web analytics
The Standard
Advertising

Rock and a hard place

Written By: - Date published: 11:49 am, May 11th, 2012 - 20 comments
Categories: economy, energy - Tags:

The world is in a second mini-recession/stall since the Great Recession began in 2008. As in 2010, we’ve seen oil prices ramp up and growth peter out. Now, because growth/oil demand is down, oil prices have dropped back a little. But the moment the economy shows mild signs of life, they’ll be back up again. Short periods of weak growth, oil price shocks, recessions – sounds like the cycle peak oil economists have predicted for years.

And before anyone says ‘well, we’ll just frack our way out of this problem’ or ‘electric cars to the rescue’ understand this: those are expensive energy sources (and also limited in their scalability). The problem we’re facing is not that we’re running out of energy but that we’re running out of energy that is cheap enough to burn and maintain the superstructure of our economy. Put another way, the ‘cost’ of an energy source is the energy that needs to be expended in accessing it – as we replace exhausted easy energy sources with ones that use a higher percentage of their energy potential to be accessed, the amount left for ‘everything else’, the economy, shrinks.

Only rising energy use efficiency or, more accurately, the fact there are so many low-hanging fruit of extravagant, low-value energy use that can be cut is allowing some moderate growth in the space between oil price shocks.

This isn’t an apocalypse, like that dinosaur John Armstrong, said yesterday. It’s a new challenge and it requires a new outlook that doesn’t assume growth is natural, inevitable, and the be all and end all of our society.

20 comments on “Rock and a hard place”

  1. Lanthanide 1

    At the moment there’s a lot of demand from Japan since they shut down their nuclear power. I saw a number of something like 500,000 barrels of oil per day demand just for this.

    • Colonial Viper 1.1

      That’s about right; and it is also why the Japanese Government asked the US to be exempted from the embargo of Iranian oil. The Japanese nation risks being energy starved and even a 5% reduction of oil supplies would be a disaster for their economy.

      • Reagan Cline 1.1.1

        Does the embargo apply to the recently publicised agreement for China to buy Iranian oil with renminbi ?

  2. Agreed James and Central and Local Government need to realise that it is an issue for now, not something that you can put off for a decade or two.

    It should be at the forefront of every regional or national transport strategy as a threat.  Regrettably many strategies do not even mention it.

    • ad 2.1

      Of course we could all do more, but let’s take that car-happy wonderland Auckland for an example. All the trains are going fully electric in 2013-14- and it’s taking a couple of years just to get all those masts and wires in place, let alone build the trains.

      There’s a comprehensive review of all bus routes coming up this year, which will make buses a whole lot more accessable to a lot more of Auckland.

      In some of the difficult stretches of Auckland, like say Remuera Road and Lincoln Road, there are already designs well advanced for putting in bus lanes in which cars travel only if they have three people in them.

      I am not proposing that anyone be grateful, but things are underway in Auckland that have never been this comprehensive or effective in their efficiency drive.

      Regrettably, this is never going to be Melbourne.

      Just a question: have we really truly tested the elasticity of fuel demand since the 1979-1981 oil shocks?

    • Pete 2.2

      Local government may already be looking into it. Down here in Dunedin the council commissioned the Peak Oil Vulnerability Analysis Report (PDF).

      The consultants recommend that Dunedin should work on five objectives to enhance adaptive capacity, social, economic and cultural wellbeing, while requiring significantly less expenditure on transport fuel:
      *Plan to reduce oil consumption by 50% by 2050
      *Transition Dunedin’s urban form with central city lifestyle development, and urban villages, accessed by 100km of safe bikeways and pedestrian zones and served by public transport.
      *Build an electric trolley bus system using efficient modern technology made in New Zealand.
      *Improve Dunedin’s average vehicle fleet efficiency to 5 litres per 100km by 2030.
      *Audit and track fuel use in all sectors, organisations and households and develop action plans.

      I would imagine Wellington under Celia Wade-Brown is exploring similar paths. What matters is whether these are genuine plans rather than just greenwashing.

