote areas with high transport costs and insufficient scale for rail)
    - some industries based on oil use will die; others will rise in their place

    Most of that is obvious, but to predict time, price response and rates of demand change, we need an effective market model. Hence my question, does anyone know how to model price and scarcity in markets?

  22. June 29th, 2008 at 17:06 | #22

    Hi,

    I recall some questions re policy and timing of Qld Govt decision to sell airport infrastructure such as Cairns.

    You had intended to respond more broadly with reference to Qld fiscsal policy but I can’t find anything on that or have I just been away travelling too long?

    Thanks :-)

  23. jquiggin
    June 29th, 2008 at 17:29 | #23

    #22 I’m going to give a talk on this and related topics in a couple of weeks which will force me to get on with this.

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