Volcanoes, flight disruptions and the high energy price effect

FT columnist Gideon Rachman – one of many stranded by the volcanic ash flight disruptions – wrote earlier this week about his feelings of anger, powerlessness and shock:

” Wealth and privilege has made babies of us all. Of course I should be able to get anywhere in the world in 24 hours! There is always a flight out. There is no logistical problem that cannot be solved with a mixture of ingenuity and money.”

Rachman, who has since made it back to London, sums up the collective disorientation felt when a mode of transport has vanished due to environmental factors well beyond the control of humankind. And a number of writers have pointed out that these feelings might be something that becomes less  unusual in the next few years and decades.

Tom Whipple wrote about the possible effect of a prolonged flight ban on oil demand, while Jeff Rubin, who was also stranded by flight ban, calls it ‘a glimpse into our future‘.

Scotland’s Herald looks at the significance of freighted food and Reihan Salam of Forbes points out the resonant parts of colleague Christopher Steiner’s ‘$20 a gallon’ book, adding:

But even if you’re a peak-oil skeptic and you’re convinced that new discoveries will save us, there’s no getting around the fact that jet travel has environmental costs that governments will, sooner or later, try to internalize through the use of even heavier fuel surcharges.

And what about companies? The Wall Street Journal contacted several big drug and auto companies with European operations, including AstraZeneca, Roche, GlaxoSmithKline, Toyota and Honda. Those companies said they weren’t affected by logistical problems due to the flight ban, but Nissan and BMW said they would, respectively, suspend or delay production of some lines due to a lack of some small electrical components that are air freighted.

This reminds us of an FT interview with Philips’ chief executive Gerard Kleisterlee, in which he warned that “more regional” (ie, less far-flung) supply chains were likely to become more common in a world where energy becomes increasingly expensive. It will be interesting to see whether a focus on flight disruption risk may further motivate some companies to reduce their reliance on long-distance transport.

Related links:

The world is already getting a little smaller - FT Energy Source

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