      • McFlock 2.2.1

        Given the council just got another $2mil of six-month operating shortfall from the stadium, I’d call it greenwashing.

        • Pete 2.2.1.1

          Between the new waterfront hotel/apartment complex announced today and the discussion of suburban development in this week’s Star, they might be moving towards the “central city lifestyle development and urban village” model. You’ll recall they also announced a couple of months ago that they plan to look at the one-way system. If they plan it right, they can have a gradual transition rather than a radical revolution.

  3. Bill 3

    “…it requires a new outlook that doesn’t assume growth is natural, inevitable, and the be all and end all of our society.”

    And so your post-market economy suggestion is…?

    • Dr Terry 3.1

      Yes, you might well quote and question the awful Armstrong statement, Bill. What does he believe is the “be all and end all” of culture and society? I would love to hear his answer (something better, I hope, than trite words like “new challenge”, “new outlook”). Apparently society can get along fine with no growth (economic, psychological, educational, spiritual, – even oil). Let’s just settle for happy stagnation!

  4. maffoo 4

    I know, lets sell the only means we have of making fossil-fuel-free energy !! that’ll help !

  5. captain hook 5

    fait ccompli.
    we are moving into a new reality.
    woo hoo.
    watchout!

  6. Liberal Realist 6

    EROEI = Usable Acquired Energy / Energy Expended.
    ^It’s a simple equation, too bad our politicians can’t grasp it.

  7. Georgecom 7

    Good news for the economy, price of oil is easing. Bad news for motorists, so is the dollar. So I am not expecting to see the price of oil slip much in the next little while, if it goes down at all. I do wonder however how motorists will feel if it edges up around $2.40 or more if the dollars slips below 70 c US.

  8. johnm 8

    Richard Heinberg :

    “Visualize life without gasoline. You might as well start doing so now, at least in imagination; soon enough, this will no longer be an exercise. Already prices are high and volatile. Next we’ll see international conflicts that shut down big portions of the global oil trade for weeks or months at a time. Strategic reserves will be tapped. The government will commandeer supplies for the military and police. One way or another, you’ll be using much less gasoline than you do today. How will your food be grown and transported? How will you get around? Will your job still exist? How will your community function?”

    Link: http://www.postcarbon.org/blog-post/840439-visualize-gasoline

    The end of the oil age has been happening since Peak Oil in 2005 and the Financial Collapse of 2008.
    We are at the end of growth too obviously how will we share a contracting pie? With greater inequality or more sharing?

  9. jack 9

    There are other sources of energy. Water being one of them but the oil cartels will do anything
    to keep that technology away from the pubic. Google Stan Meyers. He is one of many pioneers who had a deep desire to make us less dependent on oil. Took him 20 years to break the water
    molecule down and get more energy than what he put in..He thought he was a patriot.. He’s dead. Also, Google Nicola Tesla. His one aim in life was to make electricity free to everyone.. Yet, no one has heard of him. The father of AC current.

    The oil cartels rule the world. We’re at their mercy. Simple fact. You don’t have to like it but you
    can’t do anything about it. On the positive side shipping might be too expensive and local manufacturs will be back in business. More jobs.

