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Sandpit

August 19th, 2013

A new sandpit for long side discussions, idees fixes and so on.

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  1. Henry Campbell
    August 19th, 2013 at 11:53 | #1

    Here’s a thought experiment, better than bubble I think, which I pass on from someone who ruefully told me about his family’s accumulated capital being pretty well wiped out (for his father’s generation) by death duties in the days when state and federal duties plus good old fashioned stockbrokers’ and real estate agents’ commissions (and that’s without lawyers and accountants) could take over 60 per cent of the nominal value and lots of breadwinners died suddenly before heart disease was brought under reasonable control (and widows weren’t protected from death duties). He wasn’t very impressed by the morality of laws made by politicians and bureaucrats who were to dumb to understand the fact, permanency and effect of inflation and so egotistical that they treated their own situations as the measure of everything (he said his grandfather had pointed to the deductions available for people who took out life insurance – nicely pitched to the upper levels of public service incomes).

    The thought it provoked however was that debt wasn’t to be feared by a government that was not entirely wasting its fund raising in warfare and hopeless schemes because a good big capital slug on the owners of the debt would provide at least a one time fix. What difference would it make to the health of the economy?

    OK, it would perhaps have been better if private entrepreneurs had been able to use cheap capital to do there, on average, profitable entrepreneurial business rather than the government subsidise biofuels or build a new dam, but, even if suboptimal the government projects financed by debt can be paid for if necessary by getting hold of people’s savings in one way or another whether or not you believe savings can be excessive or not. The great inflation of the early 20s in Germany, and then the replacement of the currency in Germany after WW2 were examples though they wouldn’t have impinged much on the rich without a tax on their net worth – or maybe land. Currently the US is doing splendidly out of borrowing from the Chinese savers, and the Japanese and Saudis before them. Splendidly in terms of ripping them off but its a shame that productive US citizens have to put up with such vast waste by their governments in wars, producer capture which makes retired Californian police chiefs rich etc.

    Anyway, debts not such a big deal for governments if they are ruthless. The trouble is they need some discipline on them and old-fashioned ideas may have to serve. (Defunct economists might even be OK if they are gloomy Austrians like von Mises).

  2. TerjeP
  3. Hermit
    August 20th, 2013 at 13:35 | #3

    I think people should make the effort to read some concluding articles in The Oil Drum website before it closes Aug 31. For example the world is now producing nearly 90 million barrels a day of liquid fuels including crude oil, biofuels, tar sands, gas condensates and ‘fracked’ oil. Several credible analysts predict this might decline to 75 mbpd or so by 2020.

    I’d make several large corollary predictions if this pans out
    – declining oil supply could drag coal and gas demand down with it along with GDP
    – we may get 15% less emissions by 2020 with or without an ETS, RET or Direct Action
    – petrol will be over $2/L in the term of the next government.

  4. Tim Macknay
    August 20th, 2013 at 14:40 | #4

    @Hermit

    Several credible analysts

    Who exactly? Campbell? Aleklett? Koppelaar? Laherrere? They’ve all been consistently wrong so far.

    – we may get 15% less emissions by 2020 with or without an ETS, RET or Direct Action

    We “may” get lots of things that are extremely unlikely, but we need to base policy on what is likely to occur.

  5. Hermit
    August 20th, 2013 at 15:29 | #5

    @Tim Macknay
    I think those people have done OK given the number of free variables in the modelling. Let me turn the question around..what explains the current global economic slowdown? Peak Oil is a central plank in Limits to Growth theory. Next question how likely is it we can keep replacing relentless demand for oil, either by new fuels or technology such as bioplastics and electric cars?

    Scenario A peak oil is wrong and things will work out. Scenario B it is the biggest crisis modern man has faced but will thankfully slow carbon emissions. My hunch is when $2 petrol arrives secondary issues like paid parental leave get put on the shelf.

  6. Tim Macknay
    August 20th, 2013 at 16:03 | #6

    @Hermit

    I think those people have done OK given the number of free variables in the modelling.

    If you define “doing OK” as being consistently wrong.

    A couple of threads ago JQ made (IMHO) a very plausible prediction of the likely impact of $2/L oil: a lot of complaining, and a slight increase in the inflation rate. That’s it. Around ten years ago, when the petrol price hit $1/L for the first time, there was a lot of moaning, wailing and gnashing of teeth. Do you remember the devastating impact on the economy? Neither do I.

    Also, you forgot Scenario C: Peak oil is real but it won’t be the biggest crisis the modern world has faced, and probably won’t be a crisis at all. It’s possible it may slow carbon emissions a bit.

  7. Mel
    August 21st, 2013 at 01:28 | #7

    $2/L petrol will increase the trend towards smaller cars and hopefully get some of those ridiculous Toorak tractors off city roads.

    Overall this should be a big yawn rather than a cause for hysteria.

  8. Hermit
    August 21st, 2013 at 10:43 | #8

    Expensive fuel will have a knock on effect upon the growing and delivery of food. That could mean a double whammy for households with both expensive commutes and groceries. If we power tractors, trucks and buses with compressed natural gas that in turn will affect power prices. That is why no country so far is serious about reducing coal use, in our case we’ll need to sell more coal to pay for increasing oil imports.

