[Peakoil] letter to editor

[Jenny Goldie]

Sir/Madam

Prime Minister John Howard is right when he says that the increasing cost of petrol is driven by a "rise in the cost of crude oil" (p.4. CT, 26 June). 

Because we are in the period where demand for cheap oil is beginning to exceed supply ('Peak Oil'), the price of crude is heading inexorably upward. Indeed, Matthew Simmons, investment banker and author of 'Twilight in the Desert', said on Australian radio a few months ago that the price of crude should be in the 'mid-three figure bracket'. That is, crude oil should be around $US500 a barrel to reflect its scarcity especially since India and China and other rapidly industrialing nations are making such heavy demands on supply.

Of course, once the price of oil goes up it becomes economic to 'mine' heavier oil sources such as tar-sands but these processes are extraordinarily energy intensive in themselves as well as being highly polluting. Once the world gets serious about climate change - as indeed it should - there could well be international pressure to leave such oil in the ground. 

One can but hope that now that the Prime Minister acknowledges that the price of petrol is tied to the price of crude, he will examine the issue of how we will maintain supplies in light of the rapid decline in domestic supply. Invade another Iraq? Let's hope not.

Jenny Goldie
256 Baroona Road
Michelago  NSW  2620
Ph: 02 6235 5488 (w) 02 6235 9190 (ah)
jgoldie at snowy.net.au
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