Fuel prices, the death of aviation?

[Beaver Driver]

If you have been watching the news lately, you've probly seen the reports about the increase in demand and the decrease in supply of oil.

The "experts" are saying that world oil production has or will soon peak, and that most of the oil has already been used. That coupled with ever increasing demand means that we don't have alot of years left. No-one is making any predictions as to how many years the current oil reserves will last, but at the rate that demand is increasing it might not be long. Four years ago China was self-sufficient in oil production, and now they are the biggest importers in the world. They also have the fastest growing economy in the world. What do you think is going to happen when 1.3 billion people have enough money to drive cars.

I looked at rate sheet I found in my flight bag from 2001, and it was costing about $1.22 per mile for fuel in the Beaver, or about 25% of the total cost. By my calculations that is about $0.75 per litre, which seems kinda low. As supply decreases, and demand increases the price has to go up, and if it is going to be as bad as "they" say it is $5.00 per litre is not unreasonable. How much flying is there going to be when you have to charge $10.00 a mile for a Beaver.

Of coarse things like this never happen over night, and aviation won't dissapear in our life times, but I don't think it looks too rosy out there either. Where do you think it will go? What happened to aviation during the energy crisis in the 70s?

Please feel free to prove me wrong.

[Dub]

Hopefully they get the cars moved over to hydrogen and save the gas for us !

but seriously though i'd have to agree 100%. The only question is when we run out and how many wars are started due to a need for cheap oil....(hmm what does that remind me of )

[Boss Hawg]

This topic came up a while back, think it was something that PJ posted. Must have disappeared in the time warp there.

But basically I agree with Beaver Driver, sooner or later something's gotta give. You just can't go on using a finite resource at an ever and ever increasing rate and pretend it will last forever. As I recall that wasn't the sentiment from most of the other members on the forum though, most didn't seem overly concerned about the inevitible end of oil or a time when it becomes prohibitavely expensive to consume.

If I was a young, low time pilot just getting going in this business this is definitely something I would be concerned about. Oh wait, I AM a young, low time guy just starting out in this business. if somebody ever comes up with an alternative energy source for airplanes they will be RICH.

[Cat Driver]

Well this is an interesting thread, I have spent the last week communicating with the Dutch Society that is operating the Cat, and guess what the cost of fuel has just jumped one euro per. liter since last year because the tax rebate has been withdrawn......

....any of you kids out there want to stop for a few heart beats and figure out what a fuel increase of one euro per liter does to our operating cost?

Anyhow we are going to try and keep the Cat flying somehow or another, and of course I have offered to take a cut in income to do my part.

I wonder how fast we will spiral down to zero in this industry?

Cat

[Panama Jack]

Whew!!! Good thing I have a Glider Pilot Licence! Might have to re-up the instructor rating too.

Actually, I heard that they are working on Biofuels (like recycle cooking oil)-- until now of course "Big Oil" has disuaded major research powers (like the USA) to invest in this, but the time will come. Imagine folks, sitting behind an Airbus or Boeing and smelling the unmistakable scent of French Fries!!! That or every time we have an airplane accident we´ll have guys in space suits doing a post-Chernobyl style clean-up!

In the meantime, as the price of oil increases I predict everything getting more expensive, and salaries not keeping pace (remember, purchasing an increasingly rare comodity).

[Murph]

i believe now is the time to start looking for alternatives, instead of waiting for the "oil crash" that would send most parts of our society back to the horse drawn carrage and steam locomotive era. I'm placing my money on alcohol and other bio fuels, there was a link on a topic i posted a few weeks ago on a similar subject. If a company invested the time and money(big time $$$) to research and certify a mod for piston engines to run on ethanol and set up a distribution network they would be rich in about 5 years. Anyone know what the fuel for that Brazilian plane go's for be litre? pretty sure its cheaper than 100LL

[w squared]

I'm with Murph on this one. I don't whine about fuel prices all that much personally, seeing as I drive a VW, and seeing as I work in the oil an gas sector, high gas prices keep my disposable income (otherwise known as my flying money) flowing.

