Cheap energy economy running out of gas

Sensible people stay in town for Easter. It’s best to avoid from the madness that is the flight from Sydney to snatch a few neurotically short days by the sea and then it usually rains. Long experience told me it would be far more relaxing hanging around in tthe Brushtail Cafe talking about Eddie Obeid’s troubles and the Cyprus bank crisis.

“The GFC … they’re now calling it the Great Recession”, said Joadja, wiping down the bar. “It’s gone on now for five years and more, and there’s really no sign of an end. And after the Cyrpus meltdown, there’s this sense that the whole thing might get deeper. Spooky”.

“Maybe it isn’t just a recession or even a depression”, Tarkis mused. “Maybe it’s some whole new phase the world’s economy isn’t going to bounce out of. Maybe 2007 was as good as it gets”. Tarkis, of course, was in advertising.

“Good? Good?” Joadja exploded. “All the environmental rape that led up to it. All that accumulation of ‘stuff’. All that planned obsolescence. All those mountains of landfill. All that frenzied packing of more and more into each day”.

“If it is a whole new phase, what happened? Too much cheap credit?”

Old Possum stirred from his habitual stool at the bar. “Nah, not for my money. Energy is the decisive factor. We couldn’t have collectively expanded the world economy at breakneck speed unless there was an abundance of cheap energy. No cheap energy, no cheap food. Do you think world population could have gone through the roof like it did in the 20th century without cheap oil and the Fordson tractor? Without the Fordson – and its later rivals – there couldn’t have been enough food.”

“The what?”

“The Fordson Tractor. It was Henry Ford’s agricultural equivalent of the Model T Ford. World’s first lightweight affordable petroleum workhorse. Came on the market in 1917. Combined with the petrol truck, it opened up vast areas of the US, Canada, Australia and the Soviet Union to wheat production. Do you remember the tractors that were such a feature of hokey old Soviet movies about tractor mechanics and sturdy women collective farmers? They were Ford tractors built in the USSR under licence.

“And now we’re in the declining phase of the oil age. The signs are everywhere. Did you see they’ve cancelled the Australian Motor Show. It was to have been held in June in Melbourne. The manufacturers don’t have the money to go, and anyway, attendances are dwinding.

“Last year’s show, which was held in Sydney under an agreement where Sydney and Melbourne host the event alternately, was a disaster – only 135,000 people attended. To put that in perspective, 250,000 attended in 1998.

“And there’s an interesting contrast here with the Australian Bicycle Show, which is held in Melbourne in October. The 2012 show attracted 8,350 visitors. That’s only six per cent of the attendance at the 2012 Sydney Motor Show, but the bike industry show got more than double the number of visitors they’d had the year before.

“So things are heading up for cycling. Of course, it’s off a low base, as the statisticians say, but hey, what if that annual doubling in the show’s popularity keeps going?”

Old paused to take a swig of his cider but Tarkis (who was always rabidly interested in market trends) whipped out his iPhone and started tapping away on the calculator. “If it keeps growing like that, by 2016 it will be right up there with the last Sydney Motor Show”, he announced.

“That’s amazing!”

“Sure is, but then bikes have been outselling cars since 2002. And in tce of the slowing economy they’ve bucked the downward trend in consumer spending. Did you know half of all Australian homes have at least one bicycle?”

“Great. If we can overcome the pollies’ fear of that idiot Alan Jones, and get a bit more safe cycling infrastructure in place, we’ll have another hundred thousand commuters cycling right to work … or at least to the station.”

Tarkis hadn’t finished. “But guys, woohoo! Great News! The International Air Transport Association says things are looking up. They expect the international airline industry’s profitability will increase to all of 1.6 per cent this year and the industry’s total profit might be $10.6 billion. Unfortunately costs have increased by $9 to $10 billion, and most of that is fuel. The Asia Pacific Region is the only bright spot. Net profit is expected to be a scratch over $4 billion.”

“Gee, that doesn’t sound too good.”

“Well, it’s about half the annual NSW education budget … or a third of the estimated cost of Nick Greiner’s WestConnex fantasy. Not too impressive, eh.”