    I suggest these factors may not have applied so much with previous oil price increases or wages growth could cope. Looking at Egypt and southern Europe I wonder if the century’s first decade 2001-2010 were as good it will ever get.

  9. Fran Barlow
    August 21st, 2013 at 11:55 | #9

    @TerjeP

    The Greens are not effectively preferencing PUP Terje. Labor gets their preference.

    Your lot on the other hand, are preferencing One Nation. What’s up with that?

  10. August 21st, 2013 at 12:26 | #10

    @Fran Barlow

    I see Wikileaks Party have launched an “independent inquiry” into why their national council’s decision on where to preference the Greens wasn’t followed. I fear it will be too late to undo the potential outcome re: Abbott delivered control of the senate via the Nationals in WA.

    @Tim Macknay

    For a worker running a medium car and doing a 30km one way commute the difference between petrol at $1.40 and $2.00 is about $952 annually (about $18/week). That’s just for fuel for the work commute (not weekends), as Hermit correctly notes the increase works its way through to costs of everything else where transport fuel is involved and more widely too.

    It starts to get harder to calculate exactly but that could work it’s way out to, at something of a stab in the dark, of say $40/week less for that person in today’s money. I don’t share people’s confidence that this will be no big deal. It’s also very difficult to work out with any precision what size deal it will be, but I think it will be very noticeable (just as an example – if I was going to buy the house from the example person above its value to me, if I’m the same as them, is now $40/week less.)

    My opinion is that the knock-ons will be a medium-to-big-sized deal. Of course we COULD do things like massively improve public transport, but I’m not seeing it and as time goes by solutions get harder to get.

  11. David Irving (no relation)
    August 21st, 2013 at 12:39 | #11

    Grow up, Terje. Preference deals are always grubby.

    The Greens, as always, suggest that people vote below the line, while providing the AEC with the required preference flows. The only reason I’m voting above the line this year is because I’ll be too busy handing out HTV cards to deal with the bedsheet.

  12. Fran Barlow
    August 21st, 2013 at 12:52 | #12

    @Mel

    Rather than rely on the price of fuel, I’d prefer to price the externality (traffic contention, total emissions, risk etc). Failing that, simply ration the number of kilometres people could drive in any period. Have them pay a registration based on how many kilometres they think they are going to do in any year. Issue them transferrable credits on a stored value card. Provide that if they exceed their credit limit they must purchase these from someone with unused credit or stop driving the car and when next it is registered, buy the balance at a serious penalty rate — say triple the rate that they would have got at the start of the period. Make the rate vary with vehicle mass and tare.

    Exempt vehicles that were very low emissions or allow them a highly concessional rate or free permits. Ensure that there is a maximum number of kilometres driven by all private vehicles (apart from those principally in passenger transport) in every Australian jurisdiction, and provide that this would decline by 1% per year until it fell to 80% of current.

    Facilitate car pooling by making it legal to carry passengers for money (if you pass the appropriate public vehicle and probity tests).

  13. Fran Barlow
    August 21st, 2013 at 12:59 | #13

    @David Irving (no relation)

    The thing is though David, we are not preferencing PUP ahead of the ALP, who will surely finish behind both us and the ALP and the Coalition, so it’s moot. Here’s the list:

    Wikileaks; Democrats; Sex Party; Labor; Palmer United Party; Katter’s Australian Party; Coalition; Liberal Democrats; DLP; Family First; Christian Democrats; Shooters & Fishers; One Nation.

    PUP are with all the other rightwing parties.

    As I said, the LDP is preferencing One Nation first. Given that they will almosty certainly finish behind them, that’s significant.

    Liberal Democrats: One Nation; Sex Party; Wikileaks; Katter’s Australian Party; Palmer United Party; DLP; Family First; Democrats; Coalition; Shooters & Fishers; Christian Democrats; Labor; Greens

  14. Mel
    August 21st, 2013 at 13:59 | #14

    Folk also easily forget that vehicles are enormously inefficient because they are so heavy; vehicle occupants usually weigh no more than 2% of the weight of a typical passenger vehicle. Trucks are only marginally better.

    Once oil reaches a certain price, there will be a big incentive to make cars out of a lightweight material, possibly carbon fibre. News from earlier this year:

    Carbon fiber has finally broken out of its European supercar niche.

    The 2013 SRT Viper and the redesigned 2014 Chevrolet Corvette have carbon fiber hoods and other parts, and the Corvette’s production is likely to top 20,000 units this year.

    That’s a far cry from the early days of carbon fiber, when a hand-built component took hours to produce and was too costly for volume vehicles.

    That’s the good news. The bad news is that carbon fiber is still expensive. The raw material for a carbon fiber part costs $10 to $15 a pound, according to one estimate.

    That cost must fall to $5 a pound for economical mass production, industry insiders say.
    Some suppliers are working hard to bring down the cost because carbon fiber is strong and lightweight. General Motors says the material is 10 times stronger than steel but weighs one-fourth as much.

    Peak Oil hysteria is ridiculous.

  15. Fran Barlow
    August 21st, 2013 at 16:57 | #15

    @Mel

    Using carbon fibre … this is interesting:

    http://www.autospeed.com/cms/article.html?&A=111057

    There are also some intersting things being done with other new materials — graphene is one such and with new designs where the number of components is reduced — monocoque shells.

