Written By:
James Henderson - Date published:
9:00 am, May 3rd, 2012 - 94 comments
Categories: debt / deficit, Economy, energy, infrastructure, transport -
Tags:
Last week, the IMF warned that oil prices will double over and above inflation in the next decade. The Greens crunched the numbers and say that means we’ll be paying $5 a litre for petrol in 2022. Can you guess what Brownlee’s reaction was? Head in the sand and personal attacks on the Greens’ Julie Anne Genter (you know, the transport expert) for daring to suggest a handful of white elephant highways is a poor use of $14 billion, especially when petrol is only getting more expensive.
Petrol prices doubled in the last decade. That lead to the never-ending recession we’re in and saw traffic volumes peak and start to fall (we’re currently back at 2004 levels).
National’s $14 billion Roads of National Significance make little economic sense even with heroic traffic volume growth assumptions. For instance, the $1.7b Puhoi to Wellsford will break-even only if traffic volumes double in the next 15 years. They’ve been steady for years.
What happens when petrol prices hit $5 a litre? We all drive less, of course. We look for alternative transport options. We put more of a price premium on living close to where we work, shop, and recreate. The traffic growth that is being banked on even for the weak business cases for the RoNS isn’t going to happen. We are going to have traffic volumes falling. Those flash new multi-billion highways National built wind up being ghost roads.
I don’t think you’ll argue with me when I say this country isn’t drowning in cash. In fact, this government has made a virtue out of being more skint than it forecast at each turn. So why, oh why, would we chuck $14 billion at highways that no-one will be driving on once petrol hits $5 a litre?
The current rise of populism challenges the way we think about people’s relationship to the economy.We seem to be entering an era of populism, in which leadership in a democracy is based on preferences of the population which do not seem entirely rational nor serving their longer interests. ...
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A couple of other effects, we stop importing 42″ flat screens because they become too expensive, our exports are hit because suddenly milk is that much more expensive to transport, our farming models are thrown out of whack when farmers realize that zooming around all day on tractors and quad bikes is no longer affordable, tourism takes a dive, the cost of keeping our transport system going becomes prohibitive, overseas debt spirals out of control …
This really is a huge issue for NZ and the human race and we should be planning now for it. It is a shame we have such a myopic bunch in charge.
The 21st century is not going to be about financial globalisation. Its going to be about real economy localisation.
I’ve been getting a bit more interested in the transition towns and energy descent planning over the past year or so (there’s a good TED talk about it). I would hope to see it gain prominence in local body elections over the next few terms.
I’m not so worried about getting our exports from port to port – refrigerated shipping predates the age of oil – but getting exports to port and from port to warehouse to retailer to consumer might be more of an issue. I am a little more worried about agricultural production and the cost of fuel (and fertiliser) driving up the cost of production.
Edit – as for choosing where to live, I can recommend Walkscore to determine “walkability” to amenities. I would hope the planning for the Christchurch rebuild will take this into account, but I wouldn’t bet the farm on it.
Not really.
Sure, coal isn’t oil but it is still a fossil fuel and we really don’t have that much of it left either and we have other things more important that could it be used on. Peak Oil really means that, in a few years, we’ll have to be going back to real economics rather than the delusional neo-liberal economics that has dominated the world over the last few decades.
The real tragedy of the politics we are used to is that it is all based upon promises of future delivery..we could have debt because “growth” would allow that. All of this was based upon increasing supplies of cheap energy that could be used to crank any number of technical “advances”. That is about to stop and the debts will come due.
On todays political agenda is asset sales of power generation, roading projects, privatisation of water supplies etc etc. I have no doubt that some people in National and ACT know damned well the show is packing up and they are trying to pick off the future strategic assets now before it becomes very obvious how strategic they are.
Petrol to $5….and the rest.
That’s exactly what they’re doing and they’re hoping that it’s going to give them power over the rest of the population indefinitely.
Pretty soon they’ll be after your precious bodily fluids
Or try to get patent and/or intellectual property rights to parts of the human genome.
A bit of a quandary that central government’s public transport subsidy comes out of the national Nad Transport Fund, which gets a big chunk of its funding from petrol excise tax. So the less we drive, the less there is for public transport funding.
Perhaps the Greens and Labour should get their heads together and come up with some policy ideas on this one. Because if it keeps tracking this way the Government will have to trim a fair whack. Or decerease the subsidy for Public Transport per passenger.
Cleearly the latter makes PT have to pay its way more – which is a good thing.
No quandry, really. Because if we don’t no one will be moving around in the future, except for emergencies and a special once a year holiday trip out of town. So those funds are going to dry up anyways.
Extremes of the left have been willing urban apocalypse for over half a century. So far, we adjust and continue to. I enjoy Left Melancholy like anyone else. But do you have more than that, on transport funding?
