by Russel Norman
BP has released their Statistical Review of World Energy 2007. As usual it appears to dramatically overstate the amount of remaining oil because it uses the stats provided by various middle east countries and oil companies that are inflated. Colin Campbell and the Oil Depeletion Analysis Centre are saying that the peak for easily extractable oil has already occurred (2005) and the peak for total oil will occur in 2011. This is at a time of surging global demand for oil. There is an excellent article in the Independent. The editor of Petroleum Review thinks that there is enough capacity coming online to cover the next two and half years but he is not sure where future supply will come from after that.
The meaning of this for us is that we need to reduce our oil dependence before the price starts to peak. This is a message that the LabNats are struggling to hear because it is rather uncomfortable.
Published in Environment & Resource Management by Russel Norman on Mon, June 18th, 2007
Tags: environment
More posts by Russel Norman | more about Russel Norman
on the trolls and those who are unable to keep on topic
The LABNATs are not interested in this because it is another apocalyptic cult, just like climate change. However there is a chance that if it does occur, it will actually be a shock rather than the very gradual process of climate change.
“We need to reduce our oil dependence before the price starts to peak.”
We need to be ready for massive price increases, with some mitigation strategies in place, so that police/fire/medical/essential staff can still get to work. However given that something like 80% of car journeys are non-essential, there is plenty of scope for reducing oil use without the end of the world as we know it.
There might be a bit of anger though- communicating the true cause of the problem would be important. On the plus side, no boy racers!
Still I’m not convinced. The track record on this is very much with the big nasty oil companies / oil producting countries, and against the hysterical greenies. Mr Campbell has called peak production about a dozen times since the 80s and been wrong each time…
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Well lets hope the Oil Companies dont read Mr Campbells report. They might decide he is right and we will see prices go through the roof. Heh.
But they havent, so perhaps Mr Campbell is wrong? Afterall I cant see the Oil companies missing an opportunity for money. Hmm strange.
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to uk_kiwi.
Please explain to me the evidence you have for stating that 80% of car journeys are non-essential?
With little or no public transport in rural areas I do wonder how the frail, infirm and invalids are going obtain essential groceries, a pile of library books and get to medical appointments. It will be a huge concern should our fears be realised. Joy.
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Joy- try looking at page 58 of “Oil Demand Restraint Options for
New Zealand”
http://www.med.govt.nz/upload/26394/report.pdf
A full third of all distance traveled is recreational, with only 26% used to get people to work, and 14% shopping. There is just massive scope for savings here, at least for non-work driving.
If you take out the distance driven for employer’s work (i.e so you are just including private cars) and assume that half or more of shopping trips are avoidable, then the figure gets to around 70% discretionary, so 80% if the squeeze was on.
A large fuel price increase would be all you need.
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4. uk_kiwi Says:
June 18th, 2007 at 6:08 pm
> A full third of all distance traveled is recreational, with only 26% used to get people to work, and 14% shopping. There is just massive scope for savings here, at least for non-work driving.
> If you take out the distance driven for employer’s work (i.e so you are just including private cars) and assume that half or more of shopping trips are avoidable, then the figure gets to around 70% discretionary, so 80% if the squeeze was on.
> A large fuel price increase would be all you need.
Trouble is, just doing it by price won’t cut out the unnecessary trips while allowing the necessary ones to continue. It would cut out the trips by people least able to afford trips (whether necessary or unnecessary) without having much effect on the trips by those who are most able to afford them (which also consists of a mixture of necessary and unnecessary trips).
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And? Do we subsidise cars & petrol for the poor now? Why should that change, especially if there’s an oil crisis? If it’s a permanent state of affairs, isn’t it just prolonging the inevitable loss of mobility in an expensive and futile way?
In the long term theoretical case that this did all come to pass, clearly another solution would happen, probably spontaneously due to various business opportunities- i.e. grocery delivery services, increasing urban density, electric vehicle manufacturers, teleworking becoming commonplace, vege garden consultantcies etc.
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Hi UK, what is your reference for saying that … “Campbell has called peak production about a dozen times since the 80s and been wrong each time…”?
