Saturday, January 12, 2008

Should Greens Demand Higher Petrol Prices?

Often the green movement and transport NGOs lobby for higher petrol prices. They argue that the escalating prices at the gas pump will decrease car usage. Witness the reaction by Greenpeace in light of the petrol protests by the hauliers in 2003. They held reactive protests asking the government for higher petrol prices.

In the USA, where the price at the pump is rising, consumers are now turning their backs on large SUVs and demanding new hybrid and cross-over models. You could thus argue that the higher prices are a good thing, and should be used by central government as a blunt instrument for change in the transport sector.

However, a recent article in the Financial Times came across our desk. According to the article, the rising cost of oil has wiped out the benefits many African countries were expecting from western aid and debt relief over the past three years, according to new research by the International Energy Agency.

They reported: "Surveying 13 non-oil-producing African countries, including South Africa, Ghana, Tanzania, Ethiopia and Senegal, the IEA found that the increase in the cost of oil bought by the countries since 2004 was equivalent to 3 per cent of combined GDP. This was more than the sum of debt relief and aid received over the past three years by the countries, which have a combined population of 270m, of whom 104m live on less than $1 a day."

So, the increase in oil prices in the markets is having a much wider effect beyond the pumps. The rise has real social effects around the world.

The higher prices also stimulate an uncontrolled international gold rush towards mining ‘unconventional oil’ from dangerously toxic projects including tar sands and coal-to-liquid extractions as well as new policies promoting biofuels, which have the disastrous effect of hitting the poor much harder (food scarcity, higher food prices) than they hit us.

Therefore, pushing for low carbon cars is one of the most important measures we can take to manage oil consumption and help bring oil prices down again.