by Russel Norman
Interesting to compare IEA attitude to oil prices to the NZ Govt attitude. The IEA has had a recent conversion, if not to the idea of peak oil at least to the idea that we are facing rising prices over the next five years. And they are calling on governments to rapidly lead a process of reducing oil use.
This from International Energy Agency boss Claude Mandil in an interview in Le Monde (hat tip to jh):
How do you analyse the domination of the markets by producing countries? Consuming countries are largely responsible. They do not want to launch energy saving policies – despite the fact that these are the cheapest available. It’s an absolute priority. We need to take tough measures in the transport sector, such as stiff taxes on large cars, limitations on SUVs and speed limits…
And this from Fatih Birol, the IEA Chief Economist:
Unfortunately, there’s a lot of talk, but very little action. I really hope that consuming nations will understand the gravity of the situation and put in place radical and extremely tough policies to curb oil demand growth
Mandil and Birol are trying to inject some urgency into measures to reduce oil consumption. Meanwhile in the NZ Parliament…this from Michael Cullen in the House today:
JEANETTE FITZSIMONS (Co-Leader—Green) to the Minister of Finance: What economic and fiscal strategies is he developing to prepare New Zealand for the impact of an “extremely tight? oil market within 5 years where oil production may not be able to keep up with demand, as predicted by the International Energy Agency’s Medium-Term Oil Market Report earlier this month?
Hon Dr MICHAEL CULLEN (Minister of Finance): Low debt and projected surpluses give New Zealanders as much fiscal flexibility to respond to changing circumstances as almost any other developed country has. The development of an emissions trading system, and measures to support energy efficiency, to support biofuels, and to support passenger transport will help directly. Of course, as oil prices rise, individuals also react, by, in fact, adjusting to more efficient vehicles.
Jeanette Fitzsimons: Will he discuss with his colleague the Minister of Energy the need to amend this statement in the draft New Zealand Energy Strategy: “It is unclear whether conventional oil production will peak in the next decade, or a decade or two later.? so that it reflects a greater sense of urgency, given that the Government has always relied on the International Energy Agency’s fool’s paradise view that we still have around three decades until peak oil, despite all the other views to the contrary?
Hon Dr MICHAEL CULLEN: I do not propose to do that at this stage, at all. I am old enough to remember the report from the Club of Rome in, I think, 1975, stating that we would have run out of oil by this point. In fact, proven commercial oil reserves now are still larger than they were 20 years ago.
Cullen does make some noises about energy efficiency but by his comments regarding Club of Rome he clearly doesn’t take it all too seriously. He goes on to state that it can all safely be left up to markets to sort out. Unfortunately markets don’t work perfectly and not without significant ups and downs that we could do without. Which reminds me of that great quote from the Stern report regarding climate change – “It is the greatest and widest ranging market failure ever seen.”
Oil isn’t quite in the same league in terms of market failure but there are real market failures that mean we are not adapting to the likelihood of sharply rising oil prices – due in particular to the long lived nature of transport investments and short horizon of the oil market. Governments are required to have a longer term vision than oil markets but so far ours doesn’t get it.
Published in Environment & Resource Management by Russel Norman on Thu, July 26th, 2007
Tags: environment
More posts by Russel Norman | more about Russel Norman
on the trolls and those who are unable to keep on topic
If Cullen had bothered to read the Club of Rome report he would know that it did not state “that we would have run out of oil by this point”. It actually stated that if existing trends continued we would run out of affordable oil by now. The oil shocks of the ’70s ensured that those trends did not continue.
For instance, in 1973 the average american new car weighed 3,700 lbs, in 1983 the average weight was down to 2,700 lbs. The average weight in 2003 was also 2,700 lbs but safety, performance, emmissions and fuel economy are all vastly improved since 1983 mainly because of the electronics revolution.
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Go Jeanette.
Cullen is just wrong. Telling him so is futile since he “knows everything”, and is especially well-versed in the stuff “that just ain’t so”.
