Unless you’ve been hiding under a rock for the past few months, you’ve likely seen – or at least heard about plummeting fuel prices. Back in mid-October the price for a litre of 91 fuel was up close to $2.20 with the average price over the previous two and a half year period being around $2015. Fast forward to today and now at some petrol stations the price is approaching $1.60. It was $1.64 down the road from me a few days ago although I also saw it on the North Shore yesterday for $1.79 highlight some significant variability in prices across the city.
I don’t profess to be an expert in what’s happening with the price of oil so I’ll leave that to others however there are a few issues in regarding fuel prices to I want to discuss.
The Importer Margin
For me, one of the more useful tasks that the Ministry of Business, Innovation & Employment (MBIE) do is provide weekly data on their monitoring of fuel prices and in particular the importer margin. The monitoring is described as:
New Zealand petrol and diesel retail prices represent weekly average retail prices from Auckland, Hamilton, Wellington and Christchurch, and do not necessarily reflect regional variation. Biofuel blends, bulk discounts and discounts available through supermarkets are excluded.
The “importer cost” is the international price of refined petrol and diesel, adjusted to a New Zealand equivalent. This is calculated by adding estimates of the quality premium, cost of freight, insurance, losses, and wharfage to the Singapore international benchmark petrol and diesel price. This information is provided by Argus and Hale & Twomey.
The importer margin is the difference between the retail price less duties, taxes, levies, the New Zealand Emissions Trading Scheme (ETS) and the importer cost. That is, the margin available to the retailers to cover domestic transportation, distribution and retailing costs, and profit margins.
Now that most people seem to be back at work, MBIE have finally updated the data to cover the holiday period, a graph from that data is below.
Other than the precipice that the oil prices have driven over, perhaps the most significant thing about the graph is what’s been happening with the importer margin for roughly the last 4 years. In the six years from 2004 to 2010 the average importer margin was around 15c per litre. Since that time the margin has been creeping up significantly to be just under 40c per litre, an over 100% increase. Is it realistic for the fuel companies operational costs to have doubled over a four year period, it doesn’t seem so to me.
Will people it mean people stop using Public Transport and switch back to cars?
We’ve seen some spectacular growth in PT over the last decade and one concern that some have is that the cheaper petrol prices might see people switch back to driving. My thoughts are that while some of the people who are very price sensitive might do so the reality is that for most people fuel prices probably aren’t the main factor in deciding what mode to use. Instead far more likely to have an impact is the price of parking which isn’t going to change cheaper fuel. In fact if more people did try to drive it could have the effect of pushing parking prices up. Of course if people did decide to switch back to driving they would also have to once again tackle the congestion they may have been trying to avoid. There are other intangibles that many value too such as not being able to use your phone, read a book or take a nap on the way to your destination that are simply not possible (or legal) if you switch back to driving.
At the end of the day if AT focus on improving the quality of the service and making it more frequent and reliable then the network will continue to become more useful to more people therefore more people will use it.
Perhaps more than anything the volatility highlights why we need to be investing more in electric PT services doing so as it gives a greater certainty over the cost of running services. After all if prices have fallen so quickly they could also rebound just as fast.
One aspect I’m definitely not sure of is how the change in fuel prices affects Auckland Transport. In particular do the bus operators share the fuel savings with AT or keep the savings for themselves
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A couple of points here Matt.
1. The importers margin – an arbitrary calculation that does not take into account many things does show an increase on a cent per litre basis but it looks like it has – until very recently – shrunk on a percentage basis. When the wholesale price of petrol went from $300 per tonne to $1200 $0.22/L to $0.88/L is it unreasonable for the importers margin to go from 15c to 40c?
2. Will it mean people will rush back to cars? I think it comes down to convenience. If you are lucky enough to live next to a good PT service that’s fast and clean then no – why change back, but does it mean people will move out of cars to new PT – equally no. It certainly puts on hold any bold moves to invest in non road transport based on the silly green notion – previously supported on this blog – of peak oil. We are no where near peak oil and wont be for generations.