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OK I’ve been following peak oil news for about a year so here’s my little summary of the state of the play.
The bad news : World oil production has already peaked.
You will be able to find numbers in the BP report (such as “total liquids”) which are still increasing slightly year on year, but the stuff that you and I would recognise as “oil” is past its maximum already. The growth areas are in such things as bituminous sludge from the Orinoco, and tar sands from Canada (stuff which is like roading material, which is mined then cooked in huge reactors with great consumption of energy to break it down into something resembling oil).
So it depends on what you call “oil”. Amusingly, the BP report doesn’t break down production by type, or the peak-oil trend would be blindingly obvious.
But there’s still many shiploads of oil in the ground… don’t let anyone tell you it’s running out! There’s just the little problem of extracting it fast enough to meet demand… when most of the biggest and best oil fields are past their peak.
The good news : World demand is flattening off too. In any case, it’s physically impossible to burn it faster than we take it out of the ground, and a free market is a pretty good regulator. There is evidence that the current price is a major driver of increasing efficiency and conservation. Sometimes conservation means blackouts in Africa or Bangladesh, because they can’t afford the fuel for the power stations.
Interestingly, the oil-industry people have all been consistently wrong in their forecasting in recent years. They have been predicting increasing levels of production and consumption in line with the past, and have seriously overestimated the reality.
Likewise, the merchants of doom have yet to be proved right : prices have not yet gone through the roof (depending on where you think the roof is).
The oil industry people believe that there are enough new oil fields coming on stream to replace the old, worn-out ones. Mmmmaybe, for the next few years. And maybe not. Colin Campbell sees the absolute peak in about 2011, I think he’s a bit of an optimist.
We will see in a few months’ time, when there’s a seasonal upturn in world demand, whether the Saudis are bluffing or not when they claim they have got spare capacity and they can just turn on the taps to meet demand… there are excellent reasons to believe that their biggest well is drying up (technically, watering out) and that they can’t increase production much.
But I don’t see doom any time soon. Just gradually increasing prices, forcing us to be more virtuous about energy use.
NZ is in a particularly weak position, being hooked on imported fossil fuels. For one thing, we are locked into a chronic foreign trade deficit because of it. We need a crash program to wean us off the junk, because it’s only going to get worse.
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Don’t worry. Cabinet can invoke the Petroleum (Motor Spirits) Demand Limitation Regulations 1980 whenever it feels like it.
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Speaking of oil company reports, did we all see this?
The Yes Men – “Exxon Proposes Burning Humanity for Fuel If Climate Calamity Hits”
http://www.scoop.co.nz/stories/WO0706/S00281.htm
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We have been in the middle of a building boom. How many of these houses are energy efficient? [insulated yes, energy effiecient ..no] Where is the push for new urbanism? The failure (if it is a failure of) market forces, should apeal to the left(?).
Where are the Greens when developpers build walls across citizens living spaces?.
Why don’t the Greens concentrate on paramount issues instead of burdening themselves with smacking etc? (Why not a seperate “social justice” party?)… [lack of support..... the money in the bank comes from environmental causes].
jh
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This looked like a positve solution, but:
VW Abandons its 1-liter Car Project
http://www.greencarcongress.com/2005/04/vw_abandons_its.html
jh
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“prices have not yet gone through the roof (depending on where you think the roof is).”
NZ’s in an odd position there. Our NZ Dollar now is worth twice as many US Dollars as it was seven years ago when we hit NZD1 = USD 0.38 which means we’re not fully seeing the substantial rises in world petrol prices that have occurred.
But what goes around comes around – we’ll see our petrol prices jump up when the NZD falls again sometime in the next few years (don’t ask me when, if I could predict that I’d be rich and retired and, um, well, probably commenting here).
“we are locked into a chronic foreign trade deficit because ”
Also, we don’t have a chronic trade deficit. We have a chronic current account deficit. They’re different.