BJ
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I think the problem is we don’t know for sure and people can point to Lynch and a whole lot of things like technology. In the past people worried about the “yellow peril”. My Grandfather told me that if they invaded we could use guns but they would only need frying pans…” So we have a model which involves our perceptions (China using oil etc and of a limited fixed amount), and it isn’t too hard for someone to burst it, especially when people don’t want to hear bad news. Many peak oilers just take it as fact and so forget how to communicate it to others.
jh
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Maybe the Govt is simply waiting for all that oil in the Southern basin that we have suddenly been hearing so much about recently.
Never mind that even if any is found “market forces” would most likely see it sold overseas at a higher price then NZ could afford, and then when it is all gone we will be back to square one.
Any oil findings would also bring up the issue of how we would benefit from it as a country. For some reason I just don’t see National or “CENTRE-left” ie UFP-NZF-Labour doing much other than letting the market rule, but maybe they will have the nous to set a fund such as the Norwegians have.
Chomsky talks about shifting the parameters of debate…Michael Cullen sure seems to be quite happy talking within the parameters established in the 1980s.
jy
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1880s ?
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http://news.yahoo.com/comics/uclickcomics/20070725/cx_tmrkt_uc/tmrkt20 070725
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Sorry the other one was about a different topic…. appropriate to the next election perhaps, but different. Here we go.
http://www.theoildrum.com/node/2812
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Perhaps they’re hoping for Invercargill to be the Aberdeen of the South Pacific. Heres hoping. Hopefully Tim Shadbolt continues as Mayor and reads this.
http://www.economist.com/world/britain/displaystory.cfm?story_id=94814 45
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- “What economic and fiscal strategies is he developing to prepare New Zealand for the impact of an “extremely tight” oil market within 5 years where oil production may not be able to keep up with demand, as predicted by the International Energy Agency’s Medium-Term Oil Market Report earlier this month?”
That’s because a minister is endowed with omniscience and supreme wisdom, right? He’s not just someone whose only talent is in manipulating and lying to the the public and climbing a greasy pole?
You don’t know what the future of oil is. I don’t know. And I know for damn sure that this Minister for Talking the Talk doesn’t know what it is either.
*Nobody* in the world is in a position to reliably predict the future for oil – least of all a grubby politician whose only interest is in enjoying the perks and privileges of office for as long as possible.
Only the market contains such wisdom, because only the market captures the fragmented knowledge and priorities of hundreds of millions of individuals. Only the market punishes inefficiencies and steers resources to where they are most valued. In this case it might be oil, LPG, hydrogen, whatever. Nobody knows, but the market will find out where the real value is, not some politician with a set of prejudices and a career to worry about.
Let me out it this way: If you are urging that the state force everyone to fund and adhere to some new energy policy that flies in the face of what the market is doing then it does not automatically mean – as you people seem to automatically assume – that this proves how much wiser and more caring you are than everybody else and how this qualifies you to use force to impose you views of us. No. 99.999999% of the time it just means you are ignorant and opinionated.
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Mouldwarp say:
You don’t know what the future of oil is. I don’t know. And I know for damn sure that this Minister for Talking the Talk doesn’t know what it is either.
………………….
Jeanette is asking aquestion in response to the IEA report. It is the Big Cheese at the IEA who says:
It’s an absolute priority. We need to take tough measures in the transport sector, such as stiff taxes on large cars, limitations on SUVs and speed limits…
jh
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Today, 10 nations produce nearly 75 percent of oil exports. But as one senior Saudi puts it, There has been a paradigm shift in the energy world whereby oil producers are no longer inclined to rapidly exhaust their resource for the sake of accelerating the misuse of a precious and finite commodity. This sentiment prevails inside and outside of OPEC countries but has yet to be appreciated among the major energy consuming countries of the world.
http://www.energybulletin.net/32147.html
jh
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Mouldwarp
Surely you’re saying that as satire. The “market” as you quaintly put it has shown a marked propensity to punish itself for its own inefficiencies and shown little evidence of steering resources to where they’re most needed.
If what you contend is true then there would be no such thing as a “boom” and “bust” business cycle, recessions, or depressions. We wouldn’t be suffering our current high fuel prices. Our Reserve Bank wouldn’t be needing to continually hike up interest rates. Ad infinitum
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Surley, the market won’t react to scarce oil supply until it sees the whites of the eyes of the problem, Mouldwarp? As you said “nobody knows”…
By then any chance to mitigate for a change in circumstances (eg New Urbanism v sprawl) is wasted.