3. Will the price rebound as fast as it fell? It could, there can always be wars and events. But given normal circumstances we are going to enjoy cheap crude oil for quite some time and as gasoline starts to compete with LNG for road transport, we are going to enjoy cheap petrol as well. YOu can buy 2016 crude not far above today’s spot vale which is now in the mid 40’s
So in summary – I’d say the likelihood of continued affordable fossil fuels means that the NZ Govt are right to invest in RONS and that future PT should be bus focused.
AND I AM AN EXPERT.
Is global warming really good for summer vacation? or are we messing with mother nature and don’t really know what changes in the balance will do? You are right about investing in buses, so you don’t mind if they get priority and we eliminate congestion then. Or do the majority keep idling, burning fuel , emissions and going nowhere and costing Auckland $1.25b per annum to ecomomy. But worse to invest that much again if more on adding to the problem? Roads of Nothing Smart. Oil price up, down why make us fully dependent on it anyway, is that smart? Rail primarily is very smart for passengers and freight. Electrification even smarter. Let’s all be smart not puppets of the petroleum industry.
I’d be very interested to know what ‘Global warming is good for summer vacation’ thinks is behind falling oil prices.
If Saudi Arabia has simply opened up the taps to hit Iran and knock out a lot of costly unconventional oil production, then I’d expect prices to edge back up as the frackers, oil sands operations, etc are mothballed.
The Saudi have not opened any taps. New supply is all American. No need for elaborate conspiracies about this.
Yup, its more that the saudis haven’t closed the taps in response to lower consumer demand, in part to undermine the emerging fracking industry in the US
In previos oil price crashes, the Saudis closing the taps has had little effect anyway — so says Krugman http://krugman.blogs.nytimes.com/2014/12/14/petrothoughts/
Global warming will be pretty shitty for holidays in Omaha, The mount, Matarangi, or whangamata.
“I AM AN EXPERT”
Welcome back Phil. You really really need us to hear from you, eh.
Also who knows how long this will last. The main impact of lower prices will be to stop oil exploration and the production of expensive oil. That means a sharp upswing in prices in the future.
Typing “I AM AN EXPERT” in capitals while using a facetious name rather undermines your assertion. What are you expert in? Economics? Transport planning? The petro industry? Pumping gas? Trolling?
I think he’s an expert in recycled asphalt futures, which will be New Zealand’s chief mining industry in thirty years once oil prices reach orbit, humanity reverts to wind and horse power and we’re surrounded by more RONS (pun most definitely intended).
The bus contracts have an inflation clause. As fuel prices go up, then the inflation index increases and bus operators are paid an increase on their contract payment. The same applies when fuel goes down. Of course if the services are operated commercially then AT doesn’t directly bear the risk of any price increase or any benefit from price reduction.
What is the review frequency of fuel prices on the bus contracts? In the freight business it is generally monthly, and is done separately from the (typically annual) general price review.
Frequency of adjustment may vary between regions, from quarterly to annually in arrears. NZTA produce a Transport Index each quarter. They don’t use the standard CPI measurement
Road transport NZ also produce a Quarterly index, but it is much delayed.
Freight companies have contracts with the fuel companies where they pay a price based off effectively the Importer Cost. The Importer Margin is for retail buyers, I assume the bus companies have contracts similar to the freight companies.
As I understand it (as told to me by a family member working in the vehicle industry, at a senior level, in the middle east) the reasons for the price are essentially 2-fold:
Firstly the Saudi’s have massively increased production to spur a a price war with north american shale and fracking sources. They hope to curtail these (far more) expensive sources of oil and make continued expansion a very risky prospect. Secondly, the precipitous drop might harm US producers, but it is politically convenient at this time, as it causes much more significant damage to Russian produces at a time when the two powers are locked in a wider geopolitical struggle and the Russian economy – which has relied on it’s own oil & gas production to prop things up – is in full retreat. Meanwhile, China & co are more than happy to benefit from the upsides, and we all get cheaper shiny things.