That is, we’re not buying much more than we sell (a trade deficit) – we don’t have a chronic deficit of value of stuff coming in vs value of stuff going out. But we do have a deficit of cash flows. One is that we’re shipping large chunks of cash overseas to pay out profits to foreign owners of our assets (eg Telecom’s large dividend payments – they’re shipping more overseas than they’re spending on upgrading local infrastructure) and we don’t own many assets overseas that ship money back – and more importantly we’re raising our property prices and paying for it by mortgages funded from overseas. The property part’s a killer: we have no more land, but by raising land prices we end up collectively owing more to overseas banks. As a nation we borrow more than we save.
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What astounds me is that there is no evidence of strategic thinking from the government to deal with the energy crunch which will result when we are no longer able to pay for fossil fuel imports. Whether that comes from a specific collapse of the NZ dollar, from the general collapse of the international debt mountain, or from rapidly rising prices due to tight world supply, the result is similar, and we will need to become a great deal more self-reliant very quickly.
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Sachi and Sachi will have to come up with a solution quick.
jh
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There is an interesting semi-fiction, semi-documentary movie called “2013: Oil No More”, produced in France. The thing to be most scared about isn’t not being able to drive your car, its getting the next loaf of bread on your table. A lot of modern agriculture is now dependent on oil in one form or another.
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icehawk, You are probably too young to have lived through exactly the same situation 35 years ago. Commodity prices slumped in 1967/68. Over the next six years they recovered and went on to hit record highs in 1973. The dollar went along for the ride and hit a record of more than $nz1.20 to the $US. The price of oil doubled during this period but the increase wasn’t reflected in petrol prices. Then in late 1973 commodity prices crashed and the price of oil went through the roof. Suddenly we had a balance of payments crisis and the government paniced. The government suddenly stopped local authorities from borrowing money and insisted existing loans were paid off as quickly as possible. The immediate result was rates increases with no increase in services. The long term result was deferred investment in infrastructure upgrades and a reluctance to borrow. Todays ratepayers are paying three times over for this panic reaction. Once in the cost caused by inadequate infrastructure (ie traffic congestion), secondly to pay the cost of building the infrastructure at todays construction and land prices (equivalent to what they would have paid in interest), and thirdly to pay for the capital investment for infrastructure to meet the needs of future ratepayers. The latter is the consequence of changing from Vogel’s public works loans scheme to a pay/go system of funding. Essentially this was presaged when the petrol tax completely replaced public works loans as the source of funding for highways at the start of the great depression, and that scheme fell victim to the high inflation rates after WWII and after the oil shocks.
So, yes, we should be afraid, very afraid. Afraid enough to reduce our own levels of indebtedness while we still have jobs or profitable businesses and not wait till we become victims of the pending crisis (I’m one of the lucky ones, 12 months should see me debt free).
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An energy shock as ocurred in 1973 (Carless days) is just what we need….
There are still a lot of people out there promoting sprawl “houses are expensive because cities are ring fenced”. Hugh Pavlovich has The Skeptical Environmetalist on his shelves (Press article).
jh
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Kevyn,
Your summation is 100% right and should be required reading (and understood) by all “young” people.
We were had in those days just like we are being had today.
Notice the call for local bodies to sell their shares in Auckland Airport? Why? So the new owners can morgage the asset to return capital to their share holders. No value added at all.
Another round of Fay-Richwhite style buy ups that we need to repurchase (bale out) in the future.
Sound advice to all young people, live within your means and dont run up any unneccessary debt.
Interesting scenario JH,
But I dont think densly popoulated cities are the total answer. Goods and services need to be transported to them.
The scenario I see is small lot farming close to the coast from where produce can be transported to the city by sail boat.
So while Auckland will be fine, Hamilton will need to be serviced by horse drawn wagon.
Looking way ahead I would be investing in Dutch, Belgium and British draft horse bloodlines to set up a decent stud to produce those big draft horses we will need in the future.
Both for goods transportation and small lot farming.
Plus their meat is just so tasty!!