Presumably oil supply problems would filter into the market from various sources… and be reflected in oil futures? I read that while oil companies make money from high oil prices, when it comes to extracting more oil, they are constrained by….high oil prices(?)
The real issue underlying “Peak Oil” is the notion of there being limits to growth.
Mt Cook Ski planes have just put their prices up to $340 for SPA1, to cover the cost of fuel (if I have that correctly). For that price Japanese can fly to Korea and back , with accommodation. The only way to make productivity gains is to….. (but the people wouldn’t be able to pedal that fast ).
jh
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Theodore Dalrymple writes:
http://www.brusselsjournal.com/node/2267/print
jh
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Markets work wonderfully some of the time Mouldwarp, but sometimes they fail:
[I like this letter in the Press today]
Packing elderly in
We read negative things about
greedy developers building infill
housing — units for the over 60s,
80sqm, with the bathroom, including
the lavatory, and main bedroom
opening off the living area, which
includes the dining area and kitchen,
and the laundry in a single garage.
Southern Cross Medical Insurance
recently published recommendations
for kitchens and bathrooms for the
elderly, but these seem not to have
attracted the attention of developers.
The units’ frontages often face the
back of the house next door and are a
short distance from the fence, giving
almost no outlook. This can also
mean little more than three hours
sun during the winter.
With some of these units
languishing on the market, what
guarantee is there that they will
continue to be bought and lived in by
the elderly? Surely there is a limit to
the number of elderly prepared to
pay $450,000 for 80sqm, just to live
in the area of their choice.
Developers cannot continue to
build these units without resource
consents, and residents have no
opportunity to voice their opinions if
an existing house in a desirable area is
taken away, to be replaced by these
small cheek-by-jowl units.
ANN OWEN
Burnside
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Mexican Company Predicts End of Oil
Mexico, Jul 27 (Prensa Latina) Petroleos Mexicanos (PEMEX) announced that oil reserves may run out in seven years.
“Supplies of this economically exploitable resource are running out,” informed a report sent by the state owned company to the United States stock market.
http://www.jeffvail.net/2007/07/blog-post.html
Here’s a speech by an oil industry insider on the difficulty involved in making reports (re PNC’s latest)
As someone who has personally witnessed individual wells, fields, basins and even countries achieve and subsequently pass their peak productive petroleum capacities, I can say that I’ve been there and done that. In my opinion at least one or more types of “oil? production are now, or soon will be peaking. We are seeing the effects of this in product prices, and I hope for all of our sakes that the free market does indeed respond efficiently and without great upheaval. Most economists and governments expect it should self soothe, but I doubt they suspect the magnitude of the corrections that will be necessary to bring about a new equilibrium.
http://www.aspo-usa.com/index.php?option=com_content&task=view&id=185& Itemid=91
jh
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A Peak Oil FAQ
1. It seems like people thought we were running out of oil in the 1970s, and then all of our problems went away. Why is the situation different now?
[etc]
http://www.energybulletin.net/32248.html
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jh.
If you look at what the Oil Crisis did to non oil producing countries and even some oil producing nations like Mexico, particularly in Latin America, people would realise that ANY energy crisis is a VERY bad thing. It basically sent very large swathes of the population who were comparatively well off compared to twenty-thirty years earlier, spiralling back into poverty, leading to what is labelled as Latin America’s “lost generation.”
http://en.wikipedia.org/wiki/Latin_American_debt_crisis
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It would be interesting to speculate as to the impact that the Oil Crisis would have had on New Zealand if the economy wasn’t as regulated as it was then and if Muldoon hadn’t engaged in the biggest programme of public works since the Labour Government of Michael Joseph Savage.
http://www.teara.govt.nz/1966/H/HistorySettlementAndDevelopment/193549 theLabourRegime/en
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Hmm. Why do we have to depend on overseas credit when we can create our own like the First Labour Government did to stimulate the economy and fund its public works? We wouldn’t even have to the suffer the effects of inflation as they lamentably did as we have tools like the Consumer Price Index and the ‘Exchange Settlement Accounts System’ (ESAS) of the Reserve Bank of New Zealand that they lacked to monitor the amount of money that is in the economy.