Will it continue to remain affordable? MR or MS I AM EXPERTs opinion aside, who knows? But the whole saga shows that the price of fuel is very much at the whim of economic and political forces WAY beyond our control, and the most responsible thing we can do is to provide real options for PT users that insulate our economic base and personal well-being from geopolitical machinations.
…there has been no significant increase in Saudi production, all recent increase of any scale has been from unconventional sorces in North America, largely shale. And there is a softening of demand.
Then I stand corrected 😀
Will be interesting to see what AT does in its annual price adjustment.
I suspect consumers are probably wary enough of price drops and spikes that they won’t abandon otherwise good PT options for what may be one last brief summer of (relatively) cheap petrol. In my household’s case, we have enough good options near to us that there would have to be a seriously catastrophic freefall in petrol prices before it would outweigh the convenience and low cost of PT and walking/biking as transport.
I’ve mainly responded to the price drops by opting for premium petrol which is now about 25c cheaper than 91 octane was a few months ago, and appears to get better mileage and performance (not sure about emissions, but it stands to reason it’ll burn cleaner given it was what the engine was designed for). Also the temptation was overwhelming to fill up the tank in case the price drop couldn’t last, and I did so, but I don’t think we’ll drive enough to see any meaningful impact on the household budget.
If this lasts long enough for our summer holiday later in the year I’ll be mildly pleased – the difference might buy us a couple of icecreams on the way there! – but I’m definitely not counting my chickens at this point.
What makes you think this will be a brief decline in fuel prices? The rest of the world and pretty much all the oil traders believe it will have a long term effect. Crude has fallen to less than half its value in 3 months – does that not count as a catastrophic freefall? It does if you are Venezuela and Iran – they were both crying to OPEC today.
The reason you get better fuel economy on 95 (a pretty low standard anyway) is that it has less bio fuel component. Bio has less calorific value so you get worse economy but it keeps the Greens happy’ish’.
“What makes you think this will be a brief decline in fuel prices?”
As a consumer and not a petrochemical market analyst I have no idea – mostly my experience is based on the post GFC dip (when fuel fell to around $1.50/litre before recovering to over $2/litre), but my guess is that there are probably a lot of other everyday petrol buyers in the same situation as myself, who will assume that prices will eventually rise back up. As such we might see people being slow to adjust to the new “reality” of cheaper fuel, if it does last (I suspect events will conspire against the price drop lasting, but again, not a professional in this area.
By the way, I thought only Gull 91 contained biofuel, not BP/Z/Mobil/Caltex etc?
Better than investing in green energy my friend – can you imagine what all those bio fuel plant and wind farm investors are thinking right now?
According to the Financial services register I am approved as a ‘customer’, ‘Customer trading’ and ‘investment advisor’ —- did you pass any exams regulated in a top financial service sector Peter? — not looking for a fight, just asking.
“can you imagine what all those bio fuel plant and wind farm investors are thinking right now?”
They’re thinking, “IF ONLY I HAD CONSULTED WITH AN EXPERT!”
“can you imagine what all those bio fuel plant and wind farm investors are thinking right now?” – and what about all those poor people who invested in fracking?
“According to the Financial services register I am approved as a ‘customer’, ‘Customer trading’ and ‘investment advisor’”
Ah, ok then. So you don’t actually make anything useful.
I make money Gary – lots of it – which I find very useful thanks
According to my mum, I am a very good boy.
Patrick is correct in so far as it is mostly a supply led fall and that it is mostly the effect of US tight oil that has added significantly to feedstock supply. However added to this is the fact that OPEC – mostly led by Saudi Arabia have said they will not cut production and will allow oil to find its correct market value. There are many reasons why Saudi may do this, some people think they wish to deal a knock out blow to the US shale industry who need a certain price to meet loan repayments however that would be very stupid – and I doubt the Saudi Oil Minister is a stupid man. In fact Tight oil production can be turned on and off a lot easier than crude production so there wont be a killer blow. Also Obama – not a stupid man either – will cover the loans if required because (don’t tell the Greenies) cheap oil is good for the US economy.