  10. Even the IMF have woken up to peak oil see following for reference

    and Muldoon was right – think big was necessary – just not in 1980

    http://howdaft.blogspot.co.nz/2012/05/muldoon-vindicated.html 

    http://www.imf.org/external/pubs/cat/longres.aspx?sk=25884 

Important links

Recent Comments

Recent Posts

1 2 3 7

  • Customs seeks big brother powers
    A proposal giving New Zealand Customs powers to compel anyone to provide passwords and encryption keys to their electronic devices is another step towards a surveillance society and should be strongly resisted, Labour’s ICT spokesperson Clare Curran said today.  “There… ...
    1 day ago
  • Playcentre Awareness Week – celebrating an icon!
    It’s not always easy being an icon and Playcentres tell me they are facing big challenges under the current economic and social circumstances. However this week Playcentres are celebrating their proud history and current contribution. Since 1941 the Playcentres have… ...
    GreensBy Catherine Delahunty MP
    1 day ago
  • Housing Accord not working – prices continue skyward
      The Government's Auckland Housing Accord isn't working as house prices continue to go through the roof, Labour's Housing spokesperson Phil Twyford says. “The average Auckland house has gone up by $110,000 since the Accord came into effect 15 months… ...
    2 days ago
  • Justice for Teina Pora long overdue
    The Privy Council’s decision to quash Teina Pora’s convictions for the rape and murder of Susan Burdett could be the final chapter in a case that should have been closed years ago, Labour’s Justice Spokesperson Jacinda Ardern says. “Teina Pora… ...
    2 days ago
  • Ministers must answer questions on IRD blowout
    The current and previous Revenue Ministers must front up and explain how the child support system had a budget blowout from $30 million to $210 million in just four years, says Labour’s Revenue spokesperson Clayton Cosgrove. “Peter Dunne was Revenue… ...
    3 days ago
  • Curb stratospheric public CEO salaries
    A review of the way MPs’ pay is set should also look at ways to curb excessive rises in the salaries of public service chief executives, Labour Leader Andrew Little says. “Some of these CEOs have had stratospheric pay increases… ...
    3 days ago
  • 50 cents? Makes no sense.
    The minimum wage rose by 50 cents this month from 14.25 to 14.75. While it’s a small step towards ensuring minimum workers get a fair share, it’s important to remember that real wages only rose 1.5% while productivity rose by… ...
    GreensBy Denise Roche MP
    4 days ago
  • The Serco corrections circus
    It should seem obvious to employers, private or public, that it’s important to do what you can to retain your best, most experienced staff. They make life easier for you because they’re effective, attentive and often respected by those around… ...
    GreensBy David Clendon MP
    4 days ago
  • Time for NZ to prohibit the killing of great apes
    That ban was widely hailed, and spurred efforts in other countries to get similar bans. However, apes are still being exploited, abused and killed, both in captivity and in the wild. Examples of cruelty, neglect and abuse abound. Apes are… ...
    GreensBy Mojo Mathers MP
    7 days ago
  • Auckland building consents: Tragic
    The only word to describe the latest building consent figures for Auckland is ‘tragic’, Labour’s Housing spokesperson Phil Twyford says. “Whatever the Government is doing to address the Auckland housing crisis, it is clearly not working. ...
    1 week ago
  • A whiff of a new biosecurity scandal?
    A pest which could create havoc for New Zealand’s horticulture and agriculture sector must be as much a focus for the Government as hunting out fruit flies, Labour’s Biosecurity spokesperson Damien O’Connor says. “While the Ministry for Primary Industries is… ...
    1 week ago
  • Government shrugs off health sector crisis
    Despite new evidence showing that cuts to health spending are costing lives the Government continues to deny the sector is struggling, Labour’s Health spokesperson Annette King says. “Health services in New Zealand are in crisis. ...
    1 week ago
  • Parata lowered the bar for failing charter school
    When Hekia Parata became aware that the Whangaruru charter school was experiencing major problems her first action was to drop standards by reducing the number of qualified teachers they had to employ, Labour’s Education spokesperson Chris Hipkins has revealed. “Hekia… ...
    1 week ago
  • National not being straight about the economy
    John Key and Bill English need to be straight with New Zealanders about the damage their failure to diversify the economy is doing, after new figures show export growth plunged due to a collapse in dairy exports, says Grant Robertson.… ...
    1 week ago
  • Mind the Gap
    This week the International Monetary Fund released a report on the wider economic value in closing the gender pay gap. When even the bastions of free-market economics start to raise concerns about gender pay gaps, we have to realise how… ...