  16. Hermit
    August 21st, 2013 at 18:40 | #16

    When our little runabouts get T-boned by a semitrailer I like the semi to be lightweight as well.

  17. August 21st, 2013 at 18:47 | #17

    I have a reply stuck in eternal moderation again.

    It was directed to

    Fran:

    I see Wikileaks Party have launched an “independent inquiry” into why their national council’s decision on where to preference the Greens wasn’t followed. I fear it will be too late to undo the potential outcome re: Abbott delivered control of the senate via the Nationals in WA. At least they announced they would. Since I wrote my comment their 2nd Vic candidate has resigned in a somewhat cryptic manner refusing to name the people she obviously believes are the responsible wreckers.

    And Tim Macknay:

    For a worker running a medium car and doing a 30km one way commute the difference between petrol at $1.40 and $2.00 is about $952 annually (about $18/week). That’s just for fuel for the work commute (not weekends), as Hermit correctly notes the increase works its way through to costs of everything else where transport fuel is involved and more widely too.

    It starts to get harder to calculate exactly but that could work it’s way out to, at something of a stab in the dark, of say $40/week less for that person in today’s money. I don’t share people’s confidence that this will be no big deal. It’s also very difficult to work out with any precision what size deal it will be, but I think it will be very noticeable (just as an example – if I was going to buy the house from the example person above its value to me, if I’m the same as them, is now $40/week less.)

    My opinion is that the knock-ons will be a medium-to-big-sized deal. Of course we COULD do things like massively improve public transport, but I’m not seeing it and as time goes by solutions get harder to get.

  18. Jim Rose
    August 21st, 2013 at 20:02 | #18

    see http://www.smh.com.au/federal-politics/federal-election-2013/julian-assanges-wikileaks-party-running-mate-leslie-cannold-quits-20130821-2sb99.html

    seems to be all leaders and no followers in the wikileaks party.

    they are preferencing WA nats, shooters and white australia parties before the major parties.

    if wikileaks get 1% of the vote, which is not unreasonable, in WA this preferencing could stop a green senator from reaching their quota instead of the WA nats.

    if so, its 37 senators to the coalition in the senate.

  19. Mel
    August 21st, 2013 at 20:40 | #19

    Megan @17

    The owner of the car in Megan’s example could convert to LPG for little more than the cost of their annual fuel bill, recoup the cost in approx 3.5 years (far better than any other guaranteed return investment on offer) and potentially extend the life of their engine.

    Again, this is a no-brainer.

  20. Mel
    August 21st, 2013 at 20:50 | #20

    Plus you get a $1,000 Fed Govt rebate on an LPG conversion, making the pay-off even bigger.

    It costs me about $25 a week to run my LPG Toyota Camry, which is now up to 300,000 kms.

  21. Tim Macknay
    August 21st, 2013 at 21:57 | #21

    @Megan
    What proportion of workers do 30km commutes by car? What options are available to them to reduce their petrol use? I can think of quite a few, but I’d like to see you make the effort.

    As for the flow-on effects in the economy, I’ll take the view of a professional economist over unfounded speculation, thanks. As JQ says, the impact will be a slight increase in the inflation rate.

  22. Mel
    August 21st, 2013 at 22:18 | #22

    Tim is right. People adjust. If petrol prices hit say $5 per litre maybe more folk would go European and travel to work on a Vespa.

    Once again, yawn.

  23. August 22nd, 2013 at 01:02 | #23

    @Tim Macknay

    I’m a bit sick and tired of eternal moderation, so no links.

    The ABS has something called: 9208.0 – Survey of Motor Vehicle Use, Australia, 12 months ended 30 June 2012

    According to which:

    Vehicle distance total = 232,453,000,000 km

    27.3% was for commuting to and from work (as distinct from ‘business’ which has a separate category) = 63,460,000,000 km

    Using my average consumption from above that equals: 7,298,000,000 litres of ‘petrol’

    Again using my figures of $1.40 litre today to your $2.00 litre in near future = $4,379,000,000 EXTRA that the (road) commuting workers of Australia are going to have to spend just to do what they do now.

    Now, I’ve done a bit of homework – over to you. Why won’t $4.379 billion coming out of their pockets make much of a difference?

    PS: At $5 per litre they need to find an extra $26,273,000,000.00 which they will have no trouble absorbing at all. They can keep stiff upper lips and pull themselves together and so on. Nothing at all to worry about really. Sorry, I was obviously a little bit concerned about nothing at all.

  24. Hermit
    August 22nd, 2013 at 10:17 | #24

    I seem to vaguely recall when petrol hit $1/L I had a Ford or Holden V8 at the time. I used to help friends move fridges and pianos in the back of a horse float. Petrol money? Don’t worry about it. It seemed to me that major household spending categories like food, power, petrol, housing etc each had a considerable margin of error. if one went up it meant slight cutbacks on restaurant visits or ski trips. These days rightly or wrongly we are spooked about our ability to make such adjustments.

    Fast forward to not long from now when petrol is $2 and the cheapest loaf of bread is $5. No more quick meals at Maccas we’ve got to save. Maybe the interstate wedding invitation is too much of a stretch. $2 petrol could be a kind of Rubicon after which consumer confidence will be permanently low.

