Thursday, 12 June 2008

The Rise and Fall of Cheap Oil

“Above the fields of Leicestershire
On arches we were borne
And the thunder of the railway drowned
The thunder of the Quorn:
And silver shone the steeples out
Above the barren boughs;
Colts in a paddock ran from us
But not the solid cows:
And quite where Rugby Central is
Does only Rugby know.”

A journey on the old Great Central Railway described by John Betjeman. Many Rugbians today could not find Rugby Central, all that remains is a bump on a bridleway in a disused railway cutting, a long green finger running through the heart of the town, a pleasant place to walk the dog away from the noise of the traffic.

Poems like this helped create that idea that the great days of rail are behind us, killed off by Dr Beeching. Now we know the real killer was cheap oil. Beeching took the flack for closing one third of the rail network and some 2000 stations but he was appointed to head British Rail by, Conservative Transport Minister, Ernest Marples.

Marples made his fortune from the firm he help found, Marples, Ridgway and Partners, road builders (contractors indeed on the M1) he divested himself of his shares on becoming Transport Minister to avoid any conflict of interests – to his wife.

His success was based upon the same cheap oil that did for the railways. At that time most of us would, given the lower costs, greater flexibility and the new found reliability of road transport, built the M1, all those other ‘M’s and closed miles of railways.

Today we are living with the consequences of almost a century’s worth of location decisions based on cheap oil. From the ‘ribbon development’ in the 30’s, encouraged perhaps by that wonderful Shell advertising to the 60’s when the car became accessible to the masses as a symbol of personal freedom. The newly built motorways and trunk roads enabled those in search of the mock-Tudor idyll to leap frog the green belt and for businesses and shops to escape the confines of the cities.

This great dispersal shrank the cities, new towns grew in once green fields, but the new suburbs and towns completely dependent on road transport generated the flip side of dispersal - congestion.

The problem is low population density makes public transport systems uneconomic. Despite the fact that around one third of the population have no access to a car to bring together sufficient people for a football match, a retail centre or even most workplaces requires them to drive. They have little choice - even to the point that this congestion is killing the economy. This new geography locks us into in a high movement high cost society.

To get some idea of the costs involved last year the Seven West Midlands Metropolitan Councils and Centro (the passenger transport authority) sent the Government their wish list for transport improvements it had a £4.6 billion price tag.

This bill, coming in at about half the cost of the complete modernisation of the West Coast Mainline, was far from ambitious, the minimum to keep the metropolitan heart of the region moving they said. The fact the whole region gets around £90 million a year for major transport projects makes it clear that this type of development is unaffordable. This is one conurbation. Imagine the price tag for the whole country.

These numbers made me a convert to road pricing. However having thought longer about it I now realise that of itself road pricing is not enough. The fact is we have fanciful ideas based on that cheap oil about the degree of mobility we can sustain.

It seems those oil futures speculators are not fools – they know we are hopelessly addicted to oil.

When the prices shot up what did the PM, Gordon Brown say? Sell your 4x4, stop flying, or walk to the shops? No he blamed OPEC and demanded more oil from the North Sea.

Now it is not just North Sea oil that is running out. It seems the Greens are right we do not take energy conservation seriously.

Despite the recent huge hike in oil prices the cost of transport is still too low - we have to move to a low movement low cost society and we may only have twenty years to do it.

I am not an extreme Green I believe we have to do this for economic not environmental reasons. We have sold off all our once state owned energy assets making us totally dependent on international markets for our energy. We are a small country with low productivity and a weakening economy we will not be able to afford these ever shrinking resources. The US is already complaining to China and India about there subsidising of their domestic fuel prices.

The economic forces that have enabled long distance travel and long supply chains will soon go into reverse. Many current business models are unsustainable as oil prices grow. No wonder food prices are up. The ludicrously expensive, in transport terms, cost of trucking and shipping, clothes and foodstuffs over vast distances is already becoming uneconomic. Some food production and manufacturing will have to be repatriated.

Planning processes that built the motorways and new towns will now have to plan to recentralise the population and relocalise economic activity. People will simply have to live a great deal closer to schools, shops and work places. (And HM Government please note, GP sugeries and post offices).

As costs escalate some will want to give up their cars and some will be forced too - we have to make it easy for them. There is some truth that with the IT revolution we will be travelling less. But IT also generates new traffic and helps sustain complex long distance supply chains. Despite the constantly threatened immanent arrival of the electric or hydrogen powered car don’t hold your breath there is no technological fix on the horizon.

To return out of town shopping centres and housing to farmland will not be easy and there will be considerable expense in creating a transport infrastructure independent of oil. Completing the electrification of our railways and filling in those Beeching gaps with light rail and trams will not come cheap. The win is of a network that is greener and that will do wonders for our balance of payments.

So how are we to pay for this transport revolution?

So called green taxes have so far not noticeably change behaviour and any revenue has not been spent on alternative sustainable solutions. The problem has always been the Treasury. Its need for the ‘fix’ of the revenue they generate means it never sets tax at levels that really change behaviour.

These taxes have to be a lot higher. Today the price mechanism is beginning to change behaviour but current taxes still have only a very marginal impact on consumers after all since 2005 taxes on road transport have actually fallen.

So where is the money to come from?

The fact that the recent improvements to our rail network are to be paid for by passengers is a clear sign. The user is going to have to pay. We must look again at road pricing. We need a hypothecated tax on road usage for infrastructure improvements. This can be done - we have the technology we should just get on with it.

The challenge is to visibly improve and make cheaper public transport, especially trains and trams, whilst choking off the demand for movement.

It would be unfair to many people who cannot afford to live near where they work to further punish them by increasing what they see as their already excessive transport costs without giving them a real choice.

Unplanned oil price increases have done massive damage before. They cause all kinds of social and economic problems. But this is not a short term problem we can get over but a permanent change.

Effective road pricing can generate a revenue stream to help fund the changes we have to make. Those affluent enough to continue to drive can subsidise those who use public transport. And surely we can come up with varying the charges for essential deliveries or essential workers.

There is less time than we think. We must plan out the need for movement by road. Choosing to carry on as if nothing is happening is foolish in the extreme.

Transport costs are an important component of economic development one of Betjemans other great railway images was that of Metroland an entire landscape enabled by the low cost of cheap suburban trains. With the right planning rules we can do it again.

As socialists we should be pleased that the Thatcherite privatised dream of atomised individuals living in private spaces and travelling alone is coming to an end. Both housing and transport will need collective well planned solutions. Personally I look forward to the reopening of the Great Central as an electric railway and the grassing over of the M1!