“Where will the money come from??; the Government’s answers were never explicit, but in fact a good deal of the money came from State credit created by the Reserve Bank. This institution, by an Act of 1936, had become a fully governmental body; where these expensive programmes could not be financed out of current revenue or overseas funds, the Government simply borrowed from its own bank. Neither the housing programme nor the guaranteed price could have been financed without such credit.”
http://www.teara.govt.nz/1966/H/HistorySettlementAndDevelopment/193549 theLabourRegime/en
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Intersting to watch TV Ones coverage of peak oil and latest IEA news (So far=0, they are a brown nosing the rich and famous shallow bunch of good for nothings..)
http://tvnz.co.nz/content/?q=IEA&style=tvnz
TV3
http://www.tv3.co.nz/Home/gSearchResults/tabid/431/Default.aspx?q=peak +oil&sa.x=197&sa.y=20&sa=Search&client=pub-0784612283000026&forid=1&ch annel=0342145612&ie=ISO-8859-1&oe=ISO-8859-1&flav=0000&sig=AYSG8hrKpfl X-1FU&cof=DIV%3A%23ffffff%3BBGC%3A%23ffffff%3BGIMP%3A%230066cc%3BLC%3A %230066cc%3BALC%3A%23ff0000%3BVLC%3A%23003366%3BGALT%3A%23666666%3BT%3 A%23333333%3BGFNT%3A%23999999%3BAH%3Acenter%3BLBGC%3A%23191970%3BGL%3A 1%3BFORID%3A11%3B&hl=en&domains=tv3.co.nz&sitesearch=tv3.co.nz
jh
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omg wtf haven’t you heard of tinyurl.com!
Here is a better link for the same listing:
http://www.google.com/search?q=site%3Atv3.co.nz+peak+oil
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sleepytreehugger,
- “The “market”? as you quaintly put it has shown a marked propensity to punish itself for its own inefficiencies and shown little evidence of steering resources to where they’re most needed.’
You’re half right. The market does indeed punish inefficiencies. That’s why it’s so beneficial to society as a whole. Inefficient producers and those making stuff people don’t want to buy are soon put out of business. The result is that us consumers get the best products at the best prices.
Contrast that with the public sector which doesn’t operate in such an environment. Failures are not punished. Inefficient departments face no pressure to improve and to deliver what the customer wants because they have a monopoly. In fact, perversely, the worst departments receive *more* money in futile attempts to improve their performance. State departments are run for the benefit of state employees and not for us poor taxpayers who are forced to use their services. Contrast that with the private sector where we can choose who to deal with.
But you are certainly wrong when you say there is little evidence of the market steering resources to where they’re most needed. Try opening a business producing stuff that is not wanted or that passes on inefficiences in the form of higher prices for consumers (i.e. try running your company like a government department). You’ll soon find yourself out of business and all the resources you were wasting – from staff through to fixed assets and energy inputs – used instead by companies that are felixible enough to respond to continual change.
But you continue…
- “If what you contend is true then there would be no such thing as a “boom”? and “bust”? business cycle, recessions, or depressions. We wouldn’t be suffering our current high fuel prices. Our Reserve Bank wouldn’t be needing to continually hike up interest rates. Ad infinitum”"
Well, in a boom and bust cycle it is the bust that is the market punishing over-investment. So it is quite wrong to imagine that such things can’t happen in a market environment. It is in fact an example of the market in action.
The problem is that these cycles and their painful but necessary shakeouts are made far worse by political decisions, including those surrounding the fiat currency. Arguably the cycles would be far less severe in a genuinely free market.
As for high fuel prices, you will find that the oil companies would very much like to do much more exploration and drilling in all sorts of places, and to build more refining capacity. High oil prices are entirely to do with politics.
And for interest rates, a free market would have responded to the relative housing shortage by developing a lot more land for housing. So, again, it is politicians thwarting a free market which have produced the current problems. They have driven up house prices by their planning restrictions, and they now seek to blame evil speculators for the problem.
jh
- “Surely, the market won’t react to scarce oil supply until it sees the whites of the eyes of the problem, Mouldwarp? As you said “nobody knows”. By then any chance to mitigate for a change in circumstances (eg New Urbanism v sprawl) is wasted.”