    GreensBy Jan Logie MP
    1 week ago
  • Labour will hold National to parental leave promise
    Labour will hold National to its promise to increase the support given to new parents of premature, multiple birth and babies born with disabilities, Labour’s paid parental leave campaigner Sue Moroney says. "I am naturally disappointed that after battling for… ...
    1 week ago
  • It was all just pillar talk
    Steven Joyce’s confession that he can no longer guarantee a pillar-free design for the New Zealand International Convention Centre shows the Government has abandoned its dream of creating an ‘iconic’ ‘world-class’ structure, says Labour Economic Development spokesperson David Clark. “Steven… ...
    1 week ago
  • Australians move on offshore speculators
    John Key might want to have a quiet word with Australian Prime Minister Tony Abbott about Canberra's just-announced crack down on offshore speculators when he visits New Zealand this week, Labour's Housing spokesperson Phil Twyford says."Tony Abbott's centre right government… ...
    1 week ago
  • Government at odds on overseas driver crashes
    National backbencher Jacqui Dean has spoken out about overseas driver crashes, putting herself at odds with Prime Minister John Key who is on record as saying it’s not a big issue, Labour’s Transport spokesperson Phil Twyford says. “I’m not surprised… ...
    1 week ago
  • Human Rights and the Palestine Crisis
    Last week I heard two Palestinians speak at Wellington events about the ongoing crisis in their country. Samar Sabawi spoke to a full house about the history of Palestine and gave us a lucid and disturbing account of the situation… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Time to take real care of our kids
    An Amnesty International report has once again criticised New Zealand’s track record on looking after our kids, Labour’s Children’s spokesperson Jacinda Ardern says. The annual report, which looks at global human rights abuses highlights not only the fact that high… ...
    1 week ago
  • Manus Island and the New Zealand Government
    This week the Greens have participated in awareness activity about Manus Island, the refugee camp on an island in Papua New Guinea where Australia dumps asylum seekers. John Key says that he has every confidence in the Australian Government’s claim… ...
    GreensBy Catherine Delahunty MP
    2 weeks ago
  • Election Inquiry – Getting accessible voting on the agenda
    James Shaw has been doing a series of blogs on the Election Inquiry into last year’s general election.  I thought this was a great opportunity to raise an issue very dear to me – accessible voting. Last year’s general election… ...
    GreensBy Mojo Mathers MP
    2 weeks ago
  • RMA changes no solution to Christchurch housing
    Housing will continue to be a big issue in 2015. The latest Consumer Price Index, released last month, shows both good news and bad news on the housing front. After years of being the most expensive place to build a… ...
    GreensBy Eugenie Sage MP
    2 weeks ago
  • Saving kokako in South Auckland’s Hunua Ranges
    It is amazing that you can hear the song of the endangered North Island kokako in South Auckland’s Hunua Ranges, less than 50 kms from the central city. A heavy schedule of policy workshops at the Green Party’s Policy… ...
    GreensBy Eugenie Sage MP
    3 weeks ago
  • Let’s not turn a blind eye to human rights
    The Cricket World Cup has just opened in New Zealand, and it’s an opportunity for us to shine on the world stage. International sport can be a chance for us to build relationships with other countries, and examine what it… ...
    GreensBy Catherine Delahunty MP
    3 weeks ago
  • Its Just Not Cricket
    This week it was my privilege to work with Sri Lankan Tamil communities in this country and host Australian journalist and human rights advocate Trevor Grant. I knew a bit about Trevor from his biography but I didn’t know just… ...
    GreensBy Catherine Delahunty MP
    3 weeks ago
  • Time for NZ to #BeCrueltyFree
    The Government is about to progress the final stages of the Animal Welfare Amendment bill. This will be our last opportunity to get changes made to improve the bill to ensure a better outcome for animals. I have put forwards… ...
    GreensBy Mojo Mathers MP
    3 weeks ago
  • We want access!
    Access to buildings is a big issue for many New Zealanders. It looks like that, due to the hard work and persistence of people in the disability community, the Government may finally be starting to take access to buildings seriously.… ...
    GreensBy Mojo Mathers MP
    3 weeks ago
  • Greens call on Super Fund to divest from fossil fuels
    The Green Party today called on the New Zealand Superannuation Fund (the Fund) to divest from fossil fuels, starting immediately with coal. The call was accompanied with a new report, Making money from a climate catastrophe: The case for divesting… ...
    GreensBy Russel Norman MP
    3 weeks ago

Removed at the request of The Daily Blog.
Public service advertisements by The Standard

Current CO2 level in the atmosphere