The September 20 deep sea oil drilling choice

This Election, voters have a very clear choice for New Zealand’s energy future: more fracking as National advocates, more risky deep sea drilling as Labour supports, or more clean energy like solar that the Greens are pushing.

The Green Party is strongly pushing for a 100% renewable electricity system and reducing oil imports because it will deliver more jobs, more regional economic development, and healthier cities. We support clean energy because it addresses the greatest threat facing us, climate change, described as ‘a clear and present danger’ in a U.S Government climate report out today.

However in what seemed to be a tacit admission of the low priority Labour give climate change, Labour re-committed to deep sea oil drilling, late on Monday evening, as part of an environment policy announcement.

Climate change is the defining moral, environmental and economic issue of our time and with Labour last night recommitting to supporting deep sea drilling, it’s clear that the Green Party is  the only political party that will seriously address the climate crisis. Recently, United Nations climate chief Christiana Figueres said “There is no doubt that most of the fossil fuel reserves we have world-wide will have to stay in the ground” to avoid warming beyond 2 degrees Celcius.

Labour have announced they will end the subsidies for oil drilling they began in the last Government, which is to be applauded, but they have also decided they won’t require a backup relief rig to be present for deep sea drilling operations in New Zealand. As Anadarako’s own oil spill reports show, New Zealand could be waiting 110 days for a relief rig to travel here in the event of a blowout and spill. Can you imagine, 110 days of oil pouring out and washing up on our beaches, killing our sea life, wreaking destruction while a relief rig slowly steams south? If risky deep sea oil drilling is going to happen, requiring a relief rig is one of many steps needed to protect our environment and our economy that depends on it.

The fact is, hoping for oil is not a credible economic strategy; searching for oil wastes precious time in transitioning to clean energy, and actually finding oil and burning it is reckless in the extreme if we want a safe climate for our kids.

This election, voters have a choice: if you want to stop deep sea oil drilling and focus on a clean energy economy, we need to see as many Green MPs around that negotiating table as possible after September 20.

8 thoughts on “The September 20 deep sea oil drilling choice

  1. Royalties at the rates mentioned are not significant and don’t really value the resource properly – given the years it needs to last to give a fair resource future for our offspring. Economics to me is not about money but about the allocation of resources in a fair way that enhances the wll being of present and future generations. Owning a resource is not a productive activity but a process of allocation. If the resource (like oil or gold) is presently overmined or oversupplied in a way that causes social harm – climate change- then social priorities should prevail over the right to use or onsell.

    The royalties are a pittance that doesn’t reflect the social cost.

    As for claiming the cost of the safety backup from the profit – that is fine as it is really only a percentage of the spend saved from the tax, but the people employed to man and make this backup represent a wider social benefit to the purchase price, something those who spend lots of money to avoid tax forget.

  2. Spam – Where did you pull that oddment about royalties from? Not from this post is clear enough. You’re obviously on about something else.

    If oil royalty was significant then the pressure to use it would have to be economically justified, and taking productive land as a resource, with adequate equality/hardship measures would slow up the monopoly thinking around land. Extra labour would be cheaper than using resources.

    This is an important point to understand, and it is not about oil-royalty as “profit” to the crown. The words

    “New Zealand’s internationally competitive royalty regime”

    …identify the source of the problem. National’s notion is that this is all about money coming in. The notion that there is an EXPENSE involved, that we the people of New Zealand are in fact giving up some of our rights and resources in exchange for it, and any notion of what those are worth, are completely invisible to the Nationalista, and only a ghost of a shadow to Labourites.

    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

    Demanding a stand-by rig means that the “economics” of making New Zealanders pay the risk and take the risk while companies and investors get paid the profits, don’t work so damned well. It IS however, one of those necessary expenses to actually get at the oil we can’t afford to burn.

    Gareth would demand a stand-by rig for drilling, despite the risks being extremely low. Note that this would actually be a deductible expense and hence offset royalties.

    The stand-by rig requirement stays. If you reckon that it has to come out of the Royalty then the Royalty is too low and has to be increased enough to cover it. One would suggest a higher Royalty for the higher risk drill areas in that case.

    At the end of the day the people of New Zealand have the sovereign right to tell a company that this is THEIR responsibility to pay for, and to use the resulting numbers to reconsider whether the hole is still economically feasible.

