Written By: - Date published: 2:51 pm, February 16th, 2009 - 41 comments
Categories: economy, Media -
Tags: peak oil
When I heard Shell is looking at selling its service stations in NZ and its shares in Fulton Hogan, my initial thought was that the Government should look at buying – to keep profits in NZ, to help ensure competition in the market as Kiwibank has for banking, and so there is a publicly-owned network of service stations that can used to lead the way on future ‘refueling’ (battery charging or battery replacement).
And while I still think there may be some merit in that, then I heard One New’s Heather du Plessis-Allan repeat Shell’s explanation for why it was looking to sell. The company claimed it needs cash for investment in exploration and high growth markets. That raised alarm bells for me and if we had enough quality journos they might have picked up the problem too.
Shell is awash with cash. It made a profit of US$41 billion last year, probably twenty times what it would hope to make from selling its NZ interests. It returned $3 billion in dividends each quarter to its investors last year and spent $3 billion on share buy-backs (basically, what a company does when it has nothing else to do with its money). And it’s still sitting on a huge pile of cash. It doesn’t need to free up money from NZ for investment elsewhere, if it needed the cash it already has it.
So that leaves two possibilities two my mind. Either Shell thinks that service stations aren’t a money-maker in the long-term and wants to get out while the getting it good. Or it thinks New Zealand isn’t a good prospect in the long-term. The first implies a belief that people aren’t going to be going to service stations in the reasonably near future either because the technology has moved on or the supply of petrol is falling. The second, more worryingly, suggests it doesn’t think the New Zealand economy will be a good place to be compared to the rest of the world for some time, which may also link into peak oil.
Maybe those aren’t the real reasons but would be really interesting to know why Shell wants out of New Zealand. A pity the question wasn’t asked.
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Scoopit!
Pleased to hear you’re busy, lukas. How is your paper round going?
if there was a paper boy where I live I would be surprised. As for the production and sourcing of products out of China, thats going great. No recession in China or in the agriculture supply game.
Lucas,
FYI, China is collapsing too. The Chinese leader are scared shitless for social unrest (a nice the description of mayhem for when 50 million people revolt) So I would enjoy it while you can.
Trav, I have a fairly good idea of what is going on over there. Some of the bad factories are going under, the good ones are doing fine as domestic demand hasn’t really gone down all that much.
The company that I contract too is finding it hard to fill staff vacancies and to find enough suppliers for some of the products we manufacture.
Redbaiter
The problem isnt that Venezuela is dependent on oil, but rather that it doesnt own its oil yet. Adam Smith said produce what your good at, and buy the rest. But if someone else owns the oil and pumps out the income then their isnt much left to buy food. Chavez is well down the road to taking ownership of the oil back. We should do the same to key sectors of the NZ economy.
Swapping the stuff we need to live on makes sense as the capitalist system crashes and is only kept alive by using the state to force us to pay for its bad debts. Why should it get rewarded with that future income stream from the people who do the work when it doesnt?
I say let the system crash and burn and lets nationalise what we need to live on and trade what we don’t need and others do, for what we do need and they don’t.
We would run much better with the lithium in the cars and not in our brains.
Lucas,
Dream on and enjoy while it last. 30 million unemployed people represents an awful lot of “bad” factories.
Those 30 million are the people of the rural communities which send on or two of their unwed young family members (mostly girls to the big city. Their earnings represent 65% of the income of those families. That’s 30 million families who are loosing 65% of their annual income. That, whether you like it or not will lead to the collapse of local demand one way or the other.