  25. Tim Macknay
    August 22nd, 2013 at 11:57 | #25

    @Megan

    Now, I’ve done a bit of homework – over to you. Why won’t $4.379 billion coming out of their pockets make much of a difference?

    I suggested that you think about whether there are any ways motorists could avoid that extra mileage/fuel money. You don’t seem to have come up with anything. Do you seriously believe that every one of those driving kilometres, every one of those litres of petrol, is utterly essential and irreplaceable? That a 30km each-way commuter has absolutely no option but to keep on driving that distance, in the same vehicle, one person to a car, and just cop the extra expense?

    Nothing at all to worry about really. Sorry, I was obviously a little bit concerned about nothing at all.

    So how much extra have motorists had to find over the last 10 years or so to keep up with the increase in energy prices over that time? How does that compare with the numbers you’ve just come up with? How has that affected the economy? Has behaviour changed?

    While we’re playing games with figures, Australia’s GDP as at January 2013 was $1.372 trillion. If the economy grows by 3%p/a over the next year, it will grow by $41.16 billion.
    So, assuming your figures represent an accurate estimate of the cost to commuters of a price rise to $2/L, assuming the price rise occurs rapidly (i.e. within the next 12 months), and assuming commuters do nothing to ameliorate the impact of the price rise, the effect would be to reduce GDP growth by around 10%. So the net effect would be that the economy would only grow by 2.7%, or $37 billion. Not a trivial impact, but hardly earth-shattering. More like the kind of common-or-garden economic effects that cause variation in GDP growth from year to year. And that’s assuming a fast price rise of around 25% in a single year. If the rise was slower, say over 3-4 years, the impact would be lost in the GDP growth figures. But IMHO you’re overestimating the impact by assuming that that commuters would be unable to adapt to reduce the impact of the price rise.

    @Hermit

    I seem to vaguely recall when petrol hit $1/L I had a Ford or Holden V8 at the time. I used to help friends move fridges and pianos in the back of a horse float. Petrol money? Don’t worry about it. It seemed to me that major household spending categories like food, power, petrol, housing etc each had a considerable margin of error. if one went up it meant slight cutbacks on restaurant visits or ski trips. These days rightly or wrongly we are spooked about our ability to make such adjustments.

    Frankly, I doubt that people are more “spooked” about it than they were when the price hit $1/L. Certainly there was a lot less of a fuss when the price hit $1.50/L than when it hit $1/L.

    $2 petrol could be a kind of Rubicon after which consumer confidence will be permanently low

    It could be. Or it could be like $1/L – a “psychological barrier” which causes a bit of a fuss, but has a modest impact on the economy, and modestly changes people’s behaviour. Megan’s own figures show that the impact of $2/L petrol on commuters is actually pretty modest, although she insists that it’s actually dramatic and that the cost is somehow unavoidable.
    You haven’t given any reason to suppose that another 25% rise in the bowser price will have a dramatically greater impact on the economy than previous rises. I tend to suspect “slight cutbacks to restaurant visits and ski trips” will be the likely response to $2/L petrol, as it was to $1/L petrol – together with slight increases in cycling, public transport use, purchases of scooters, motorcycles and smaller cars, car pooling, rationalisation of discretionary trips, etc. As for “the cheapest loaf of bread is $5”, where’s that coming from? What makes you think that $2/L petrol will lead to $5 bread? Is there a calculation behind that?

  26. August 22nd, 2013 at 14:07 | #26

    @Tim Macknay

    I was only calculating the additional cost to those who commute by car.

    Using the ABS figures and a rough average consumption of 11.5l/100km, road users as a whole have to come up with about $16 billion per year extra at $2 litre. Or, as you rightly observe, reduce consumption by a comparable amount.

    You implicitly complain that I didn’t come up with alternatives. That wasn’t my point – I can think of many solutions. The point I clearly made was that there is almost no action on such changes. We are still building far flung car dependent developments without any, or any real, alternatives.

    In my view, the higher price of road fuel – all else trying to remain equal – will mean that somewhere something has to give. The flow on effects will not be trivial, in my opinion.

  27. Hermit
    August 22nd, 2013 at 14:08 | #27

    @Tim Macknay
    Firstly home brand no frills sliced bread is not going to hit $5 this year unless the wheat harvest is rained out. That is mainly due to rain on the wheatbelt in the last fortnight but things weren’t looking good as late as July. Inevitably there will be a year when not only does the rain completely fail but farm inputs diesel, DAP, urea and so on are very expensive.

    With any gradual squeeze there must come a point at which business-as-usual is no longer viable. For example a 60 km each way commute from a rural fringe area, now costing about $20 a day on the bus. When I did that I took the 6.50 am bus but my work colleagues who left home at 9 am were unimpressed when I had to take the last bus home at 6 pm. My impression is that people who have tried car pooling abandon it after a while as too restrictive. What if the return bus ticket was $40 but part time employment meant just half a day’s work? The inner city penthouse may not be an option.

    I suggest there are a nontrivial number of people out there who will not be able to adapt to high food and fuel prices. Look at Spain and Greece, former middle class people just like most Aussies. We differ mainly because we have more useful rocks in the ground but one day that may not be enough.

  28. Jim Rose
    August 22nd, 2013 at 14:16 | #28

    typical. the day after the debate is about rudd’s lack of manners.