    Any idea that this oil is cheap, is useful income for NZ, or is a burnable resource has to be understood as an error. There are a lot MORE useful things that this country could be doing to prepare for what is coming and to advance its own economy, than searching for more stuff to dig out of the ground.

    Its just that none of those things are possible to someone who supports National’s party line… and many of them are not possible to someone from Labour either.

  3. In New Zealand, as with almost everywhere else, environmental destruction and social inequality continue to increase. Meanwhile, most of our so-called leaders in government and business continue to argue that there are no ‘limits to growth’, that we need more people if we are to ‘progress’, and so on and on. Alas, we’ve a shortage of true, and truthful, leaders and a surfeit of willfully blind followers of much that has failed, or is failing us. And not just here, but all over the planet where illusion and delusion reigns.
    National and Act and Labour, too, together believe that the majority of citizens either don’t care or don’t want to hear the truth, so they’re not going to say much about what’s impending for humankind if we continue doing what we’re doing. They’re principally interested in getting re-elected. Presenting unpalatable truths won’t do it.

  4. If oil royalty was significant then the pressure to use it would have to be economically justified, and taking productive land as a resource, with adequate equality/hardship measures would slow up the monopoly thinking around land. Extra labour would be cheaper than using resources.

    Gareth loves to obfuscate on this point. Royalties are actually significant (they were much lower previously when the only producing fields were Maui and Kapuni). Here is the actual legislation:

    Royalty regime

    The Crown Minerals (Royalties for Petroleum) Regulations 2013 set out rates and provisions for the payment of royalties on petroleum production from initial permits granted after 24 May 2013. The royalty terms and conditions for permits granted before 24 May 2013, and any subsequent permits to those existing permits, is determined by the relevant minerals programme.

    New Zealand’s internationally competitive royalty regime stipulates the payment of either an ad valorem royalty (AVR) or an accounting profits royalty (APR), whichever is the greater in any given year.

    The royalty rates are either:

    5% AVR, that is 5% of the net revenues obtained from the sale of petroleum, or
    20% APR, that is 20% of the accounting profit of petroleum production.

    If a discovery was made between 30 June 2004 and 31 December 2009, the following applies:

    AVR of 1% for natural gas
    APR of 15% on the first NZ$750 million cumulative gross (offshore) or 15% on the first NZ$250 million cumulative gross (onshore).

    In calculating the accounting profit deductions are made and may include associated production costs, capital costs (exploration costs, development costs, permit maintenance and consent costs and feasibility study costs), indirect costs, decommissioning costs, operating and capital overhead allowance, operating costs and capital costs carried forward and decommissioning costs carried back.

    Note that corporate tax is paid in addition to this.

    Gareth would demand a stand-by rig for drilling, despite the risks being extremely low. Note that this would actually be a deductible expense and hence offset royalties.

  5. I think there are significant differences with our economic policy. The shifting of taxing from income to resource royalty and pollution makes a strong move to make those making a quick buck out of the present mess to start paying. If oil royalty was significant then the pressure to use it would have to be economically justified, and taking productive land as a resource, with adequate equality/hardship measures would slow up the monopoly thinking around land. Extra labour would be cheaper than using resources.

    A gelling up of the community control of finance creation would make a difference to the true value of sustainable resources. I am sure that is why John Key wants the community to see Green as the looney left as he has a vested interest in keeping people from really looking. The same reasons they are trying to weaken the power of independant internets, mass media, and even universities.

  6. I’ve no idea how the “Green” economy can work either. It seems to be a greenwashed version of the current economy. Nice trick if you can do it.

  7. It isn’t “the economy” – it is “the BAU economy”, and the chief problem is that the banker’s economists are still in denial about how the Green version of an economy can work. Not perhaps in denial as much as being actively terrified that it might, because when it does they are (for the most part) unemployable.

    :-)

  8. No surprise, with Labour. The economy always comes first with (almost) all politicians. That’s what the voters are told to be interested in. If Labour had any intentions of taking climate change seriously, it would come out strongly against producing more fossil fuels.

    How would the Greens negotiate with Labour, on environmental matters, in the unlikely event that Labour and Greens could form the next government?

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