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Reading this thread depresses me. All the doomsday-and-don’t-we-deserve-it Fin de siècle glee here simply goes to prove that the Greens are just another millenialist cult awaiting the end of time. Worse, it goes to show that Green politics is a dead end street with no real answers beyond a middle class Presbyterianism that yearns to see the guilty punished for their pleasures. I’ll tell you all now – trying to force carbon emission reductions won’t stop global warming. Why? Because the democratisation of wealth in places like China and India mean we are in a third industrial revolution right now. trying to stop this is like Canute trying to stop the tide coming in.
First of all, there is no energy crisis. There is enough solar, wind, hydro, nuclear and solid fossil fuel. We are facing a liquid fuels crisis. No more, and no less.
People like their cars – no, they LOVE them. They give them names. They invest them with characters and see them as extensions of their personality and ego. Every society and culture is the same when exposed to the motor car. The car gives them freedom to roam. It frees them from the tyranny of suffocating 19th Century parochialism, a cartoon like, Tolkienesque vision of which so many Greens seem to yearn for. Heads up guys: For 90% of the population “deep England” was a shithole they couldn’t wait to escape to the point that even the dark satanic mills of the early industrial revolution were preferable.
People also love their cheap airline tickets. They love the democratisation of travel. They want to keep going to Marbela, Ibiza, or the Gold Coast or whatever. To return to the world of even 50 years ago would see a shrinking of the horizons for all mankind.
So here is what I think will happen with no realistic alternative policies. The profitability of biofuel crops is going to be the final nail in the coffin for the rainforests. The drive for biofuel for the west with create a Malthusian population crisis in the third world that 80% of Westerners won’t care about. millions will starve to death to fuel our cars and cheap holidays. For us, food will go up in price, but fundamentally it will be business as usual as we screw the third world to maintain our lifestyle.
Behavioural changes take generations to implement and are incredibly expensive, only patchily successful and the minute the imperative for modification disappears the behaviour returns with a roar. look at drink driving. We have no choice really. The democratisation of wealth means we have to seek technological solutions, not moral ones. Human nature means its better to engineer away a problem that lecture people into reluctantly doing the least they can get away with. Green politic ought to be about demanding research into clean nuclear technologies like fusion and subcritical thorium reactors. We need to be exploring how to transition to hydrogen based liquid fuel economy. It ought to be about a vision towards replacing the current earth based extractive mining and depleting of mineral resources like platinum with robotic space based mining of the asteroid belt along with near-earth processing – asteroids are rich in free iron and nickel metal, as well as in the platinum group metals which are rare and valuable in Earth’s crust (about half the world’s nickel comes from one mining area in Canada called the Sudbury Astrobleme where a giant asteroid impacted Earth in prehistoric times. The Sudbury Astrobleme also produces platinum group metals which are separated from the nickel.). We have to develop carbon sequestration technologies to remove carbon from the atmosphere and store it underground or in carbonates.
People won’t return to a peasant farming economy, not matter how bucolic and appealing that is to a middle class greens on their lifestyle blocks. Back breaking drudgery in the depths of stygian rural ignorance and isolation is what we want to escape, not return to.
People want cars, computers and the trappings of a consumer lifestyle. We have to come up with ways of sustainably delivering that outcome to all the people of this planet, no simply try and deny prosperity and lifestyle to everyone to “save the planet.”
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fish_boy
Actually in the 19th Century people didn’t flee “Deep England” to escape the “back breaking labour in the depths of stygian rural ignorance” to the refuge of big cities and labour in the “statanic mills” as you maintain. They were forced from their lands, because the Commons was transferred into private ownership, hence it became an exclusive possession of a few who decided it would be more lucrative to replace people with sheep so that they could meet the demand for wool in Europe. They had no choice, but to seek jobs in those hell-hole Mills. It was either that or starve. Not a choice either you or I will ever have to make. Thank God for the Welfare State.
Yeah no doubt the “Developed World” will continue to screw over the people in the Third World so that we can keep the lifestyle that we have become accustomed to and believe we’re entitled to as they have done since Christopher Columbus. What else is new?
Oh we can continue to believe that there is some technical “magic bullet” that can solve our problems and waste our money in some extravagent “wild goose chase” instead of realising that as a society we can’t continue as we are.