Rather I believe the US and the Saudi’s have a deal where the Saudi’s will help deliver a killer blow to Putin, Iran and ISIS – who all need a high oil price – and the long term payoff will be that the US and Saudi (soon to be the two biggest oil producers) will carve up the worlds energy markets as they see fit.
The earliest the tight oil can cut production is July, about the same time as the next major OPEC meeting. Between now and then you are likely to see crude price in the high 30’s and then a range of between $50-70 for the foreseeable future. Of course events will conspire to create spikes and dips in the future and that is why the foreseeable future is not that distant.
Still – RONs make sense for NZ and if I were any of the oil importers I would be hedging my costs as far forward as I could – which is at least the next 5 years. Longer term I’d be comfortable that there is tight oil everywhere – just waiting to be fracked.
I’d rather the government invest in something long term and positive than locked into the adventures of a C grade action movie with definate bad effects.not just graphics the environmental kind.
I don’t follow short-run movements in commodities with the obsessive intensity that some people do, but I did read one rather good analysis that suggests that about half of the fall in price is due to falling demand. The remainder could be attributed to supply-side factors – e.g. the unexpectedly early return of Libyan oil production and the Saudi’s unwillingness to cut production to prop up prices.
http://econbrowser.com/archives/2015/01/demand-factors-in-the-collapse-of-oil-prices
The price fall is a supply led movement. Demand in Asia has slowed down but it is still year on year increasing. A lot of people read headlines that say things like ‘Growth in China falls from 15% to 5% and think the market is shrinking – actually 5% growth is still all of last years demand plus 5% more.
I have been saying for at least 12 months that fuel was going to get a lot cheaper – If Goldmans missed that then Goldmans know my number. They are small time investors these days anyway – since Dobbs Franks – they massively reduced their commodity exposure.
James is right – stats coming out of America show the yanks did not learn any lessons and are running back to big SUV’s – be a good time to sell Toyota and buy Ford stock.
As for busses in Auckland – The Northern busway has worked well and a proper fast bus route to the Eastern burbs would seem a good investment. Even Patrick must have hated those slow trips on the Howick busses when he was a kid – in the 60’s – coming into Auckland to marvel at the new architecture of Police HQ and City Hall 🙂
“Still – RONs make sense for NZ…”
I hope you’re not an investment advisor, because the return on investment for state highway spending in recent years has been utterly abysmal.
British petrolium is not Exon Mobil is not ISIL. Would not be surprised if ISIL black market oil caused price wars. OPEC is gone. I see this as a “price recovery” . All savings negated buy 25 cent down trail in the NZD Vs the USD. Most people are dumb, elect dumb administration therefore no real change will come to new zealands white nuckle moterhead mindset
http://seekingalpha.com/article/2817376-at-last-the-experts-wake-up-to-oil
Why are the RONs the answer if the drop in oil prices doesn’t result in a material increase in driving? Or if they do and we get more congestion irrespective of new roads (induced demand)? Seems pointless
But I like the idea of more investment in buses. Can you suggest which of the proposed busways under the CFN you would build before anything else?
It was reported in ?Bloomberg, that as the price in the US was dropping, more large SUVs were being purchased, which will lead to some demand-based correction.
And on importer margins, the existence of supermarket discount coupons/AA rewards etc. means that surely a good proportion of fuel is being sold below the headline price.
http://www.marketwatch.com/story/can-tesla-survive-collapsing-gas-prices-2014-12-31
“Car buyers respond to changing gas prices quickly, too. According to data compiled by Edmunds, the automobile market research company, sales of light trucks and other “gas guzzlers” (my term, not theirs) are suddenly booming again… trucks, vans and SUVs in November accounted for 55% of the market — their highest share since 2011….
But one thing that ought to be bullish for gasoline… is that every time oil prices fall people just go out and waste it some more. Gasoline prices are down over six months, and already U.S. car buyers are shunning fuel-efficient vehicles and buying themselves a new SUV. When enough do that, gasoline consumption goes back up, and so do prices.”