  29. Mel
    August 22nd, 2013 at 14:33 | #29

    In my view, the higher price of road fuel – all else trying to remain equal – will mean that somewhere something has to give.

    My town of approx 5,000 people is about 35km from Bendigo, in north central Victoria. Each weekday morning, hundreds of single occupant vehicles head down the highway from Castlemaine to Bendigo. If petrol hit $2 per litre, each of those people could adapt by:

    (a) taking the train that runs between the two towns
    (b) getting an lpg car conversion
    (c) car pooling
    (d) buying a much lighter car.

    What Megan is doing is the very kind of dodgy CBA that we associate with the economic right when it opposes environmental regs (see Eban Goodsteins work on this, for example). Adaption and innovation occur all the time and people adjust.

    It is also false to say no planning for change is occurring, although it is possibly fair to say too little is happening. Fran and I have already mentioned private sector developments to reduce the weight of vehicles, for instance.

    I’m sanguine about what will happen when oil is no longer so cheap that it makes sense for folk to travel hundreds of kms as single occupants in monstrously heavy private vehicles.

  30. Tim Macknay
    August 22nd, 2013 at 15:02 | #30

    @Megan

    I was only calculating the additional cost to those who commute by car.

    Using the ABS figures and a rough average consumption of 11.5l/100km, road users as a whole have to come up with about $16 billion per year extra at $2 litre. Or, as you rightly observe, reduce consumption by a comparable amount.

    Yes, as I said, we’re playing games with figures. Neither of us are performing a rigorous economic analysis, are we? For example, it’s not obvious that the $2/L would represent the true cost of fuel for all motorists (although it presumably would for private commuters). But assuming it does, then the impact of a rapid (1 year) rise to $2/L would be to knock a third off annual GDP growth. Certainly a significant impact, not again not necessarily greater than many other impacts (e.g. movements in the exchange rate, other commodity prices) that we have seen in the past few years.

    It seems to me that it’s not clear what we are arguing about. It seems to me that you’re implying, but not quite coming out and saying, the the impacts of a price rise to $2/L would be economically devastating. I just can’t see it. On the figures, it seems to me that the impact will be modest, even if the rise is quite fast. But then again, maybe you’re not arguing that – maybe you’re just arguing that there will be an impact. If that’s the case, we’re not in disagreement at all.

    You implicitly complain that I didn’t come up with alternatives. That wasn’t my point – I can think of many solutions. The point I clearly made was that there is almost no action on such changes. We are still building far flung car dependent developments without any, or any real, alternatives.

    I was thinking specifically of alternatives that are available in the short term, that don’t require new infrastructure. I mentioned a few of them in my response to Hermit.

    In my view, the higher price of road fuel – all else trying to remain equal – will mean that somewhere something has to give. The flow on effects will not be trivial, in my opinion.

    I suppose it depends on exactly what you mean. It seems to me that the flow on effects will be somewhat lower GDP growth, that may or may not be manifested as higher inflation. That’s isn’t necessarily trivial, nor is it earth-shattering. But I can’t help thinking you’re implying something more serious – recession or depression, perhaps. Again, it doesn’t seem to me that the figures support that. A very abrupt rise might trigger a recession, perhaps, would it would also trigger a more significant behavioural and policy response. But a gradual rise would get a gradual response, and the subjective impact would be minimal, as it has been for the past ten years.

    @Hermit

    With any gradual squeeze there must come a point at which business-as-usual is no longer viable.

    Yes but who says business-as-usual has to remain viable? My argument is not that things don’t have to change, but that they can, and probably will, change at an incremental rate that is not particularly disruptive (at least with respect to oil – other sustainability issues may have different parameters). And even relatively disruptive changes (e.g. oil shocks caused by wars) can be smoothed out over the longer term. Human behaviour is more adaptive in the longer term than the shorter term. Hence the complaining about $1/L oil a decade ago, and the ho-hum attitude to $1.50/L oil today. Business-as-usual as we know it can come to an end, but it doesn’t have to be “the greatest crisis we’ve ever faced”. It could well just be the new business as usual.

    For example a 60 km each way commute from a rural fringe area, now costing about $20 a day on the bus. When I did that I took the 6.50 am bus but my work colleagues who left home at 9 am were unimpressed when I had to take the last bus home at 6 pm. My impression is that people who have tried car pooling abandon it after a while as too restrictive.

    If people have abandoned car-pooling as too restrictive, that suggests to me that either there are better alternatives and they’re adopting those instead, or they don’t find the price rises so onerous as to need to change their practices.

    On my calculations, if you were riding a 50cc scooter on your 60km commute (fuel consumption conservatively estimated at 2L/100km), you’d be using $1.20 worth of petrol each way at $2/L, or $2.40 per day. Assuming you work 48 weeks of the year, you must be spending $4800p/a on bus fares. 50cc scooters cost under $2000. At $2/L, your annual fuel costs would be $576. That’s a saving of $2224 in the first year alone. I doubt the total cost of ownership would amount to that much. Just sayin’. 🙂

  31. August 22nd, 2013 at 15:20 | #31

    It is also false to imply that I said there was “no planning” when I explicitly said “almost” no action.

    A little untruth, but an untruth nonetheless.

    What little there is, is insufficient it seems we agree.