The market can’t predict the future, but then again neither can any individual or group of individuals that you care to mention. Such a feat would require complete comprehension of a myriad emerging technologies, such as carbon nanotubes and quantum dots to name just two – plus complete knowledge of all so-far undiscovered technologies just over the horizon, as well as an omniscient knowledge of all the priorities and trade-offs that everyone in the country decides according to their own circumstances. It is just impossible.
What the market can do is sift competing technologies as they emerge – in the face of problems and opportunities as they too emerge – and throw up the best set of solutions in an impossibly complex world. That’s the best you can ask for. By contrast, if you expect a handful of people to accurately predict the future and to impose that vision on everyone else you should probably investigate how other “great leaps forward” worked out under similarly centrally-controlled economies.
What you absolutely do not want to do is let politicians get involved. Check out the American corn ethanol scam articale in Rolling Stone magazine.
http://www.rollingstone.com/politics/story/15635751/ethanol_scam_ethan ol_hurts_the_environment_and_is_one_of_americas_biggest_political_boon doggles
That is the ugly political reality of the approach you are suggesting.
As for the letter you posted, about developments for the elderly, I think the key phrase from it is “Surely there is a limit to the number of elderly prepared to pay $450,000 for 80sqm, just to live in the area of their choice.” So it would appear that people are buying these places; intelligent people who have weighed-up the pros and cons, looked at the alternatives, and decided that they want to live there. Where is the problem here?
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“What the market can do is sift competing technologies as they emerge – in the face of problems and opportunities as they too emerge – and throw up the best set of solutions in an impossibly complex world.”
Does that explain the success of Windows, VHS, SUVs, Intel, fan heaters or halogen uplights? All of these are either second best or the almost the very worst way of doing things. The SUV had its popularity assisted by cunning manipulation of a sensible law. Most of the others are straight forward examples of clever licensing or marketing strategies.
For the market to work perfectly there have to be certain perfect preconditions, especially information and competition.
The medical profession provides the best example of how the lack of these preconditions gaurantees failure not just of the market but also of non-market approaches. Why doesn’t increased funding result in more operatons? Why has productivity decreased in hospitals over recent decades? Why are there so few surgeons employed in our hospitals. Answer – because most surgeons are employed as consultants, on contracts, just like management. Most of those highly paid “managers” in our hospitals, especially the ones who’ve doubled their incomes in the last ten years, are actually consulting surgeons. The very same people insisting that our hospitals have to many overpaid managers.
It also explains why so many food importers don’t want CoOL labels. In the free market information is power, since whoever has the information has the power it follows logically that informing consumers is the same as empowering consumers, and that is a marketing strategy best reserved for niche consumers.
“it is politicians thwarting a free market which have produced the current problems” Right! And not just high prices and high interest rates but by severely restricting where infill housing and apartments can be built they are preventing the most vital preparations for peak oil from happening.
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“it is politicians thwarting a free market which have produced the current problems” Right! And not just high prices and high interest rates but by severely restricting where infill housing and apartments can be built they are preventing the most vital preparations for peak oil from happening.
………….
I’m not sure what you mean by the last bit Kevin.
jh
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My cousin made a comment about Riccarton (between Riccarton and Blenhiem Roads) that: “the people should be moved out and then the houses bowled and the whole area rebuilt”… The question is why not?….
jh
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This IEA thing could have been a big opportunity for the Greens, unfortunately people groan at the mention of Green Party, thanks to you know who and you know what…
jh
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jh,
I meant that the most important thing we can do to prepare for peak oil is to reverse the urban sprawl that governments and councils have been promoting for the past 100 years. This can only be done by allowing infill housing and apartments amongst the existing sprawl of quarter acre sections. Most council plans still don’t allow this to happen. It is vital that the average distance between people and amenities is reduced before peak oil while there is still enough capital and investor confidence to make it happen.
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Found this interesting study of a previous peak oil crisis.