Could it be that we are witnessing the “tsunami effect” in regard to oil prices? The level drops as the tide goes way way out, for a while. But then, just as we have all been lulled into a false sense of security . . . .
WHAM!
But I really don’t know if this will happen. I have no sources to cite. Just suggesting.
AND I AM NOT AN EXPERT
I agree with this likely tsunami effect. Either way we need PT, cycle and walking to be top notch so we don’t get wiped out. Now focus on those modes with capital investment so it is tsunami proof. I think this petroleum industry is getting desperate and out of control
What is there to.lose by getting those modes top notch we have enough asphalt area as it is probably too.much. Versus the other risk and certain damage to the environment. More options, better transport and even less demand for fuel, what will that do. We just need to be smart not pawns in the game. Even for cars, flowing traffic is better also when not all relying on the same low capacity option.
My opinion, for what it’s worth. Rail is dinosaur technology, especially for NZ with our challenging terrain & very low population density. Whatever is powering the transport of the future (hydrocarbons, hydro electric, wind, solar, maybe fusion) we lose massive amounts of freedom by not investing in more roads. Our new & existing roads should have fat conductive/inductive + data pipes embedded in lanes. Hydrocarbon powered road going vehicles are increasingly so much more efficient than 3-4 years ago , and it’s only going to get better. Driverless vehicles all tuned in to each other, whatever they are powered by, able to accommodate & share roads with “smart” bikes etc, is all we should be focusing on. Commuter rail should be gracefully retired and any loopy ideas like the CRL left in the “thank God we didn’t go backwards” bin. Really, how much should the workers of South Auckland be penalised in rates & rent for the feel good ego trips of a few CBD workers?
Mark the city rail link isn’t just about the city , it maybe where the work is but benefits the whole rail system by doubling capacity. and the bus network also by having a good solid skeleton to feed passengers to.
In the city especially rail and bus are good options. Car just simply work on it’s own even with better technology, is it even close to working now?This car mode only solution ? is costing Auckland over half of the city rail link project each year. I’m from South Auckland and think it is better than all the motorway projects combined last 50 years. I think the problem now is without a high end bus network with priority people can’t see the difference and impact this will make especially for cars with 50% in other modes of travel, even another 20% fast will make a big difference. You simply can’t widen the whole grid and rely on a low capacity option, that is the current thonking and it is a disaster.
As several others have stated on here, the price drop is to do with OPEC and non OPEC countries taking a deliberate strategy to make the price of oil below that of break even in the US and Canadian OIl Sands and Fracking production. This they are hoping will force the companies out of existence, or will stop supply. One issue for these countries is that the US has become self sufficient in oil in recent times, and if in some sources is even a net exporter, this in turn will have a massive impact on world oil prices through supply and demand. This will be an interesting battle to watch as it will play out over months if not years, and like most price wars the only winner is the consumer.
Add to the mix the speculators on Wall Street, in the City and in Asia who were primarily responsible for driving up the price a few years back, you have a scenario that as a spectator will be a fascinating case study in years to come. You also have the near bankruptcy of Russia who have oil as its only real tradeable commodity now and consequently a player on the supply side and not the demand side.
As for what will happen next, I suspect you will see volatility as the various players make their moves. The irony of the situation is that technology will improve meaning previously uneconomic wells and modern sources of oil will become more profitable, meaning the world will have oil supply for years to come, much like the gold rush’s where todays Klondike Gold Rush is being fuelled by new technology and better extraction techniques, remining the same gold fields that were mined and deemed uneconomic in the previous gold rushes.
I am also not an expert, I am an observer who has an significant interest in finance, economics and the financial markets.
As you mentioned it you may be interested to know that 6 months ago Brent Crude Options Volatility was just under 15% and today it is 46.05%! The vol for bal 2015 is 38.57%. Dec 15 closed last night at 57.40/bbl and you have to go all the way to June 2016 before it breaks $60/bbl. Clearly the markets are not bullish oil.
The NZ Govt could in theory take a long forward hedge on oil and a a long forward hedge on the USD – that would lock us into cheap fuel for plenty of time to justify the spend on the RONs.
