Energy prices

Energy prices

In the mid-1990’s energy prices in Australia were some of the lowest in the OECD.

I distinctly remember the politicians of the day boasting about how good this was for industry and business and I have to say I bought the argument. Utilities that people have to have should be affordable. The marketing men can persuade me that a Mercedes is so much better than a Hyundai and well worth the price tag because it is a discretionary spend on my part, but water, power and waste removal I must have or we are back in the dark ages.

Twenty years later, the current government has announced a new energy policy that they claim will save the average family $100 a year on their energy bill. This new policy is supposedly a response to the problem that domestic energy prices have risen by 67% in the last decade, and with supply shortages forecast regularly, the medium term economics suggest this annual rate of increase will persist. Energy costs in Australia are now at the top end of the OECD ranks.


Australia is also going to struggle to meet emission reduction targets it promised in Paris in part because this cost pressure from energy has become an excuse not to focus on renewables and to continue with power generation with a heavy emission profile.

Oops again.

Lots of rant and rave opportunities here, classic Muppetville. The one I want to unpack is that cost saving, $100 a year for the average family.

Median annual income in Australia is around $81,000 and has been increasing steadily at around 3.5% more than doubling since 1990’s when energy was cheap.

An income of roughly $220 per day is right up there with the highest in the world. Savings on the energy bill proposed by the government is 27c per day, not even the price of a coffee and cookie in a month.

The average household energy bill, on the other hand, is around $4.20 per day and currently increasing at close to 7% or roughly 29c per day.

Phew, that’s a relief. The government policy is going to save the average household most of the money they would have to spend to on the price rises. Superb.

Should average annual income continue to rise at 3.5% the 29c cost saving on energy is further compensated by an additional $7.70 per day in extra income.

This explains why economic growth is so important to governments. Despite inevitable difficulty around the margins, on average it puts money in voters pockets.

It also makes that first ‘oops’ identified earlier a huge blunder.

Energy is literally the engine of economies so to let its costs spiral and allow the security of supply to lapse is stupid however you spin it.



A decision is made to dam a modest sized river In the foothills near a big coastal city. The city is growing and water security is regularly a hot political topic as the area is prone to drought.

Construction on the dam wall begins in 1948 and on its completion the wall creates a lake with the capacity to hold a little over 2,000 Gigalitres of accessible water.

When the dam was completed the city was home to 1.8 million people. Today there are over 5 million inhabitants and the lake remains the primary source of freshwater for these people and their economic activities.

Downstream of the dam the floodplain has become an important area of agricultural and peri-urban development. The dam protects against flooding and the planners have allowed people to live in previously inundated areas. The dam not only holds a large proportion of the water supply to the city it also protects built and commercial assets from flooding.

When the engineers say that the dam wall could be raised by 14m, what do you think the planners will do?

Naturally, they will allow greater access to land on the floodplain, most likely by releasing some areas for residential development. It is a growing city after all.

In the planning meeting some wag says that it will all be alright because the climate is changing “It will be drier anyway, so no worries”.

This comment goes unchallenged despite the evidence for increased storm frequency and intensity in the region, and the obvious connection between this and major flood events.

Here is a hint with a biblical origin.

Don’t buy a house on a floodplain…. especially downstream of a dam.

Post revisited – Journeys

Post revisited – Journeys

Netflix has an excellent period drama called Victoria on the life of the iconic queen of England who ruled for 63 years and married off her progeny into most of the royal families of Europe. She died in 1901 aged 81. Throughout her life, she moved around in luxury carriages drawn by horses. Steam trains and iron-hulled ships occasionally took her and her entourage further afield but it was the stables that did most of the heavy lifting.

She was in her late sixties when the first motor car appeared in Germany but did not live to see the mass production of cars or the first powered flight (1903) but she did have a few photographs taken.

Skip just 100 years and there are websites that track air traffic so you can follow the travel of your own flight or that of a loved one across the vast reaches of land and sea to every far-flung destination on the planet. Browse one of these sites and the globe lights up with traces. There are a million people in the air at any one time.

Amused or not, Queen Victoria would not have believed it was possible.

Here is an Alloporus thought on air traffic from June 2011

In 2009 2.5 billion journeys were taken in aircraft.

Evened out across the global population, every third person on earth took a flight. In reality it is the wealthiest proportion of the 1 billion people in western economies who took most of the journeys.

The projection is that by 2014 there will be 3.3 billion journeys taken.

This represents a 32% increase in 5 years.

Mobility is an inevitable consequence of affluence. As more and more people have disposable income, many will want to use some of those funds to travel. As economies grow, more business is done and so travel to buy, sell and negotiate also increases.

In the mid 1960’s the first Boeing 737s carried 100 passengers up to 2775 km. This was quite a revolution at the time.

The latest Boeing 737-800s carry twice the number of people over 5,500 km and use 23% less fuel.

Suppose it were possible to replace all the aircraft flying in 2009 with the latest fuel efficient models. It would be possible to absorb almost all of the 5 year increase in passenger volume to 2014 through fuel efficiencies that these more efficient vehicles bring.