PRICE TRENDS OVER A COMPLETE HUBBERT CYCLE: THE CASE OF
THE AMERICAN WHALING INDUSTRY IN 19th CENTURY. by Ugo Bardi from the Dipartimento di Chimica – Università di Firenze.
http://www.oilcrisis.com/history/whaleOil20040913.pdf
On the basis that a picture is worth a thousand words here is the price and production data from the report in a line graph titled U.S. Whale Oil 1804-1876 Versus World Crude Oil 1940-2007:
http://www.petroltax.org.nz/images/WhalePeakOil.jpg
To the best of my knowledge the continuation of the polynomial trend line isn’t actually a prediction but, just in case it is, here is the frightening big picture of the future:
http://www.petroltax.org.nz/images/WhalePeakOil.jpg
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PS, Some of the dramatic changes are explained by these simple facts. USA was at war with Britain 1812-1815 and with itself 1861-1865. Pennsylvania Crude production began in 1861 but the price didn’t fall below $40 barrel (2006 dollars) till 1870.
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What is a polynomial trend? Explain it again thanks.
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The biggest hurdle facing councils with infill housing (and high density housing projects) is the reticulation of essential services. Just taking sewerage alone, doubling the number of houses in a location would suggest that already overloaded sewerage systems would neeed at least a 75% upgrade in capacity.
Now before you can permit more infill housing you need to ensure that the water in&out, electricity, roading, etc. infastructure can handle the doubling of people living and working closer to home.
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jh, Well, there is an explanation of polynomials at wikipedia, reading it is an effective cure for insomnia.
Here is a real short explanation:
poly = many
nomial = numbers
trend = long-term movement (in the numbers)
A slightly longer one:
“A mathematical expression of one or more algebraic terms each of which consists of a constant multiplied by one or more variables raised to a nonnegative integral power (as a + bx + cx2).
A polynomial curve can be created through the entire known data or just near the end. The resulting curve can then be extended beyond the end of the known data. Polynomial extrapolation is typically done by means of Lagrange interpolation or using Newton’s method of finite differences to create a Newton series that fits the data. The resulting polynomial may be used to extrapolate the data.”
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Gerrit said “before you can permit more infill housing you need to ensure that the … infastructure can handle the doubling of people living and working closer to home.”
Two aspects of the roading network should set your mind somewhat at rest on the concerns you raised:
1) generally a traffic lane will become congested when carrying more than 2,000 cars an hour.
2) the road network has three types of road: local, arterial and feeders (or collector/distributor) which connect local with arterial.
Typically a local road will have a peak load of a few tens of cars per hour, feeders can be as high as a few hundreds. Hence the only real cause for concern is the impact on arterials. This is different from the impact of ex-urban traffic only in the precise spatial distribution of new traffic and that the increased load from infill occurs on a smaller portion of the artery.
In the case of water, wastewater and stormwater the impact on mains and treatment plants will be similar irrespective of whether population growth is accommodated with infill or exurban developments.
The situation is likely to be different for cable infrastucture where the wires used in the local lines will have been more closely spec’d to demand than is possible with roads or pipes.
Public transport reveals the major advantage of accommodating increased population with infill rather than exurban developments. The extra population is accommodated within the existing route length giving more paying customers per hour of driver’s wages, litre of diesel and km of RUCs. Exurban developments require increasing all of these to service the growing population.
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jh, Here is the correct link for the extrapolated price of crude in 2012 ($US250 per barrel).
http://www.petroltax.org.nz/images/WhalePeakOilPrediction.jpg
The extrapolated crude oil production in 2012 is the same as the actual production exactly half a century earlier (1962).
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Kevyn,
I dont think I made the point very clearly, with infil or high density developments in existing suburbs the infastructure to handle the sewerage, water, roads,etc. is already established and may not be able to cope with the increased demands placed upon it. While in new suburbs this infastructure will be newly installed and simply joined up to main feeders.
It is not the main feeders I’m concerned about (although raw sewarage overflows on North SHore beaches is common during heavy rain periods), more the last mile into infil suburbs.
Another issue with infil housing that the councils have to consider is stormwater runoff. One of my rental properies has enough room for another dwelling but I cant get council approval because the back section is actually designated as a storm water run off from the neighbouring higher placed properties. This then flows into the local creek and into the Manukau.
So that is yet another issue to be confronted.
While infil and high density housing looks pretty good on paper and in theory, there are other considerations that councils have to take into account.
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Here’s a reply to a letter I sent to Hon David Parker
Minister of Energy>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thank you for your email of 24 July 2007 regarding the Medium Term Oil Market Report of
the International Energy Agency (IEA).
