<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META http-equiv=Content-Type content="text/html; charset=iso-8859-1">
<META content="MSHTML 6.00.2900.2912" name=GENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><FONT face=Arial size=2>Sir/Madam</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>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). </FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>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.</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>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. </FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>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.</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>Jenny Goldie<BR>256 Baroona Road<BR>Michelago
NSW 2620<BR>Ph: 02 6235 5488 (w) 02 6235 9190 (ah)<BR><A
href="mailto:jgoldie@snowy.net.au">jgoldie@snowy.net.au</A></FONT></DIV></BODY></HTML>