  32. Tim Macknay
    August 22nd, 2013 at 16:32 | #32

    I wonder if the figures or the use of dollar signs is making the comments go into moderation? Maybe the software thinks we’re gambling spam or something?

  33. Mel
    August 22nd, 2013 at 18:30 | #33

    “It is also false to imply that I said there was “no planning” when I explicitly said “almost” no action.”

    You need to improve your English comprehension skills. I never implied you said no planning had occurred.

    Peak Oil scolds are much like the ignorant, unintelligent and/or uneducated Queenslanders who spread lies and rumours about the dangers of fluoridated water. Thankfully the ABC’s Catalyst dealt with some of those lies a couple of weeks ago whilst confirming common perceptions about the simpleness of many Queenslanders (our Dear Leader PrQ excepted of course):

    Ruben Meerman [Catalyst Reporter]

    What’s the scary thing about having it in the water, or what’s your concern?

    Woman 1

    It’s chemicals.

    Woman 2

    We don’t like it.

    Man 1
    It’s just a poison.

    Woman 3
    Fluoride’s good topically for your teeth, but ingested it’s actually a poison.

    Ruben Meerman

    Ah, you’re a New South Welshman.

    Man 2

    Damn right. It’s the best thing they’ve ever done.

    Woman 4

    ‘Cause it’s a poisonous chemical, so I just don’t believe in it.

    Does anyone have a theory on the unsophisticated nature of Queenslanders?

  34. August 22nd, 2013 at 19:31 | #34

    @Mel

    I’ll leave the gratuitous insults aside and invite PrQ to enforce his previous ban on you pretending I said things about fluoride which you know full well I never did.

    You really are a belligerent old bully who can’t handle complexity or common English usage, aren’t you?

  35. Mel
    August 22nd, 2013 at 20:37 | #35

    Megan,

    I didn’t mention your name in relation to fluoride, I merely pointed out that both Peak Oil scolds and fluoridated water scolds tend to be simpletons.

  36. August 22nd, 2013 at 21:13 | #36

    @Mel

    Simpletons? That’s a bit rich. It was only a month ago you were warned about this:

    Please no more rehashes of the fluoride debate. Mel, as you seem to have initated this round, I advise that any further mention of your debate with Megan will lead to a ban. If I post on fluoride or some related topic, you can comment, but don’t attack other commenters.

    Back on the subject, Oil is a finite resource. Oil is currently at the centre of our economic system. Oil production will unarguably reach a high point and will decline. Conventional oil production is probably past that stage and we are seeing higher oil prices as a result.

    Higher oil prices flow on into almost all other areas of our lives. This is not a trivial matter.

  37. Mel
    August 22nd, 2013 at 21:26 | #37

    Megan,

    I didn’t mention you in relation to the F word or debate the topic with anyone else. Settle down.

    Peak Oil scolds who worry about $2/L petrol might be interested to that 15 or so mostly rich European countries already have US$2/L petrol.

    According to Bloomberg, Norway ranks first as US$2.63/L among 60 selected countries.

    The sky hasn’t fallen down in Europe because of high petrol prices, nor has America’s relatively low petrol prices (not even in the top 50) saved it from recession.

  38. August 22nd, 2013 at 21:55 | #38

    @Mel

    It wasn’t directed at me?

  39. Mel
    August 22nd, 2013 at 22:11 | #39

    Of course not Megan. As I understand it, you’ve seen the light and now know that F water is a very good thing.

  40. August 22nd, 2013 at 22:29 | #40

    @Mel

    Then why raise it? What could the context possibly have been? Peak oil has nothing to do with fluoride.

  41. Tim Macknay
    August 22nd, 2013 at 23:36 | #41

    Test

  42. Mel
    August 22nd, 2013 at 23:39 | #42

    Catalyst was on the telly tonite and it brought it to mind.

  43. Tim Macknay
    August 22nd, 2013 at 23:39 | #43

    Let’s keep it civil guys. We were having an interesting discussion there.

    Prof Q, I’ve got a couple of comments in moderation. They’re lengthy, but I promise they’re civil!

  44. August 23rd, 2013 at 00:46 | #44

    @Mel

    Disingeniousness is obviously your strong suit, but credibility you are very light on. You might want to work on that.

    Yes Tim. Let’s keep it civil. Weird kind of false balance though – Mel rolls out a tired old lie by imputation and I’m supposed to “keep it civil”?

  45. Tim Macknay
    August 23rd, 2013 at 11:09 | #45

    I gonna try to re-post my comment that is caught in perma-mod. here goes:

    @Megan

    I was only calculating the additional cost to those who commute by car.

    Using the ABS figures and a rough average consumption of 11.5l/100km, road users as a whole have to come up with about $16 billion per year extra at $2 litre. Or, as you rightly observe, reduce consumption by a comparable amount.

    Yes, as I said, we’re playing games with figures. Neither of us are performing a rigorous economic analysis, are we? For example, it’s not obvious that the $2/L would represent the true cost of fuel for all motorists (although it presumably would for private commuters). But assuming it does, then the impact of a rapid (1 year) rise to $2/L would be to knock a third off annual GDP growth. Certainly a significant impact, not again not necessarily greater than many other impacts (e.g. movements in the exchange rate, other commodity prices) that we have seen in the past few years. Coming back to the individual commuters’ costs, the other thing your analysis leaves out is expected annual increase in income. On the average of the last few years, it would be much more than $18 per week, and more than your $40 per week figure as well. So the most likely outcome is that your commuter’s wouldn’t actually be worse off at all, just slightly less better off than they would otherwise have been.