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a round up of responses and commentary on the Independent article and the BP review…
http://www.energybulletin.net/31126.html
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So fish boy, where exactly is the “doomsday-and-don’t-we-deserve-it Fin de siècle glee” in this thread? I can’t see any when I read the thread.
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“Do we subsidise cars & petrol for the poor now”
We pretty much subsidise them for *everyone* now, through low gas taxes, lax technical standards and not having compulsory insurance. Which makes more difference to the driver of a 1980 Corolla than a brand new Volkswagen.
Of course having low fuel taxes means that the pump price goes up that much more when oil prices increase (because the proportion of the price spent on crude oil is larger) – so people who drive cheap, thirsty cars will get a sudden shock. Especially if they’ve bought a cheap house in the new “edge city” that Barry Curtis wants to build.
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Didn’t Jeanette say oil would be $100 a barrel in 2005 and that petrol would be $2 by Xmas – 2006!
Didn’t Colin Campbell say oil had peaked in 1989, 1995, 2000, and variously will in 2010, 2007, 2005 and 2010 again?
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Re Energy Bulleton article
Interesting comment about Drudge. When Drudge mentions it it is big news…
I see peak oil as a big winch slowly gripping everything and winding it in.
Maybe the BIG peak will have a wide summit as there is a lot of discretion (perhaps) as in use the car less.
jh
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Insider
Peak-Oil is here. The price of oil is gamed by the US government and the Saudis with the effect that it’s been raised early to a plateau that they can defend for a while longer. The oil patches themselves are depleted and if you look at the details you’ll see field after field in declining production. This is ONE of the reasons there are so few new refineries. No point. We can refine pretty much everything that we can produce now, so this stricture on demand for the raw product produces extra profits for the refiners and extra price signal early in the cyle to the consumers.
There’s another part to that signal too and it has to do with the US $ which is balanced in astonishing ways as it teeters along the cliff-face. Sheer inflation to the left and deep depression to the right. This is also gamed to the hilt. What comes next?
respectfully
BJ
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Maybe we should adopt initiatives like this, only in our country before the US economy takes a nosedive and draps us down with it. http://www.aidg.org/mission.htm.
What are we gonna do when the “Japanese Housewives” are no longer willing to prop up our paper economy or willing to subsidise our consumption driven lifestyles? How are we gonna pay for our power, petrol, or even our groceries when we lose our jobs and our house values collapse? Did anyone read the link I posted awhile back? http://energybulletin.net/23259.html
New Zealand’s No. 8 wire/Kiwi Ingenuity identity is as much of a myth as our “clean green” image.
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BJ
Sorry to burst your bubble, but the number of refineries has nothing to do with limits on oil production, just as the reduction in western toy factories has nothing to do with reaching peak elves.
It is much more to do with more mundane things like the costs associated with regulations, investment cost and limited demand growth in developed countries, which is where there has been a numeric decline – you ignore the growth in refineries in developing countries. The USA is not the world.
Refinery numbers are irrelevant when capacity increases – it’s called productivity and a process not unique to refining. WHy buid a new refinery to cope with single digit growth in demand when you can do so by tweaking the existing one.
NZRC is a classic example of that happening on our doorstep. Over the last 40 years it has been upgraded in quality and capacity as it makes more sense than building another one in Timaru.
And where it made sense to build a 100kbd plant in the 60s now you would only look at >250kbd as scale is important. That scale puts out of business the small and inefficient.
Turn your theory around, why would NZRC be spending 250 million on an investment with an extremely limited future?
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[Some] people are beginning to wake up to the fact that there is only a limited supply of a vital resource. With demand set to rise from 84.5 million barrels per day to over 110 million within the next 17 years (IEA estimate for 2025 consumption), and supply already showing signs of stagnating and even declining in many countries, what debate is there to be had?
If the ‘peak’ of conventional light crude wasn’t for another 40 years, what would we do with the intervening years? Other than expand our economy, our infrastructure, and our current ways and means of living…meaning that when demand does finally do-in supply, are we better or worse off for having had the extra time to prepare?