That said, petroleum fuel is a dead end. We WILL run out, and it WILL hurt economically. It's going to hurt Canada a little less than most other countries, as we have only just scratched the surface of the Athabasca oil sands. That crude reserve is as large as all of Saudi Arabia's, and the infrastructure to tap a small part of it has only just been put in place.

Maybe ethanol based fuels will be a boon for the Canadian economy...Saskatchewan can get a bigger piece of the energy-related wealth.

[CaptainHaddock]

Canada does have a lot of oil reserves, but were giving it away like a fat chick with low self esteem. Were tearing up northern alberta and pumping it as fast as we can out of the east coast. even BC wants to lift the ban on drilling to get in on the action (I can only imagine the damage one good spill, or the many little unreported spills there are all the time will do to that lovely coastline).
We use some but the majority goes south of the border (willing customer, why not?). Unfortunately it's a like a bank account you start out with, only you can't make any more deposits in it so use it accordingly. Oil is used to make so many other products that we require and need in our technolgical lifestyle (Troll Dolls, cup holders, The Vulva-Matic 2000) the fact we are burning this limited resource to fuel cars and heat our homes (I do it too.)is a waste.
I can't see hydrogen powered aircraft anytime soon though, I think aircraft will be powered by fossilized fuels for a long time, the best way to preserve limited fuels is to change other users, electricity from geothermal pumps, diesel electric cars, solar hotwater heaters,(we could take all the BS that comes from Ottawa and maybe get methane out of it)etc.
I think large comercial aviation will keep going as it's growing in global demand and people will just pay the increase, but for smaller operators it will be another nail in the coffin along with the huge increases in insurance.

[w squared]

BC has a ban on drilling? Geez...someone should mention that to the couple dozen drilling rigs working in NE BC right now!

Sorry...I shouldn't be snarky like that. Maybe you're referring to the moratorium on offshore development?

[. ._]

It's all economics, and I'm far from being an expert.

People will find the chepest way to do something to maximize profit.

As soon as oil is too pricey, then we'll switch to another fuel. If a Beaver is too pricey, we'll build a road for our hydrogen cars, or put up a wind farm on that airstrip with the wicked cross-wind to heat the houses that we fly heating oil into.

No doubt there will be lots of political dealings and wars to figure this out, but that's how us monkeys deal with this thing- if I want your coconut, I'll bonk you on the head to survive, and allow me to breed.

If I want your oil, I'll bomb ya.

Luckily, I don't think anyone here will see the end of the profitability of the venerable deHavilland Beaver. And if your pilot kids of the future encounter lack of fossil fuels, they can always take a wind powered winch into the heavens. Some of us monkeys were born to fly.

-istp

[Brint]

As mentioned earlier, oil is used for a lot more than fuel in vehicles. And unfortunately, Jet fuel is the least of our worries. Many people don't realize the amount of fossil fuels required to create fertilizers. Today's soil is void of nutrients and we are reliant on fertilizers to get a decent crop. We won't be complaining about the lack of flying, but rather the lack of food. But....that's way down the road.

I agree that for the foreseeable future, it is just an economics games. More research is happening all the time on many alternatives. Thankfully most people have stopped pretending we'll have oil forever. Someone is bound to find a viable alternative for all of our fuel and energy needs.

Now, if you'll excuse me, I need to fill up my V8 powered SUV to drive around the corner and pick up some overpacked merchandise!

[LH]

Don't worry about running out of oil because they've estimated that there is enough left now for 80 years, including inflated uses and that's just the reserves that they KNOW about.

What had driven the prices up has nothing to do with the known supplies...it has to do with economics. We forget that the price of oil was greatly deflated not that many years ago and hung around $16-$18 for a drum of Texas Crude. That's also the "bench-mark" that is used internationally and has been since oil's discovery. When the oil was at that low price for a long time, the oil companies the world over, backed-off on exploration because about $22-$24/barrel is the "break-even point. This went like this for a long time and then all of sudden there was a great demand for oil, with the likes of China's economy joining the demand. It take decades to do the exploration and many years after to get it to our tanks. Everyone keeps yapping about the Saudis and the war in Iraq......sorry but one should check who's in 2nd place and if they increase production by another 7%, they are the leaders then.......RUSSIA is...... and Norway is yapping at their heels, but all one hears about are the bloody camel drivers. The Iraqis have the largest known oil reserves in the world.......BUt those reserves are in the ground still.

