I’ve written before about peak oil, when oil production peaks and then starts to decline, getting more and more expensive. There are various predictions around the place, but many seem to agree it’s going to hit this decade.
Some argue it’s already hit, and only the Global Financial Crisis dampening demand has masked it.
What would happen if petrol prices doubled?
Preposterous!, you might think. But it’s already happened.
Melbourne metro petrol prices: average 1998-2010
(Source: Australian Automobile Association)
Here’s how petrol prices have looked since 1998. It’s easy to forget it, but we’re currently sitting at just on double the price back in 1998.
And as you can see, the trend line is quite definitely pointing upwards.
And that’s including the downward pressure from the removal of indexation on fuel excise in 2001.
(The graph is not adjusted for inflation. According to the RBA’s inflation calculator, from 1998 to 2009, inflation was 38.6%.)
So anyway, next time you’re thinking about buying a car, or moving house, or one of those longterm decisions that will impact how much you drive, and how much petrol you use, be sure to consider: what if petrol hits $2.50 or $3 per litre or even more in the next 5-10 years?