Rising energy prices: impact on property prices

[House_Keeper]

This recent ABC report raises the issue of peak oil again. What is new is that even the International Energy Agency admits that there is a problem looming.

What does it mean for property prices, and especially for land values? I remember that not so long ago some banks doing modelling on the sensitiveness of the mortgage portfolios to petrol prices, with some outer suburbs with poor public transport identified as high-risk areas.

It seems that, in a world of rising energy prices, inner-city living would be more attractive, and being close to public transport becoming more valuable.

Any other impact people can think of in the medium term (5 to 10 years)?

 

[tom32]

This recent ABC report raises the issue of peak oil again. What is new is that even the International Energy Agency admits that there is a problem looming.

What does it mean for property prices, and especially for land values? I remember that not so long ago some banks doing modelling on the sensitiveness of the mortgage portfolios to petrol prices, with some outer suburbs with poor public transport identified as high-risk areas.

It seems that, in a world of rising energy prices, inner-city living would be more attractive, and being close to public transport becoming more valuable.

Any other impact people can think of in the medium term (5 to 10 years)?

I reckon it depends on just how expensive it gets.

$3.00 a litre in todays dollars and you get more hybrid cars power prices go up with a carbon tax to ensure we do not get too far ahead of ourselves in such a coal rich nation...

I believe at that level everything you say is pretty well spot on, consolidated living in cheap to cool / heat dwellings in the inner city or hubs with good access for rail and truck freight bringing goods into central locations is most efficient at that level of pricing.

Move the goal posts to $10.00 with power prices also soaring (not in our lifetimes I suspect) and then you are probably better off in a self sufficient block with all year round fresh water or large water storeage with crops or people around you with crops to trade etc.

We know multi unit dwellings are cheaper for infrastructure provisions etc as well so I suspect this is the way the wheels will turn in the shorter term. The trouble in Australia is while governments say this is a better way to live they also tax this style of development, at least in Sydney in such a fashion to limit its appeal. If they really wanted to stop urban sprawl why tax multi unit developments? Tax sprawl sure, but give people the other option at a price that appeals.

 

[Sunfish]

Any other impact people can think of in the medium term (5 to 10 years)?

That's quite a long time really. >$200 oil has the potential to seriously disrupt world order if sustained. I don't know a defense against this either. I don't think owning shares in WPL or STO is as good an idea as it looks at first glance.

Notes on Peak Oil!

I don't claim expertise but I have been taking this subject seriously for many years.

"Peak Oil" does NOT mean NO oil. It is better thought of as the point at which cheap (land-based or shallow off-shore) oil begins an irreversible decline in ACTUAL production. There is no doubt we reached PO (by that definition) years ago. Demand has been met by ever increasingly expensive (and risky) means..... deep water, tar sands and soon, shale.

The American and Canadian non-conventional fields (shale oil, tar sands) have billions of barrels in them so we will always have enough for lubrication, essential services and rich men's games. What we will miss out on will be transport for the masses (road/air) and the means to grow food and transport it to market cheaply.

I haven't traded in my V6 yet. Not because I think there will always be petrol available for it but because I don't know what we will be driving next decade. I think it will be plug-in electric but only if we tame the rabid anti-CO2 brigade.

 

[Jonril]

Peak oil? Why worry? She'll be right.

 

[tom32]

I haven't traded in my V6 yet. Not because I think there will always be petrol available for it but because I don't know what we will be driving next decade. I think it will be plug-in electric but only if we tame the rabid anti-CO2 brigade.

I know we cannot plan for everything but I am in a similar boat driving an old bomb, because I would be pretty dirty if buying a new Prado for 60k to find diesal becomes too expensive to justify getting it out of the garage in 5 years...

Rather wait and see plus I can save more coin in the meantime and where I am concerned if it has aircon and power steering it pretty well feels the same as a new car anyway.

 

[VYBerlinaV8]

8 years ago when I bought my V8 petrol was about 80cents per litre. People were saying that when it went to a dollar per litre, life as we know it would end.

I strongly suspect we will see more development in electric vehicles for commuting, which would be plugged into the mains power overnight (on off peak rates). Hybrids are too complex (manufacturing and reliability issues) and cost waaaay too much for what they are, and don't do any better than small turbo-diesels anyway.

I'd be quite happy to drive a plug in electric, especially if we could make them genuinely cheap (ie simpler, less features) when compared with petrol models. We need to start looking at cars differently - maybe a single vehicle doesn't need to do everything?

 

[RumpledElf]

I can only dream, but it would be nice if people realised that building a huge open plan living area with mostly glass walls is actually a stupid idea that requires 8KW air conditioners when there is even a whiff of warm weather outside.

We went airconditioner browsing online based on the size of our open plan living area (about 7x7m) which after years of living in houses with simple 4x4m separate lounge rooms seems huge. But no, apparently on the scale of living areas ours is quite small if the size of available airconditioners is anything to go by