Not Feeling The Pinch In Australia
I just had a thought today that we haven’t really felt the ups and down of crude oil prices in Australia as much as parts of last decade. I remember 2005-2008 being particularly painful for petroleum price rises, and oddly enough calls by the public to look at public transport a lot harder. Since then a few things have happened, namely, the Australian Dollar has appreciated to almost twice what it was, and the price of crude has come off the peaks. As of this writing it’s siting at about US$115 /barrel, which is about 20% off the peak of US$ 145/barrel reached in 2008.
Of course during the GFC it fell down to $35/barrel, and yet the US$115 it is sitting at is above the price point that people in Australia started feeling the pinch. In short, we’re being protected from this high price of oil by the high Australian Dollar. Judging from all the people driving their gas-guzzling 4WDs in Sydney, it’s fair to say they’re not feeling the price point of US$115 as they did in say, 2007. Also as of this writing, they’re reporting record prices for gasoline in the USA.
This leaves me to ponder a) how soon will parity break for the Australian Dollar, b) how much it will go down, and then c) how soon we’ll start hearing about oil prices and gasoline prices then.
At the moment, Nick Greiner and his cronies are pushing for WestConnex, a crazy tollway-driven project as part of their so-called Infrastructure NSW plan, which is mostly devoid of public transportation plans and seems to assume a great many things including the relative stability of oil prices, continuing for a long time in the future. A quick look at the crude oil prices and exchange rate tells you that this assumption is way off base, and that Nick Greiner and his vested interest cronies are asking the people of NSW to foot a massive bill to build roads that will maybe be too expensive to drive upon, and will in no way solve problems of congestion, for a future where car use may decline as a result of skyrocketing gasoline prices.
It is entirely possible that they build this crazy tollway and there won’t be enough users to drive over it. It’s possible this thing is going to be worse than a white elephant project.
Anyway, just some random thoughts watching the price of Brent Crude.