Category Archives: Economy and oil

Should New Zealand prepare immediately for oil shortages?

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imgresLast night at our Transition Towns meeting we had a good speaker from the Otaki Clean Tech Centre on alternative liquid fuels. He spent the first part of his talk summarising the position with fossil fuels. What a reminder!  One thing he told us was that our New Zealand strategic oil reserves are held on a piece of paper in Japan. I am keen to confirm this and so have today written to the Minister of Energy and Resources, Hon Simon Bridges.

Then I see on  my email today a link to a media statement from ASPO Australia. He says New Zealand should prepare immediately for oil shortages. ASPO’s website is here. That led me to a link to a talk by Professor Susan Krumdieck. Well it is hard to find 32 minutes to watch a youtube video but I assure you this is worth it. She is talking to business people and makes the cases that is is a dumb investment investing in fossil fuels where there is such a low return on energy invested.

Which leads me to thinking about what has happened over the last few years of a National Government, hell bent on building roads and deaf to the cries of the manufacturing and export industries about the high NZ dollar. The answer is always about how New Zealanders will feel the pain of a lower dollar in higher petrol prices. We continue to drive at 100km an hour, though in times of awareness that speed comes down to 80 km an hour. In the seventies oil shocks we had carless days and had to drive slower. But right now we have been lulled into a state of torpor, dreaming that this oil, which cost so much to produce and so many lives in oil wars to protect, will continue at this price forever without dirsuption. Are we sleepwalking to catastrophe?

 

Petrol tax will backfire on Government

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19 December 2012

Petrol tax hike for roads will backfire on government, says party

The announcement that an extra 9 cents excise tax on petrol will be to pay for the government’s Roads of National Significance will badly backfire on them, according to the New Economics Party.

Spokesperson Phil Stevens said that if an excise tax is tagged then it should be tagged for rail rather than roads, because road transport is not the future. He said ‘While it is important to put a correct price on fossil fuels to discourage their use, the public will know in their bones that the future isn’t expressways for more trucks. The future is rail and alternative transport fuels.’

‘When the Minister justified this hike by saying the CPI figure was the lowest for 13 years, noone is going to believe him. In fact our inflation figure is a not valid. It is artificially low because since 1999 the cost of land has been taken out of the CPI. Everyone knows that as land goes up, property prices rise and that means households pay more for their rents and mortgages. They know the real figure for inflation is much higher. Ask anyone with a mortgage where their household money goes,” he said.

For further comment phone Phil Stevens 06 326 9717 or 021 784 718

Official report on Oil Prices and Transport Sector Resilience suppressed by Brownlee and Joyce

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Yes we have had an official Government report called Oil Prices and Transport Sector Resilience in Nov 2009. This unsigned report had to be ferreted out by the wonderful Thames-based Dennis Tegg, who blogs so responsibly on the topic of peak oil. http://oilshockhorrorprobe.blogspot.co.nz/2011/08/new-zealand-at-greater-risk-from-oil.html. Our unique vulnerability on many fronts is described in the report. Gerry Brownlee and Steven Joyce apparently don’t believe an informed public is going to be useful for their oil friendly and lignite friendly agendas! The road transport lobby is no doubt also doing some effective lobbying to bend their ears.

There is another report, the one written by Clint Smith for the Parliamentary Library in Oct 2010. http://www.parliament.nz/en-NZ/ParlSupport/ResearchPapers/4/6/a/00PLEco10041-The-next-oil-shock.htm and to date is still on their website. It is excellent.

And of course there is a report commissioned by NZ Transport Authority from 2008 which was never given much airtime. It was 148 pages long.

And during January Australia suppressed its long and comprehensive report on peak oil too.

The Minister of Defence is also turning a deaf ear to military reports overseas and neglecting to commission a report for our country’s security. Like the others he has his head firmly in the sand. When a US CNA Military Advisory Board Report on peak oil came out last year, calling for a 30 percent reduction in US oil use over ten years to reduce “grave national security risks”,  I wrote to our Minister of Defence, Wayne Mapp, to find out whether he had seen it and asking under the Official Information Act for copies of all reports on oil, and the implications for security that he had received. He replied that he hadn’t.

No wonder we have seen all this rush for deep sea oil exploration and lignite production in Southland. Tag Oil in early January spoke of the potential to build thousands of oil wells in the largely untouched region of New Zealand, and said that New Zealand could become the Texas of the South. This was repeated by MPs and Ministers. The dangerous and resource intensive practice of fracking continues. So widespread is the local concern, even the Christchurch City Council has asked for a moratorium on fracking.

 

 

European debt crisis and oil affordability

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Well it looks as though it wouldn’t be much fun being the next Prime Minister of either Greece or Italy right now. It is a poisoned chalice. Who wants to introduce austerity measures and remain electable? Any concerned citizen can see what is coming for New Zealand when our trading partners are in this sort of trouble.

Richard Douthwaite, the green economist from Ireland, has written the most amazing chapter in FEASTA’s book Fleeing Vesuvius. He explains the connection between declining oil supplies and the trend of rich countries to run deficits. Taking Ireland as an example, he lists the cost of mineral fuel imports, the value of exports and then works out the fuel cost as a percentage of export earnings. It rose from 2.4% in 2001 to 7.6% in 2008. Exports are the only means by which the country can earn the money it needs to pay the interest on its overseas borrowings.

He explains that a country that runs a deficit on its trade in goods and services for several years will find that its firms and people get heavily in debt because a dense web of debt has to be created within that country to get the purchasing power, lost as a result of the deficit, back into everyone’s hands.