The other reason was foretold 3 years ago when Venezuela had their national strike and their production was shut down completely. This went on for over 5 months and OPEC attempted to increase production to compensate, but that took them 6 months to get anywhere up to speed. In the meantime, the demand was outstripping tha pace at which they could produce. One has to remember that they produce the oil in many places, but many of those same countries haven't got the ability to refine it. At present the largest refiner of oil in the world is the US and nobody is even close to them in that ability. Also, the better the grade of oil, the easier and quicker it is to refine. The Saudi oil is notwhere near the quality of the Nigerian "sweet" oil and Nigeria can't produce like the Saudis and others. Nigeria also had internal problems with guerrillas and this stunted production. Seventy-five percent of US oil requirements comes from us and about 13% from Venezuela. They aren't up to speed yet after settling their strike and that increases the problem again. The last factor for us "hosers" is that a lot of the oil being used in Eastern Canada DOES NOT come from Alberta or any place in Canada....it comes from Venezuela. So when Albertans say "we'll just turn off the tap to you guys in the East, that would really hurt them real bad, BUT there would still be a supply coming to them from Venezuela via Halifax and Montreal....soon as the Venezuelans get up to speed again.

Anyone wants to get some info themselves on the so-called "oil shortage" can start with "OPEC" on their address bar for starters. There are other places for info on all this and some of it would surprise many and here's another one for example......"the US continental supply of known natural gas reserves EXCEEDS Canada's known reserves by 40%".

Lastly, take note the next time you get fuel of any sort as to just how much goes to taxes. The price may go up or it may go down, but AT ALL TIMES that tax rate remains the same......about 43% Everything else fluctuates, but not the taxes . Allow them to fluctuate with the prices that are charged and the price of fuel would drop "big time".

[Driving Rain]

Think oils expensive? Well, go to a grocery store and buy a bottle of drinking water. Fresh drinking water cost anywhere from 2 to 3 times more per litre than gasoline or diesel anywhere in North America. They wouldn't charge that much if they couldn't get it.
When I retire in a few years the first thing I'm cutting loose is my vehicles. The average Canadian pays $7500 bucks a year to keep one on the road. I own 2 and I figure those numbers are pretty close. If I need to get somewhere after I retire I'd be further ahead to rent for those occasions.

LH good post ...another thing about fuel taxes in Canada, it's taxed right at the well head, so in effect, we are paying a tax on a tax every time we purchase fuel!

[Brint]

WOW!!! 80 years! Well I'll be dead by then, so it's not my problem! We can just let our grandkids solve this one.

Of course there is no reason to freak out today, but I think we should start to change the way we live and save a little oil for the future.

I really don't think OPEC (http://www.opec.org/homepage/frame.htm) is the best place to find info on the eventual shortage of cheap oil. They may have a bit of a bias on that issue.

For some info from the other side of the spectrum, check out: http://www.lifeaftertheoilcrash.net/
The content there definately suggests the worst case scenario, however it is an interesting read.

Unfortunately, it is hard for the average person to get the straight answer to issues which are SO controlled by both business and government.

[Holy Magenta]

LH way to pull out the stats, very informative, should almost footnote some of that!

Good points by all, I just wanted to add to the water cost theme. In addition to oil companies sticking with fossil fuels till the dying end because the profits will just get better, they are willing to sacrafice other resources that aren't necessarily renewable. I believe near Red Deer they have proposed contraversial plans to pump water from the Red Deer river down hole to help keep pressures up for gas/oil harvesting. The water becomes salinated and poluted leaving it unuseable. They wanted to pull quite alot of volume too. For an area often in drought conditions its not too brilliant.

LH I hope some of us westerners arent lame enough to claim we provide for the east with our oil/gas production, because I don't think we even get to use much of our production. (im not talking about subsidy/equalization payments either before someone jumps all over me!) Most of it is south bound. The US energy consumption is insane, and like a fat little kid they will eat as much as you can give them. Us canucks gotta stick together. I don't know if we are restricted by the free trade agreement or what, but we should be charging them out the ass for the hydro and gas power we ship south. I've seen it said on CNN that we need the US they don't need us. Thats bs for certain, look at the chain reaction from power outages on the east coast last year. We should make our grids independant and sock it to them, or at least have a little leverage when we are getting bullied.