    But it’s not altogether clear to me what we are arguing about. It seems to me that you’re implying, but not quite coming out and saying, the the impacts of a price rise to $2/L would be economically devastating. I just can’t see it. On the figures, it seems to me that the impact will be modest, even if the rise is quite fast. But then again, maybe you’re not arguing that – maybe you’re just arguing that there will be an impact. If that’s the case, we’re not in disagreement at all.

    You implicitly complain that I didn’t come up with alternatives. That wasn’t my point – I can think of many solutions. The point I clearly made was that there is almost no action on such changes. We are still building far flung car dependent developments without any, or any real, alternatives.

    I was thinking specifically of alternatives that are available in the very short term, that don’t require new infrastructure. I mentioned a few of them in my response to Hermit.

    In my view, the higher price of road fuel – all else trying to remain equal – will mean that somewhere something has to give. The flow on effects will not be trivial, in my opinion.

    I suppose it depends on exactly what you mean. It seems to me that the flow on effects will be somewhat slower GDP growth, and higher inflation. That’s isn’t necessarily trivial, nor is it earth-shattering. But I can’t help thinking you’re implying something more serious – recession or depression, perhaps. Again, it doesn’t seem to me that the figures support that. A very abrupt rise might trigger a recession, perhaps, would it would also trigger a more significant behavioural and policy response. But a gradual rise would get a gradual response, and the subjective impact would be minimal, as it has been for the past ten years.

    @Hermit

    With any gradual squeeze there must come a point at which business-as-usual is no longer viable.

    Yes but who says business-as-usual has to remain viable? My argument is not that things don’t have to change, but that they can, and probably will, change at an incremental rate that is not particularly disruptive (at least with respect to oil – other sustainability issues may have different parameters). And even relatively disruptive changes (e.g. oil shocks caused by wars) can be smoothed out over the longer term. Human behaviour is more adaptive in the longer term than the shorter term. Hence the complaining about $1/L oil a decade ago, and the ho-hum attitude to $1.50/L oil today. Business-as-usual as we know it can come to an end, but it doesn’t have to be “the greatest crisis we’ve ever faced”. It could well just be the new business as usual.

    For example a 60 km each way commute from a rural fringe area, now costing about $20 a day on the bus. When I did that I took the 6.50 am bus but my work colleagues who left home at 9 am were unimpressed when I had to take the last bus home at 6 pm. My impression is that people who have tried car pooling abandon it after a while as too restrictive.

    If people have abandoned car-pooling as too restrictive, that suggests to me that either there are better alternatives and they’re adopting those instead, or they don’t find the price rises so onerous as to need to change their practices.

    On my calculations, if you were riding a 50cc scooter on your 60km commute (fuel consumption conservatively estimated at 2L/100km), you’d be using $1.20 worth of petrol each way at $2/L, or $2.40 per day. Assuming you work 48 weeks of the year, you must have been spending $4800p/a on bus fares. 50cc scooters cost under $2000. At $2/L, your annual fuel costs would be $576. That’s a saving of $2224 in the first year alone (excluding on-road costs and maintenance. But I doubt those costs would amount to that much). Just sayin’. 🙂

  46. Mel
    August 23rd, 2013 at 12:42 | #46

    This story is much more worrying than Peak Oil hysteria:

    Michel was one of 65,000 single parents, mostly women, who were affected when the federal government scrapped the Parenting Payment for single parents with children aged eight and over in 2012. Most were moved onto the lower Newstart Allowance. (Partnered parents now lose the payment when their child turns six).

    The maximum rate of Newstart Allowance for single parents is $537.80 a fortnight, while the maximum Parenting Payment for single parents is $683.50 a fortnight.

    The government promoted the scheme as a way of encouraging parents back to work, but critics point out that 60 per cent of those affected were already working in some capacity.

    According to the Single Parents Action Group, the effect of the cuts has been so drastic that some women have contemplated suicide. ”I get personal messages from people telling me they want to give up on life and kill themselves because they feel inadequate and unable to support their kids,” says Bianca Maciel Pizzorno, who manages the national Facebook page for the group. ”I have to direct them on to appropriate support services. It’s very distressing.”

    She says she also gets messages ”on a fortnightly basis” from people seeking help for friends who are sleeping in cars or about someone who has turned to prostitution.

    Sickening.

  47. Donald Oats
    August 23rd, 2013 at 21:25 | #47


    Fluoride
    You are drinking industrial waste
    The greatest scientific fraud in human history

    So begins the flyer someone dumped in my letterbox. Upon reading the guts of it, the brochure reads like a story from the now defunct newspaper, The Truth, which gave us such great headlines as Kylie is an Alien, and Weeing Nuns give us babies! As per those stories, there is a small nugget of fact buried under a tonne of smelly stuff.

    This is the most technologically advanced era in human history, and yet we have to contend with this bulldust. If the individuals behind these brochures don’t like fluoridised water as a means of avoiding dental problems, then surely can stick to reasons for opposing it which aren’t in the same league as “I was an alien abductee and got probed” stories. Then they have the audacity to write “Help us spread the truth.” Gordon Bennett!