After a careful explanation, one of his conclusions is that it is dangerous and destabilising for any country, firm or individual to borrow overseas and net capital movements between countries should be prohibited. This is rather startling, but when you think about it foreign capital creates problems when it enters a country and when it leaves the country. When it comes in it boosts the exchange rate, thus hurting firms producing for the home market by making imports cheaper. It also hurts the exporters, reducing their overseas earnings when they convert them into national currency. As a result, when the loan has to be repaid, the country is in a weaker position to do so than it was when it took the loan on.  And managing borders obeys one of the laws of Nature.

The late Rod Donald, former co-leader of the Greens, used to go on and on about the balance of payments in New Zealand and I can see why. Both the National Party and the Labour Party seem to be taking our country into more and more debt. We have borrowed around $40 billion in the last three years.

Someone should work out our trend over the last few years. We need to find a list of the fuel cost as a percentage of export earnings and the ratio of total external debt to exports.

 

Minister should release military reports on oil supply disruption plans

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Reduce oil dependence for National Security, says candidate

8 Nov, 2011

The New Economics Party has sent in an Official Information request to the Minister of Defence to ask him to release relevant military reports advising us to reduce oil use for security reasons. The candidate for Wellington Central, Laurence Boomert, said have now been major military reports on oil in both Germany and USA.

A report was released a week ago to Senate by a prestigious Military Advisory Board In Virginia, USA. The report for CNA (cna.org/news/releases/) calls for a 30 percent reduction in US oil use over ten years to reduce ‘grave national security risks.’

Boomert said the report advised that even a small interruption of the daily oil supply impacts our nation’s economic engine, but a sustained disruption would alter every aspect of our lives – from food costs and distribution to what or if we eat, to manufacturing goods and services to freedom of movement.

“USA get their oil through the same shipping routes as we do – through the Strait of Hormuz. They have analysed what would happen in the event of a complete shutdown of a strategic chokepoint like the Strait of Hormuz, the international passageway for 33 percent of the world’s seaborne oil shipments.”

“If Iran pre-empted an attack on their nuclear plants by shutting off oil supply lines, New Zealand would be affected too”, said Boomert. The report calls for immediate, swift and aggressive action over the next decade to achieve the 30 percent reduction in U.S. oil consumption.

He said oil shocks are immediate and far-reaching, but at today’s level of consumption, a sustained disruption would be devastating. Worldwide demand for oil is increasing at an alarming rate.”

The report calls on national leaders to increase efficiency, diversify supply sources, develop alternatives and develop a national, cogent, dedicated and sustained energy roadmap that rises above partisan politics.

Boomert has previously worked on regional energy descent plans with Transition Towns and, as a Living Economies trustee, recently co-published Fleeing Vesuvius a comprehensive handbook for contingency planning in the face of energy, economic and environmental shocks to our system.

His party the New Economics Party has an oil reduction plan as part of its manifesto (https://neweconomics.net.nz) calling for a 4-6% per annum reduction plan for this country.

The German report said that by 2014 increasing prices of oil due to decline in supply would bring an end to our growth- based economic model, leading to widespread social unrest.

“We have entered treacherous waters but there is no one steering our ship”, laments Boomert

For further comment phone Laurence Boomert 03 525 8229 or 027 258 8807

 

Plan for 4-6% less oil every year

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Media Statement

6 November, 2011

Plan for less 4-6% less oil every year, says candidate

The New Economics Party believes that Government should involve the public in planning for a 4-6% reduction in oil use every year.

Laurence Boomert, the party’s candidate for Wellington Central, says we have to do this because the alternative is growing national debt, food riots and severe recession.

“The public needs to help decide how we are to adjust to a world with less oil every year. We need to do this as the world production of oil starts to decline relentlessly. We also need to do it to address climate change. It may be the people opt for petrol rationing, a lower speed limit on the road, to introduce a ‘cash for clunkers’ scheme or to voluntarily reduce air travel, he said.

“It is going to be painful, we will all have to sacrifice, but if we go on as we are the alternative is much worse. “

Boomert said growing national debt is a big worry. The Pre-election Fiscal Update assumed the price of oil would only rise to $93 by June 2016, but Treasury must be in la-la land.

Our oil exports cost a record $7.7 billion last year, an increase of 22%. If it keeps going at this rate our annual oil import bill will cost us soar to $25 billion by 2017. This is more than double what we currently spend on education. If we don’t watch our debt we will be another Greece.

Boomert said Britain’s former chief scientist has attacked politicians and industry experts who have their “heads in the sand” over dwindling oil supplies and the same could be said for our politicians.

The longer we delay, the harder the brakes will have to be put on, he said.

 

For further information phone Laurence Boomert 03 525 8229 or 027 258 8807

A main assumption of Prefu just fell over!

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The supremely optimistic Polyanna style Pre-election Fiscal Update released by Treasury had three assumptions. One was that there was an “orderly resolution of the Greek debt crisis”.

But with the Greek Prime Minister just announcing that there would be a referendum on the bailout package and the markets responding by panicking, it is abundantly clear that Treasury’s assumption just flew out the window (to change the metaphor).

So the major political parties will go on debating the finer details of their different policies while Rome burns (well Athens actually) and France and US and New Zealand and all those who trade in our connected world.

When we have a financial system based on issuing money supply as interest bearing debt why are we surprised when the debt compounds? Why are we surprised when everyone is in debt? It is time to understand that we have come to the end of economic growth on this planet and we need a new economic system which works for everyone.

 

Deirdre