Awww, someone give ad a hug…
Extremes of the right have also been quaking on about teh end of the earth/society/their moral majority as well, main difference is that usually the voices on the left are oft coming from the people who study a particular area and are working on the science of the day. The (in)famous book The Population Bomb for example had relatively rigorous models, main issue is that Ehrlich didn’t anticipate fully the impact of the Green Revolution and other things which allowed humanity to avoid a crash via increasing food production. Though I tend to ignore predictions not based on science, so yeah…
So while yes, many predictions do prove hollow, relying on technology to save us runs right into the Problem of Induction and the basic issue that technological improvements aren’t a nice linear (or non-linear) predictive thing. i.e. we don’t know if they work until they’re worked out and tested, so betting on them can be, well, problematic. Then there’s the issues with actually dealing with the root problems, which while over-population is an issue, mainly it comes to down to economic inequality and it’s various impacts on distribution of resources and technology that create issues with food distribution and waste, along with land productivity problems. Basically, get rid of poverty, and population growth takes a dive as eduction and reproductive rights offer women other, better options than being a baby factory. Unfortunately the current mode of global capitalism is rather addicted to exploiting poverty for low wages and easy to capture markets and kicks up a fuss at contributing to society’s well being.
There’s also the West love affair with throwing away perfectly good fertilizer (aka sewerage, which after heat treatment is perfectly safe) and leads to nutrient pollution and energy waste. But I’m running late for a swim now so that’s all you’ll get on that :/
Not sure if your line “Basically, get rid of poverty” and eating your own sewerage is utopian or apocalyptic. Read that last post on the Comedy Festival stage and you will have quite a career.
The remarkable thing about innovation is how little policy has to do with its success. The moment for globalised policy to have purchase on the way the world turns environmentally was lost in Copenhagen, and shown no sign of reappearing.
I’m definitely pessimistic about the shrinking realm of the public order and policy agency upon the world itself – witness the increasingly pessimistic tone of the Shell Scenarios over the last decade. So no, there will be no public sector elimination of anything serious.
Regrettably, only the private sector has the power to change the world substantially now – be for ill or good.
Once you’ve pulled your head out of your sewerage and dried off, just respond to the simple little concrete problem of transport funding in New Zealand.
lolwut? on the eating sewerage bit:
http://en.wikipedia.org/wiki/Compost#.22Humanure.22
There’s industrial scale versions which reduce the composting time as well…
Basic biology lesson – high temperatures = kills everything and has a lovely tendency to denature protein based toxins.
As for why, read teh fucking literature.
Public or infrastructure?
And now, I shall go blob, for instead of tiring me out completely this swim has trashed both arms
Basically, get rid of poverty, and…
See, it’s this kind of direct, pragmatic approach to problem-solving that’s so lacking in the organisations that actually do stuff. If only the public and private sectors would apply this kind of bold thinking to health (Basically, get rid of cancer, and…), the breakdown of the family (Basically, get rid of jealousy, and…), world peace (Basically, get rid of armies, and…), etc – oh, how rapid would be the progress we’d make.
lawl 😛
Hey, I be a science student, so I tend towards the core issue, which in that case is poverty and it’s causes. Which of course it’s not straightforward to fix smartarse 😛
Also cancer is not one disease, so 😛 to you.
(what? 500m in the pool makes me more irreverent)
Well….no. But we might be if all that money concentrated ‘up there’ because of the non-trickle of the trickle down effect was to be brought cascading down somehow 😉
Of course the country is drowning in cash. Its just sitting building up behind reservoirs controlled by the very rich. The Treasury’s broadest measure of money supply is well over $100B. The issue is that the money is not flowing through the economy between transactions and between ordinary people, it is being hoarded by the top 5%.
Which in some ways is a good thing. I’ve mentioned this before on The Standard, that the money being kept and banked by the rich slows down inflation through the rest of the economy.
The other thing is that a higher velocity of money and transactions taking place implies a greater rate of consumption of the world’s diminishing resources.
a handful of white elephant highways is a poor use of $14 billion, especially when petrol is only getting more expensive.
Because, of course, it is utterly impossible that a car could ever run on anything other than petrol.
Absolutely Gormless – will privatisation ensure that electricity for example has no price increases either over the next 15 years? Of course rail may become more popular – perhaps we should be putting a rail line through instead of four lane highway? Or are you relying on an as yet undiscovered source of energy?
I look forward to cycling along with Gormless dribbling something about new energy sources being just around the corner, past the potholes unfilled by new asphalt (no longer available), complaining all the way.
True. Building roads takes oil (bitumen).
i think gormless is alluding to the cunning plan of utilising the increasing obesity of the populace. In future there will be ‘Z’ liposuction centres where you will be able to sell your excess fat, have it rendered on the spot and fill the tank!!! Smelly but effective…I have a few thoughts on bitumen replacements also…
Well, actually you can make them out of concrete which lasts ages and doesn’t need to be completely relaid every decade or so and asphalt is somewhat recyclable as well and the binder can be made out of a variety of carbon sources. Main issue is carbon and energy costs.