I’m not sure you can count.
In order for the RONS to be “justified” economically, they must be used fairly intensively over a long period of time – 30-40 years. The long-term traffic forecasting that’s been presented in business cases indicates that this is unlikely to happen in many cases – even with optimistic modelling assumptions, underlying demand will be too low. Fuel prices this year, or over the next 2-5 years, will have little impact on their economic viability over the course of multiple decades.
Moreover, many of the RONS won’t even be complete before 2016. Even if the NZ government decided to create massive market distortions by intervening in the liquid fuel market over the next 2 years, it simply wouldn’t have any impact on demand for roads that haven’t yet been built.
RONs are about planing for the future and all the doomsday comments from the anti car lobby about running out of fuel will be gnashing their teeth right now. I do not think the Govt should start trading oil – historically Governments are useless at those types of interventions. I was just making a point that the fall in fuel price can not be considered a short term blip in the otherwise green party wet dream of unaffordable fossil fuel.
One RON I would support all day and night is the AWHC – often derided on this site – as it adds much needed resilience to Auckland’s transport system. We would be well fracked if the existing bridge had to be shut down and it is not going to last forever. The two biggest population growth areas in Auckland are the CBD and the Shore – not adding a further link between them is madness.
Incidentally I do favour a rail link to the shore – something the current AWHC plans include – and I see direct rail between Britomart and Takapuna/Albany as being a lot more value to Auckland than the CRL.
Phil I’m surprised you’re supportive of having an 8+ storey ventilation stack for the tunnel next to your house. Don’t worry though, the NZTA have already said that even with an AWHC, Skypath is still their preferred way of providing walking/cycling access over the harbour.
As for Britomart to the Takapuna. As someone who’s caught buses between those two locations for some time now I know that the route is well used both on and off peak and in both directions. It’s likely one of the better performing routes in Auckland (although it’s made up of a number of routes). That being said the current demand isn’t in anyway high enough to justify rail. There’s currently a bus every 10-15 minutes all day, if that frequency were down to every 2-5 minutes and with double deckers then it would be a different story. Same goes for Albany. Also the North Shore isn’t the first or even second biggest growth area in Auckland, it’s one of the slowest growing areas in large part due to the strong nimbyism that exists.
What do you mean RONs won’t be used over 30-40 years? With all due respect that is totally bizarre statement unsupported by any rational facts, let alone natural desire for travel freedom, adventure, safety etc. Surely you are not a Kiwi?
It’s not that they won’t be used it’s that they won’t be used enough to justify their high construction costs. Further if it was about improving the economy there are a heap of other transport projects that would deliver greater overall economic benefits but the problem is they tend to be smaller projects that don’t get as much attention for ribbon cutting ceremonies.
Seems NZ’s have not lost their love for cars just yet http://tvnz.co.nz/business-news/kiwis-drive-up-car-sales-in-bumper-2014-6218331
You misinterpret massive infrastructure inertia in favour of cars as people “loving” cars.
Guess what – in countries were cars are less subsidised, and other modes less marginalised, cars are used much less. And even those who own cars (still most) are quite happy with that state. And richer for it.
Seems Kiwis have not lost their love for cars just yet http://tvnz.co.nz/business-news/kiwis-drive-up-car-sales-in-bumper-2014-6218331
Stephen, I have no issues with the bus network. I live in Mangere Bridge & commute to Constellation Drive each day, via SH20, Dominion Rd, K’Rd, jumping on to SHI at Vic Park underpass. The issues causing road congestion are bad drivers (including bus drivers). Remove most of the drivers and the capacity of the road network doubles, more safely, with the essential freedom of departure & destination that rail will never, ever, give. It is impossible to take rail to our ideally decentralised hubs that enable the space, work flexibility & remote work or study opportunities that technology brings us. Nice to have but increasingly expensive & irrelevant for most except CBD office johnies & perpetual students of useless MA’s in Politics & Sociology. Not to mention of course the inevitable unreliability & potential for disruption of a single or double track system driven by Union Members..