Sorry, getting off topic a little bit here, should hop over the the politic forum to vent.

I just see the future as grim for this industry, and challenging for the whole world. Gotta get my gliders license, for when we are flying horse drawn gliders. Good times.

[LH]

Apologies gentlemen because I stated OPEC as just ONE reference. Also remember that OPEC does NOT control all the world's oil supply. There are more countries that are NOT members of OPEC than are members. OPEC's "raison d-etre" was to even-out the wide up and down swings in oil prices. They've done a reasonable job, but they don't control investers on the stock markets, politcis in Russia or what comes oput of Allan Greenspan's mouth about the American economy, etc.

I mentioned just OPEC for starters because they represent the big players as of present day and by that I mean the top 5. WE all hear the rantings out of the Middle East about how we are this and that in the West. The same ones doing that don't have the equipment, technology, oil-field fire fighting ability nor skilled work force to get that oil and make themselves and their economies wealthy......but we DO. Ditto for other countries. ELF oil is French and guess where the majority of their equipment comes from and guess who provides the expertise for their fire-fighting experience in order to satisfy their insurance companies. Ditto for the Russians and who supplies all their trailers for their camps.....ATTCO of Calgary Take note of one world-renowed company by putting the name "Safety Boss" on your address bar. Take note also of what place and in what country they call home.......CANADA. You'd also be very lucky to find 2% of Canadians that know that fact or have ever heard of the outfit. Also take note while there, as to who was relied upon, even by the American fire crews (under contract to Haliburton Oil) for the modern technology to put out the fires in Kuwait.......CANADA...."Safety Boss". The Americans could do the job also, but WE were the ones doing a better and quicker job with better technology. The camel drivers can't do any of that stuff and gotta just stand around and watch. We need their oil and they need us to get it for them. Otherwise, we get it someplace else and they go back to tents and camels and give up their yachts and trips to Monaco.....because without the oil, they have nothing...period.

With or without supplies of oil, does anyone actually believe that 80 years from now we will still consider it a basic necessity of use? With the speed at which we are developing everything, how can one think like that? Thirty years ago there was no such thing as synthetic oil and who developed that? Which is better...synthetic or non-synthetic and how much of the synthetic do we get from the Middle East?......NONE! Lastly, try finding out the presently known oil reserves in the Athabasca tar sands and compare that to other places world-wide.....it'll "blow your socks off". Unless someone moved them, they call Ft McMurray, AB home and I believe Ralph Klein would tell you that place is part of AB, CANADA. You can also bet that the Saudis know where it is too.

[North Shore]

The trouble with this is that there are much better alternatives to Oil out there for transportation. There are various types of biofuels out there that will work very well with our current fuel distribution systems, and have the added benefit that they emit very little CO2, thus helping us enviro-wise also. However, in typical short-sighted human fashion, we keep pumping the oil, grabbing the profit, and f@$king the earth.
The second part of this is that oil has many much better (and infinitely more valuable) uses to us than a simple source of propulsion and heat. Look around you in your house and workplace - all of that plastic? Comes from Oil. Dyes for clothes etc..Oil. Medical supplies? Oil. To a huge extent, our quality of life is based on using oil as a chemical feedstock for other uses. Pumping it out of the ground and then burning it borders on the criminal, considering the other, vital, uses.

[LH]

North Shore -----what you state is true. The problem is that the whole world must be involved to make it succeed. We can re-cycle, change to bio-fuels, etc. all we like to save the atmosphere, but we in Canada have done nothing then. There is more pollution emitted in the Shanghai area in one month than Canada emits in one year. At noontime in Shanghai everyone is wearing a surgical mask if they venture ourside, so all our efforts are doing absolutely nothing worldwide for the planet. It makes us look and feel good that we are doing something, but it's all for naught. We might as well be trying to stop the wind.....which also brings that Chinese pollution eastward over the Pacific to our continent. What CAN we do then......I really don't know because unless we are all "onboard", out little nation of 31M doesn't come even close to the pollution being emitted by a nation of 1.3B. We haven't even mentioned India either yet and they are right behind China.