Future aircraft construction materials that are lighter and still strong enough will see even greater fuel efficiencies. Aircraft built in the next decade or two might only use a third of the fuel guzzled by the earliest models.

Replace all the 737-800s with aircraft of composite material designs and 13 years of growth in passenger numbers could be accommodated without increasing fuel use above that used in 2009.

But even if all these replacements were possible by the mid-2020s, less than a generation from now, fuel use in air travel would begin to increase over 2009 levels.

In half the time since those first Boeing 737 aircraft began flying all the fuel efficiencies would have been used up by the increased volume of traffic.

Clearly instant replacement with the best technology is impossible.

Some of those fuel hungry early models are still in the air on the more remote routes operated by obscure airlines. And it is these cheaper fare options that will be responsible for much of the growth in passenger numbers. The fuel efficiencies will arrive incrementally.

In the absence of some remarkable technology that can replace jet engines running on aviation fuel, greenhouse gas emissions from or air travel will grow along with the airline industry.


There is talk of a jet-rocket vehicle that would travel in the stratosphere, have no emissions because it flies above the atmosphere on hydrogen fuel and could reduce the travel time from Sydney to London to a few hours. Commercial flights might happen by 2040.

By then there will be close to 10 billion journeys per year.

Turns out there were 3.1 billion journeys in 2014, a little down on projections, but not by much. Dreamliners notwithstanding, the fuel consumption numbers are still up there as is the prospect of Tesla rockets.

There is no obvious solution to the emissions issue. Aircraft are going to continue flying passengers and freight, we are now over 100,000 flights per day, and the fleet still runs on aviation fuel.

In China alone, the expectation is that over 800 million people will join the ‘middle class’ meaning that there are going to be plenty of bums to put on all the seats. A GFC 2.0 or nuclear confrontation might slow things down but in the short term, there will be journeys taken and plenty of them.

The scale of all this is very difficult to comprehend. Numbers like this only come up when we are buying a house. Volume is an issue but the kicker is the rate of change. Horse-drawn carriages to 100,000 flights a day in 100 years is staggeringly rapid, even for a planet that is no stranger to the odd dramatic shift in fortunes.

‘Journeys’ was a post about emissions to highlight how significant they were going to be in the near future. The real message is to think about the rate of inevitable change. Those aircraft are here for their productive lifetime. They will fly as long as they can be operated at a profit. The fleet is added to rather than replaced and more flights are taken. More this year than last and more than the year before that. This is change that is fast and locked in. There is no reason, bar catastrophe, to suggest otherwise.

I don’t think we really understand what this means.

Queen Victoria would not have believed a word of it and I am not sure that we do either.



Would you prefer a wage or an unconditional income?

Finland has decided to give 2,000 citizens the equivalent of A$844 per month for two years, no strings attached.

Crucially participants still get the money even if they find work. They can supplement the unconditional income with paid work as much as they like.

The debate on whether this policy is affordable, not socialist enough, morally wrong or simply the best idea since sliced bread, will expand as more jurisdictions try the experiment.

It will be a challenging discussion because the idea either pitches hard or soft at so many long-held beliefs.

Here are a few of them…

  • Money for nothing is always a bad idea
  • Laziness is inevitable if you give people all they want
  • Give people a safety net and they will soar way above it
  • Entrepreneurs just need a start
  • Robin Hood wasn’t such a great guy so why do all that over again
  • You can’t give money to everyone so all the rich buggers get it too
  • Labour has to be remunerated
  • Unemployment is just an inevitable consequence of the economic system
  • Mess with balance between capital and labour and the sky will fall in

Basic income raises fundamental questions about work. What it is, does and even if we need it in a modern society. And this is a debate we have to have. Not just for the moral and economic questions about work but because work will have to change [link to buying car post] as economies automate.

So, what do you think?

What would you feel about $844 a month just for being a citizen? More importantly, what would you do with the money?

New species

New species

It is a hugely exciting day today for against all odds and logic, completely out of the blue, and to my total surprise, given that I am not even a taxonomist, I have discovered a new species of ape… me.

I have a slightly bigger head than average, a wider girth, less hair, and some vaguely different genetics to my closest relatives. This, apparently, is more than enough to establish a new species.

So I am now declaring myself Homo spuriensis.

Of course, I am instantly critically endangered, as there is only one of me known to science. A specimen that is well past breeding age. This rarity status is both a challenge and a badge of honour. Being critically endangered means that some specimens of another species, Homo sapiens, will do their utmost to protect me. They will set up reserves and recovery plans and lament the loss of my previous habitat that they appropriated. This will make me famous but do very little to prolong my own existence or that of my unique genome.

All the other species sharing the planet, including the vast majority of the aforementioned H sapiens, will not give a rats. They will carry on minding their own business of gathering resources to promote their own genes. Nature will not even notice this new addition to the biodiversity lexicon.

It is possible that a few species of bacteria, virus, parasite or symbiont will take a liking to me but, again, this is not personal. They would have done this before my nomenclatural change.

The tragic prognosis is that Homo spuriensis will be extinct within a generation. Another sad, lamentable piece of evidence that spaceship earth is doomed.