How many people does the road network carry each day, how many does the rail network carry..and at what cost?
Mark, the City Rail Link would provide enough network capacity to build the proposed airport rail line, which would have a station at mangers bridge. You could have a 25 minute trip to the central city on trains running every five minutes, then connect to a 20 minute trip on the busway to Constellation, also every few minutes. That would take you perhaps 50 minutes in total, any time of day, regardless of the traffic.
How long does your commute usually take, and what times to you make yourself head off to miss the traffic? What’s it like on a rainy day in winter?
So much for freedom of departure, I scoff a little at all that freedom when I see drivers who must leave work at 4.30 to avoid the traffic, or get up at 6am to do the same.
Mark agreed with rail the inflexibility of routes but it makes up for that by astronomical capacity and speed. You have buses to take passengers to this fixed tracked route. The new electric trains are fast and quiet and not dinosaur technology. Have a look at what the congestion free network is planning for you, I think the year 2025 from memory.
Especially mangere bridge with a rail line extended from onehunga to the airport with station at mangere bridge . Rail to Britomart then rapid bus to Constellation drive. In terms of cost , I don’t know if someone knows the cost of the entire roading network including motorways but it would be heaps and while rail growing at 18% is handicapped by bus still tied up in.knots. But at capacity heaps cheaper cost and less space vs road equivalent as road you can’t widen the whole way so chokes up.
My commute by car takes 35-40 minutes. I imagine with a driverless/smart roading network could be down to 20, probably with EVs powered by renewables, almost nil accidents, massive safety benefits for all travellers. This will never, ever be achieved with any kind of inflexible rail system, even with 100s of $billions spent. Rail still makes some sense as an increasingly marginal replacement for heavy freight, or against Air passenger movements, or in big cities where it was built before ludicrous Nanny State mandated H&S costs in construction and operation. We don’t have the geography, and don’t have nor want the density to support it here. If anyone adheres to the unspecified “smart green tech” mantra of the Watermelons for NZ, it is not in 200 year old physically unsuitable transport modes. It is in attracting smart techie people & companies with tax breaks & renewable energy rather than ideologically suspect refugees who may decide to bomb train stations because we embrace modern lifestyles.
I doubt driverless will cut your commute by 50% or actually anything without other modes fully operating and clearing the congestion to start off with. Including the CRL, Sw line, Mt Roskill spur, rail tunnel to north shore light rail dominion rd etc we are talking about $8b and $2b on rapid busways. Your right rail is also good for freight. Our geography is fine for rail. I think even if you still want to drive absolutely fine but we should have these other efficient options for those who don’t and that will clear the grid for your drive be it driverless or whatever. Mode rebalancing is probably exponential cheaper than just continuous car mode spend and actually congestion free will be acheivable for a change as there are no width demands beyond 8m for bus and 4m cycle incl barriers.Some places like cities in Japan rely 90% on rail alone. The tracks might be 200 yr old technology but the electric trains are not. The bus network adds the flexible net to catch the passengers and the busways are a rail equivalent almost.
Ah rail, that 19th century transport technology. Guess we better stop using that other 19th century transport technology too.
“It is in attracting smart techie people & companies”
Guess where those companies generally want to be located, in or close to the CBD where they have access to the largest pool of potential workers from across the region and where there are other supporting amenities such as retail, hospitality and entertainment. All things being equal they would take a central city location over a suburban office park any day of the week.
You’ve mentioned focusing on buses. Guess what, that’s been looked at and doing so ends up with massive bus congestion on the streets and that’s even if you dedicate entire roads currently used by cars to them. The CRL is about solving capacity constraints on both the bus and rail networks as well as providing better access to a greater part of the city centre.
You’re welcome to your own opinions however none of what you’ve said is supported by facts.
Myth busting for Mark: http://greaterakl.wpengine.com/our-analysis/myth-busting/
I can only assume the anti-rail detractors who keep popping up here have never been to any of the many countries where rail performs a vital and much-appreciated role. Either that, or they went there with their eyes wide shut.
