What to do about fuel prices?

If it is still acceptably fashionable in certain circles to deride "carbon plans", "green" policies and alternative energy options, no-one seems to have told the leadership of the UK Government, which this week is on the offensive over failure within its ranks to make progress in these areas.

Amid fears and predictions of petrol price rises to possible levels of 2 pounds ($NZ4.40) a litre, the Conservative-Liberal coalition is introducing its Carbon Plan - with punitive consequences for those government departments that fail to meet their "green" commitments.

With instability in Libya in particular and the Middle East in general heightening concerns, Energy Secretary Chris Huhne has made it clear that the country must get itself "off the oil hook".

While understandably distracted by the urgent task of dealing with the crisis wrought by the Christchurch earthquake, Prime Minister John Key's Government needs to take a close look at its UK counterpart and consider similar measures for this country.

For even after two price increases last week, in which petrol rose by 8c and diesel by 10c, reliable sources, including the Automobile Association, suggest this is far from the end of it.

With all four of the major suppliers having raised city pump prices to $2.11 a litre, there is every indication that the record price of $2.19 a litre - to which levels 91-octane rose following Hurricane Katrina's crippling of United States oil production in 2008 - could be breached.

The longer uncertainty and conflict continue in the Middle East - undermining certainty and depth of supply - the more perilous to this country's already struggling economy the issue will become.

As if to underline the international dimensions of the fuel jitters, Wall Street could not even get excited about the United States' most positive recovery news in months: the jobless total falling below 9%.

There can be no ambiguity in the effects for New Zealand of steadily rising fuel costs.

Even in normal times, they would impact on the cost of living and constrain the competitiveness of business operations.

Commercial operations of all manufacturers and retailers will be adversely impacted should prices continue to rise.

But in the rural sector, where the majority of our export earning capacity lies, the effects will be amplified.

Costs of production will rise; costs of transport to market will rise; costs of fertiliser and equipment will rise.

Farmers, like their urban counterparts, will have less to inject into local economies and whatever stimulatory effects the Government had hoped its tax cuts might have produced will be negated.

Rising and record fuel costs are a dead weight on an economy struggling to raise its head above water - and further hampered by the fiscal demands of earthquake reconstruction.

What is to be done? Serious leadership on such matters would not go astray.

For all of his capacity for hard work, Energy and Resources Minister Gerry Brownlee has his hands full with the aftermath of the earthquake.

And it would be fair to say that his forays in the energy field (most notably his - and the Cabinet's - embarrassing backdown over mining the conservation estate) do not mark him out as a natural candidate for leading the charge on a reduced carbon dependency.

He has, in the meantime, handed his energy responsibilities to associate minister Hekia Parata, but Mr Key might do well either to promote Ms Parata full-time to the role or instigate a reshuffle to bring in a more senior minister.

His Government needs to work with local authorities in developing - and encouraging commitment to - a series of policies that reduce oil dependence, and not just for the immediate future.

This means looking seriously again at public transport, including buses and trains.

Cycle lanes on urban roads making pedal-power safer and more attractive for city commuters will reduce daily consumption - and bring health benefits as a bonus.

Peak oil means that the graph of fuel prices over time will only go one way unless and until suitable alternatives are developed - and that way is up.

As senior AA analyst Mark Stockdale said at the weekend, "We have to get used to the idea that as global demand increases and supply doesn't, we are going to be facing these kind of price fluctuations ...

"The only way we can manage that is by reducing our consumption."