I am sorry to bring you this initially exciting but ultimately depressing news but luckily there is another new species of ape just discovered in Sumatra.

Keep it real everyone.

Post revisited – Peeled potatoes

Post revisited – Peeled potatoes

In Monty Python’s infamous movie Life of Brian the masses lament their lot and decry “What have the Romans ever done for us?” only slowly realizing it was just about everything that made life livable.

This was, of course, a satirical stab at the economic system, the one everyone moans about all the time for its addiction to growth, our slavery to it, and the fact that it is so sacred that no one can touch it.

This post from 2011 begins with a similar lament but ends up somewhere else…

Peeled potatoes

In our world of doing it all easy, the latest labour saving option in the kitchen is pre-peeled potatoes.

What an outstanding idea. No need to whip out the peeler and waste time or get mud on your fingers. No more peels to get rid of and litres of water are saved from not having to clean off the grubby bits.

What, you are kidding!

How lazy can we get? It takes no effort at all to peel a potato or two. This has to be consumerism gone mad. ABC radio host Richard Glover thought so and created a funny skit to point out the craziness.

Only there are a couple of things.

First thing. An inevitable consequence of a market mechanism is that new products will emerge. Whatever people will buy, whether they really need it or not, the market will provide. The market will also provide things that they hope people will buy, often well before customers recognize that they might have a need for it. In the end, if a product works for even a few of us then it may be worth manufacturing. Witness, ‘peeled spuds in nitrogen’.

Second thing. There is always an opportunity for more efficiency in they system. If the supplier of the potatoes also recycled the peels into compost, this would be useful second product from the potatoes. Very few of the customers would do this and even if they did there would be no scale benefit.

We are at the stage where every nutrient and kilo of organic material that goes back into our agricultural soils is worth the effort given that fossil fuel based fertilizers are rapidly becoming another of our limited resources.

Our system of resource use is so bloated that there are efficiencies that will help our sustainability just about everywhere. All we have to do is look. One of these efficiencies, conversion of organic waste into fertilizer, will become commonplace. As will novel ways of doing it.

The idea that the recycling happens before the product reaches the kitchen might just be one of the better ones.

In short, the market is bad unless it is efficient.

What the Romans did was create efficiency through commerce that made lives easier and more livable in the time before sanitation, antibiotics, and mass transport. And for better or worse, the market has done the same for the majority of westerners since the industrial revolution.

But for the system to deliver livability for the majority,  over time, it has to be efficient and resilient, especially in the use of resources. Resource wise, peeled potatoes might work efficiently if the peelings are actually composted and returned to the farms that produced the potatoes. Market players can clip their margins along the supply chain so long as consumers are prepared to pay a premium for pre-prepared convenience. If they are, and the peelings feed worms, all is well.

Then we find out that 40% of Australia’s banana crop never leaves the farm because the fruit is misshaped. Not even in a parallel universe is this efficient. I can see Minions crying at the piles of rotting yellow.

We also know that wealth is increasingly concentrated because this is also how the market works. Money and resources churn but the clip ends up in the hands of a few. This is also a criticism of the Romans and any number of subsequent empire builders that followed their example — wealth is concentrated as the masses are exploited.

Except that the Romans did a whole heap of things that kept people alive and moderately well. And, arguably, in much better shape than they were before.

Our dilemma is the same.



I am not a Unionist, never have been. Perhaps, back in the day when labour was ruthlessly exploited by capital, I would have joined, but today it feels unnecessary. This, of course, is a delusion on my part.

My political nirvana, where left and right are conspicuously absent, would deliver progressive economics and social benefit through positive leadership without the need for exploitation. This centrism is also delusional.

So even as union membership declines along with their influence, I will concede that they are still needed. The balance between worker and employer will always be precarious.

Nevertheless, I have little time for the modern union movement, mostly because, to me, they epitomise a blinkered, dogmatic worldview that raises their issues ways above any other. My prejudice may not be a good thing, but it is what it is. Recently though, I found myself siding firmly with the unions as they rebutted claims of grubby slander on how they use their money.

Federal police raided the offices of the Australian Workers Union, the uniformed arrival to dig for dirt preceded by a media scrum who had obviously been tipped off. The union claims it has cooperated fully with the authorities on all outstanding matters. It is no coincidence that the leader of the opposition was once the leader of the AWU. On a hunch or a sniff of a lead, unleash the hounds on your suspect who just happens to have past connections to your main rival.

This is truly grubby politics designed to slander your opponent. The Americans call it a fake news, but fake or not, some of the mud will stick. The seed of doubt is watered in its cosy garden pot of compost. Keep the compost moist and the voters will do the rest.

But governments should not be able to manipulate police to achieve this end. When they do, it’s called fascism. And that has a very unpleasant history.

The AWU has my sympathy.

I will always be wary of unionist philosophy and especially of their tactics but when the government behaves in this way it makes unions look like saints. That should tell you enough.

The logic behind this kind of behaviour assumes we can be led by the nose.

It is imperative that everyone is vigilant enough to prove this assumption is always false.