I would like to assure you that the Government takes the issue of oil security seriously and
consequently is committed to preparing for a sustainable future now, to lessen our
dependence on imported oil.
In its report the IEA indicates that it does not forecast oil prices, and notes that one of the
components of the current high oil prices is tightness in the refining sector. The report states
that the issue is not one of reserves but of investment in production capacity (i.e. it is not
about the need for new discoveries). Rather, the report should be considered as a wake up
call saying that things will not get any better without more investment in upstream supply
capacity and more rapid progress on energy efficiency.
Also, as markets will respond to forecast supply constraints this report will encourage more
oil exploration and production, and will provide further incentives to find alternatives to fossil
fuels. You may be aware that the Government recently announced a major programme of
exploration in the Great South Basin, and the Tui and Maari oil fields are now coming on
stream.
There are a number of initiatives in place designed to move New Zealand towards a more
sustainable energy future with a reduced reliance on non-renewable fuels. You may be
aware that the Government is currently developing a New Zealand Energy Strategy (NZES)
that will explore the choices and policy options available to New Zealand in order to prepare
for a transition to alternative sources of oil and energy. It will consider the longer term
security issues posed by dramatic price increases, constraints on fuel supplies and the future
impacts of climate change.
The NZES builds on the sustainable development energy goals developed by the
Government in 2004 after wide consultation with stakeholders. It therefore takes as its starting point the thinking that has already been done on the key challenges for New
Zealand’s energy future.
The New Zealand Transport Strategy sets out a direction for New Zealand’s transport
system. Its objectives for environmental sustainability include reducing fuel consumption and
increasing the use of low energy transport options, this strategy can be viewed at
http://www.beehive.govt.nz/nzts/.
I am aware that work is underway within the wider government transport sector to look at
ways to better integrate our land-use and transport planning which could help to reduce the
use of road transport and hence fuel. This work was flagged in the Transport Sector
Strategic Directions document that I released when Minister of Transport, in December 2005.
There is also some work that has started to look at longer-term issues that might impact on
transport, which, no doubt, will need to consider the questions of fuel availability and pricing.
The Government has announced a preferred policy for encouraging the uptake of biofuels
through the introduction of mandatory sales targets. Work on the design and implementation
of this approach is currently underway. Voluntary standards for bio-diesel have already been
developed. More information on biofuels can be found at http://www.eeca.govt.nz/renewable-
energv/biofuels/ and httpJ//www.transport.govt.nz/biofuels-440.
In the Speech from the Throne on 8 November 2005, and through the Green Party Co-
operation agreement, the Government committed to take a more aggressive approach with
respect to energy efficiency and renewable energy. This includes increased support for solar
water heating, improved building standards, and other mechanisms to achieve a sustainable
path forward. These measures will be implemented over the term of this Government.
The Government is already addressing energy efficiency and conservation in New Zealand in
a number of ways. A significant recent development is the review of the New Zealand Energy
Efficiency and Conservation Strategy (NZEECS). This review is a timely opportunity for the
Government to implement new policies to move New Zealand towards a more sustainable
energy future with reduced reliance on non-renewable fuels. The Energy Efficiency and
Conservation Authority (EECA) is responsible for implementing the Government’s objectives
relating to energy efficiency and renewables. Further information on the process and
framework for developing a replacement NZEECS can be found at
http://www.eeca.govt.nz.Together with the NZES, the NZEECS will form a critical part of the
climate change work. Together they make up the climate change.
Thank you for your correspondence.
Yours sincerely
Hon David Parker
Minister of Energy
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There’s plenty of oil just refining constraints so no need to worry. He’s right (for now). Or….
“Late in November, all Pacific commands, including both the Navy and Army in Hawaii, were separately and explicitly warned war with Japan was expected in the very near future, probably with attacks in the Far East: the Philippines, IndoChina, Thailand, or Russia. The warnings were not specific to any area, noting only war with Japan was expected in the immediate short term and all commands should act accordingly. Had any of these warnings produced an active alert status in Hawaii, the attack might have been resisted more effectively, and perhaps resulted in less death and damage. …….”
http://en.wikipedia.org/wiki/Attack_on_Pearl_Harbor
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