There is a certain cosy insularity in the views of some New Zealanders, who seem to want to keep New Zealand in 1970’s timewarp. They fail to realise that transport in the 21st century is no longer only about roads and cars.
This is nowhere better demonstrated than in Auckland’s backward transport system. The widely-acknowleged mess that Auckland has become from 50 years of following this false kiwi-motoring-dream is ample evidence that these people have it all wrong..
Nah Dave they’re all from the future, you know it’s all hoverboards, jet packs, and teleportation: progress! Or at least some place where the laws of physics don’t apply and the economics is whatever they prefer…. funny how the glorious future is apparently sitting alone in a tin box in traffic, eh?
They’ve bought into the bullshit idea of individualism. One heroic loner against the world, Mad Max style in their V8.
Even if driverless technology came on stream anywhere over the next 40 years, the fracturing effect that cars have on communities won’t be solved. Walking and riding is friendly, driving is not. Simple test: remember the last time you swore at another driver? Would you have acted the same if you were walking?
NZ has done well with its roads. Outside of Auckland they are permanently empty – as would rail be – simply because Auckland is the only centre that comes close to looking like a city. With only 1.2M people in Auckland it is a wonder there is any congestion at all and certainly if cities with much larger populations can operate a road system then Auckland has years to go before we need to worry about an underground. Roads – which also carry busses – offer door to door convenience for private motorists and also commerce. It would seem obviously pointless to have DHL deliver all your online shopping just to the nearest rail station.
This blog likes to look towards Copenhagen for inspiration. Well here are some facts. Copenhagen has a population of about 1.2M, Denmark is 43’094 Km2 – Auckland has a population of about 1.2M, NZ is 268’021 KM2…. Denmark has over 1000 kms of motorway, NZ has 199 kms of motorway. The answer is simple – if you want Auckland to be like Denmark we need to build the missing 802 kms of motorway 😀
The contractors can adjust to rail, busways, cycle, walking infrastructure. 60 years of car infrastructure alone has not worked and won’t work. I’m sure even their kids will enjoy biking to school, and it will be a better future for them. Time to build something useful that will benefit society or we keep going in the wrong direction?
My mistake, I had thought this was an intelligent discussion about the best technology for our unique circumstances, not a platform for adherents of failed ideologies and anti-freedom luddites.
Our circumstances are only somewhat unique because we’ve managed to almost entirely paint ourselves into a corner with billions spent on roading and not much else. We’re better off using technology that exists and can and does work even in less dense cities than Auckland, rather than doubling down on roads while we wait on the driverless zero-emission nirvana.
Also it would probably have been a more intelligent discussion on balance if you hadn’t whipped out your ridiculous stereotypes about office workers and students, not to mention the iffy not-quite-bigotry about immigrants blowing up train stations. I felt like I actually lost brain cells when I saw that stuff. Not to mention “anti-freedom luddites”. Really? That’s how you pitch for a productive debate here?
For this discussion to be anything like intelligent you need to read the entire crl section of this page at a minimum.
Hello Mark – what “unique circumstances” and “We don’t have the geography, and don’t have nor want the density to support it here” ?
Hamilton NZ has a population of 153,100 (including 40,000 tertiary students) in an area of 98 km2 a pop density of 1,560 people per km2.
Geelong VIC has a population of 215,000 (including 27,000 tertiary students) in an area of 115 km2 a pop density of 1,870 people per km2.
Cambridge UK has a lower population of 123,867 (including 24,488 students) in an area of 115 km2 a pop density of 1,077 people per km2.
and love car parking lots just like we do , http://goo.gl/maps/g9CgK
http://www.cnbc.com/id/102338135
Very good summary of likely US production this year, and US production is the source of the ‘over-supply’ side of the price correction so this is also a good guide to likely price movement, again, from a supply side perspective:
http://www.reuters.com/article/2015/01/07/us-shale-drilling-prices-kemp-idUSKBN0KG1Y120150107
http://royaldutchshellplc.com/2015/01/15/bp-sees-50-oil-for-three-years/