    I suspect the people behind these brochures actually object to mass fluoridation because they want to be free to choose for themselves whether to consume fluoride or not. If so, why not just say that? No need to pound us with nonsense arguments instead of an individual liberty argument. Or how about suggesting other ways of providing people with choice, things like milk with fluoride added, in the same way you can buy milk with calcium added? If you don’t want the fluoride, you can purchase the non-fluoridated milk; a simple opt-in system. There is simply no need to make baseless claims such as …the greatest scientific fraud in human history!!! I suppose the use of three exclamation marks is significant 🙂

    Okay, they caught me on a bad day…

  48. Jim Rose
    August 23rd, 2013 at 21:55 | #48

    Does anyone have a theory on the unsophisticated nature of Queenslanders?

    queensland used to vote labor solidly until the 1957 spilt. were Queenslanders unsophisticated then?

  49. Mel
    August 23rd, 2013 at 22:11 | #49

    Donald, this type of drug-addled nonsense is all too commonplace on the web as well.

    You will always find uneducated and ignorant souls spouting nonsense like this and “useful idiots” willing to dip their snouts into the swill of fear and hysteria:

    Today Premier Bligh announced that she was going to instigate fluoride mass medication of 80% of Queensland’s population of 4 million people within 2 yrs and up to 95% in 5 yrs.

    Fluoride chemicals are added to public water supplies to ostensibly treat tooth decay. Fluroidation is mass medication despite the Health Department denials. Fluoride chemicals are added to water to treat people, these chemical compounds do not make water safer to drink to prevent water-borne diseases. Fluoridation is mass medication by any definition.

  50. August 23rd, 2013 at 23:25 | #50

    @Donald Oats

    Donald, you should also be very careful about engaging with a person who has a history of lying and bullying on this site. This person disregards the several warnings they have been given by the host about revisiting old battles (in which this person has been repeatedly and comprehensively thrashed because they were trying to falsely attribute a quote – clearly marked as belonging to someone else – to the host of the site where the quote appeared, but refuses to accept that fact).

    Such a person would accuse others of being “drug-addled”, “uneducated, “ignorant” – and of course “useful idiots” likened to pigs.

    Mel has an extremely creepy fascination with me and an obsession with fluoridation.

    I’m happy to discuss reality with you if you need to be set straight on Mel’s dishonest personal attacks on me, but hopefully you’ve been around here long enough to know who the real fruit-loop is.

    “Flouridation” anyone?

  51. Mel
    August 24th, 2013 at 00:38 | #51

    Some nut called “M Haines” made the statement at #47. It has nothing to do with you. Now settle down.

    Anyway, let move on to the anti-GMO nutters …

  52. Jim Rose
    August 24th, 2013 at 11:35 | #52

    Rudd may lose his seat. How ironic

  53. Fran Barlow
    August 24th, 2013 at 12:08 | #53

    @Jim Rose

    But on balance, a good thing, in context, if it occurs.

  54. Hermit
    August 24th, 2013 at 13:56 | #54

    @Tim Macknay
    I’d do a 60 km each way commute on a scooter when global warming has stopped the rain and a bingle with one of these carbon fibre cars feels like a fluffy duster.

  55. John Quiggin
    August 24th, 2013 at 14:43 | #55

    Mel & Megan: I’m absolutely sick to death of this. Please take two weeks off. On return, no interaction with each other, or discussion of fluoride.

  56. August 24th, 2013 at 14:53 | #56

    @John Quiggin

    I protest a 2 week ban as undeserved. I never raised the topic or started a fight.

    But as the host, it’s your prerogative.

  57. Hermit
    August 24th, 2013 at 15:43 | #57

    I’m not sucking up but kudos to Pr Q for saying a year ago the right carbon price was $50. It seems the Obama administration agrees. See the Climate Spectator article titled $48 – the right price for a tonne of CO2?

    Funny that the new explicit Aussie carbon price will be in the range $0 to $10.

  58. Jim Rose
    August 24th, 2013 at 15:57 | #58

    @Fran Barlow Rudd would not stay on as opposition leader. I do not see him staying on the backbench

  59. John Quiggin
    August 24th, 2013 at 17:20 | #59

    @Megan

    It may be unfair, but I’m too busy to sort out who started it. From now on keep clear of each other – if there are any unprovoked attacks, call my attention and they will result in a permanent ban.

  60. Jim Rose
    August 25th, 2013 at 22:28 | #60

    for once, i agree with Rudd 2.0: Labor did not have a mandate to introduce a carbon tax.

  61. Fran Barlow
    August 25th, 2013 at 23:01 | #61

    @Jim Rose

    Just as well they didn’t introduce one then … 😉

    Mandate theory is bunkum in our system anyway.

  62. Jim Rose
    August 26th, 2013 at 21:07 | #62

    Drone strikes have a stronger legal basis than any cruse missile strikes on syria.

  63. Troy Prideaux
    August 28th, 2013 at 10:53 | #63

    From “The Business” last night: “New research shows that the superannuation industry raked in 18 billion dollars in fees last financial year, that’s more than 1% of Australia’s GDP”
    Couple that with the sum of bank profits from our big 4 and it’s shameful to think how much of our hard earned spondulas are just thrown into the wind:(

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