Another article worth linking to from energy bulletin
http://www.energybulletin.net/31076.html
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Speculative bubble… not worth defending but I think you should pay more attention to the degree that the oil price is gamed insider.
Since refinery capacity ( Gee, semantics problems too, I should have simply said capacity ) is growing far more slowly than demand and productivity of individual refineries does not keep up, the availability and price of the refined products we actually use is far more dependent on what happens at the refineries than on how far over the peak the oil supply has gotten. I was pointing out the distinct possibility that the refinery capacity is restrained by people who are actual insiders. The folks who run XOM and BP, the Saudis and their good buddy Darth Cheney. They want to keep the profits coming. They know that the patch is going dry. Extra refining capacity might make it far easier to see that more oil can’t be pumped… and would definitely make the profits smaller. You have to think about the larger picture.
Whatever you wish to think about productivity, it isn’t the answer to the shortage of refining capacity. They’re all running flat out 24×7 just as tightly run as any process plant that size can be run. 96% of the capacity is used.
Ignored growth? Me? What in the world gives you that idea? I think about refinery capacity relative to the demand and the margin is shrinking pretty nicely as demand ramps up. Maybe in 5 years or so the capacity will show up in those plants in Indonesia and the mid-east. Right now both are within spitting distance of 80 MBPD and refinery utilization is an unsustainable 96%…. at that rate any plant that goes down means somebody does not get served.
If more capacity comes on line, it may well become impossible to fill some of the input pipes to somebody’s refineries. I suggest that the restraints in the old-money industry are, as Senator Wyden showed in his report back in 2001, engineered at the corporate level to maintain profit margins. There is ample reason to believe this is true. I speculate only to the extent that the industry may be further guided by political operators not wishing to let people see the cliff they are driving over and others of different politics who want to divert supplies away from the West.
I happen to think those motives exist (profit and politics), exist. I may not agree with them, but too much sh!t happens that fits the theory.
respectfully
BJ
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insider asked “Didn’t Jeanette say …” and “Didn’t Colin Campbell say…”
I don’t know exactly what either of them said – could you reference what they said, rather than make a quote up? Anything else is not good debating.
I had a look through the Greens Peak Oil PRs from 2005,
http://www.greens.org.nz/docs/more_docs.asp?class=PR&cat=133#2005
but I can’t find any where Jeanette prophisises about future prices. And I’m sure that’s because she is careful to be scientific and balanced at all times.
If she ever did state actual figures I bet she said “some experts have predicted”.
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There is a silver lining in peak oil for New Zealand. Once it becomes obvious that peak oil is actually happening there will be a scramble to make dramatic changes to transport systems in a very short time frame. Everybody will be looking for off the shelf solutions and New Zealand can provide three of them.
Designline’s natural gas/electric hybrid buses will be needed to allow bus services to expand without having to compete for shrinking supplies of deisel.
Hamilton Jet’s ferry propulsion units will be in demand in cities with harbours and waterways to relieve the pressure on railways, as they did in New York following 9/11.
Steelbro’s sidelifter container trailers will be needed to meet the rapid increase in demand for intermodal transfers of shipping containers between intercity rail and local trucking. Current intermodal systems are built around interstate rail of containers with intrastate movements still mainly handled by trucks with transfers happening at a small number of large hubs. Peak oil will trigger the rapid development of a large number of small hubs (ie, what we have always had in this country) and traditional container handling equipement is either too big or takes too long to manufacture.
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BP Loses Australian Bid to Trademark Green
…..However, Justice William Gummow was skeptical: “It might be inherently adapted to mislead, might it not? … What is nature [sic] and healthy about the production or consumption of petroleum products?”
“it was a clever colour to have chosen so many years ago because it is now very much associated with the environmental movement.” A majority of the three judges rejected BP’s application and awarded costs against the company. Despite the setback, BP has registered the colour green in over 20 countries.
http://www.democracyinaction.org/dia/track.jsp?key=366768391&url_num=3 0&url=http%3A%2F%2Fwww.prwatch.org%2Fnode%2F6163
jh
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