Friday, December 31, 2010

ENERGY LITERACY 101: Would you change your lifestyle if oil hits USD200 per barrel? (That's RM5/litre for petrol)

Mail Motor's theme for 2010 is Cars That Care and this means our editorial will examine wasy that cars and car companies care abotu their occupants, abotu the environment and also society at large. 

Within that context we will begin a series of campaign related to the theme and one of them is ENERGY LITERACY.

We want to promote greater understanding about the use of energy and its impact on the global ecosystem, this is the first in our series of ENERGY LITERACY 101 series which takes a look at the basics of Energy Literacy. This week we examine something quite simple, the cost of energy and our lives.

For the longest time, the cost of energy has not been calculated on a holistic basis, oil companies add all their costs and margin and that is what we pay at the pumps but the energy that we use generally cost more than that.

So here we go

In 2007-2008 we saw some of the biggest fluctuations in oil prices, going way past USD100 for the first time and stayed there for a few months before coming back down to around USD65 per barrel.

To put that into perspective, just a few years earlier oil executives would have laughed at the suggestion of USD50 barrel, at that time oil was struggling to stay at the USD35 barrel mark.

Oil is ending its run at the USD94 barrel mark in 2010 and with the Chinese, Indian and Korean economies steaming on and Asean economies recovering from their sputter demand for black gold is expected to remain strong for 2011 and all the way to 2015.

Some experts predict oil may hit USD200 in the mid term and this is based on predictions of continuing crisis in the usual hot spots plus the decline in the number of new economically feasible finds.

So if oil actually hits USD200 per barrel, which probably means petrol would be hovering near the RM5 per litre mark and a full tank of RON97 in the average family car would set you back RM200 would it force a change in your lifestyle?

For the average family that travels about 60 kilometres per day commuting and/or sending the brood to school, the fuel bill would be about RM100-RM120 per week, assuming you drive a 1.6-litre car or smaller.

If fuel were to rise to RM5 per litre that fuel bill would jump to about RM300 per week.

On a monthly basis, fuel cost would increase from about RM500 per month to RM1200 per month.

That is a substantial increase even for a family that earns RM8,000 per month because the increase would also mean that other necessities would rise in price.

Who can say how much the usual barometer, teh tarik and roti canai would increase in price.

Given this scenario, it is likely that we will be forced to change our lifestyle, how would yours change?

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