It’s a laudable goal to reduce our expensive dependence on foreign oil but it would be a lot smarter to invest in alternatives like better public transport, renewable electricity and sustainable alternative fuels.
Even if New Zealand is the ‘Texas of the South’, it is unlikely to benefit New Zealand. New Zealand sells itself cheaply with the forth lowest royalty rates in the world and gives subsidies and tax breaks to foreign oil companies. So there will be hardly any royalties, hardly any taxes and hardly any jobs for Kiwis, and the profits will flow offshore. We won’t pay any less for petrol at the pump if we produced more than we consumed because we are still unlikely to process it here or pay less than the international market price.
We know Kiwis face 100% of the environmental risks for only 5% of the value of the oil. The only way to massively ramp up oil production is to drill in hostile, risky environments in deep-water like the Great South Basin or the Raukumara Basin, more than 1000m down. This brings its own risks as we saw only too graphically in the Gulf of Mexico. Our clean, green brand is too valuable to put at risk from a catastrophic oil spill.
The Rena demonstrated we do not have the capacity to adequately deal with even a moderate spill let alone a deep-sea well blow-out. The tax-payer has already forked-out $25 million in costs associated with the Rena and our oil drilling insurance rules don’t even demand oil drilling companies have insurance to cover the full costs of a spill.
At a time when globally, renewable energy is surpassing fossil fuels and other governments, businesses and militaries are planning to reduce their dependence on oil, our Government isn’t even planning to start planning. But they are planning to increase it by borrowing billions to pour on uneconomic motorways.
If oil is the problem, more of the same isn’t the answer. As the International Energy Agency’s Chief Economist Fatih Birol says, ‘we should leave oil before oil leaves us’.