As for Gormless’s post, what it comes down to is the price of travel, which while response is slightly inflexible, as it rises you still get a reduction in motor vehicle use and the alternative tech’s are still very much wanting. Especially given the issues with rare earth metals required for batteries and energy efficiency of hydrogen power (which is pretty shit once you include everything that’s needed). So given current traffic levels don’t justify the holiday highway, except during a few days of teh year, the investment is somewhat economically pointless.
And the age of NZ’s vehicle fleet is old conpared to other nations. We are more likely to get their second hand knock offs as they move to electric cars that see NZ switch over wholesale to those types of vehicles.
In addition, the construction of electric vehicles etc requires a wide range of resources including a variety of rare earth metals. They are in high demand for other uses in electronics etc so I can’t see there being a huge transistion to these types of vehicles.
It’s utterly impossible that more than 10% of NZ cars will run on anything other than diesel or petrol.
Depending on your definition of “run”. I can imagine a future where 25%+ aren’t running on diesel or petrol. Just the fleet of running vehicles will be much much smaller than it is now.
The govt’s projection is that by 2030, 13% of new car sales will be electric or hybrid. So, that’s 87% of new cars at that point still running on petrol, implying something well over 90% of the increasingly aging fleet running on petrol
There won’t be new car sales in 2030.
..and, at the rate you are going, nor will there be any workers’ collective. What concrete have you done about that since we last spoke of it? When faced with a complex task, sometimes I find it helpful to break it up into small, manageable parts. You know, make a to do list. Have you tried that yet?
On a sales volume of zero in 2030 13% = 0!!!!!
In Kuwait I paid around 30-40 cents per litre for petrol and drove a gas-guzzling V8. The locals were horrified at the idea that NZers were paying 5 times that for petrol and wondered how anyone living there could possibly afford to drive a car. I came back here to the 5x petrol prices and a lower salary, and still drive a gas-guzzling V8. In short: the term “inelastic demand” exists for a reason.
I don’t know if the rationale “people are going to keep driving the same as they have always done, regardless of whether petrol is $3, $4 or $5/L” makes much sense.
Indeed, over some intervals on the price-demand curve demand can appear inelastic…until you move past a breaking threshold after which demand collapse will begin to occur.
I think the demand collapse re: private vehicle use is more tied to the entire economy falling into a depression and everyone losing their jobs than it is the direct price of petrol.
I can’t disagree completely.
What’ll really blow everyone’s mind is what impact higher liquid fuels costs are having in terms of removing profit margins and discretionary income from the economy.
i.e. economic decline is not independent of fuel prices.
This is the startling thing – with 10 EU countries officially back in recession, China manufacturing indicators slowing for the 6th straight month and US jobless prints continuing to look dire, we would normally expect oil to be under US $40/bb due to significantly lowered demand.
Its at $118/bb.
Let the Kuwaitis have their oil, we have something that is becoming more and more precious – adequate access to freshwater.
The Middle East nations are going to run in to problems with dwindling oil exports. Currently they need those exports to import food (and as a consquence water – both in the food and used in its production). They have no way to feed or water themselves once they start running out of oil to export (which is going to hit them sooner rather than later given their own prolific use of the black stuff).
the fact that vehicle kms travelled have fallen by about 8% per person in the past 5 years indicates there is a degree of elasticity in demand.
I expect there will be somewhat reduced demand at $5 per litre, but “ghost highways” that “no-one will be driving on?” That’s just high-grade wishful thinking.
No one driving on any highway wow bold call. So we just hang glider into people’s houses really what are you talking about. Do electric cars go on highways ahhh yes. Do solar-powered cars go on highways ahh yes.
civilisation isn’t going to stop dead because of no oil. there will be other fuels ,and roads will always be needed whether the Greens like it or not
Its hard to run a global civilisation without fuel to deliver goods and services. I suppose the old fashioned ways of sail and wind, horse and cart will work.
I guess your argument is that even a horse and cart will require roads. That’s a convincing win for the multi lane Holiday Highway, then.
In New York around 1900 or so they were very concerned about the ever increasing number of horses and their effluent that they had to manage and get rid of.
Thankfully cars saved them from that problem.
solar-powered cars would be electric. ask your science teacher.
And, the government reckons only 13% of new car sales in 2030 will be electric or hybrid. So, don’t go pinning your hopes on them.
“there will be other fuels ,and roads will always be needed whether the Greens like it or not”
The Greens aren’t against “roads”. They’re against Highways of Notional Significance. There’s quite a big difference.
And where are you going to get the power from? Think about that very carefully…, oh, wait, it’s james111, he can’t think.
Yep, I suppose you could put about a kilowatt of solar panelling on top of the car with say a washing machine motor to push it along…
Yeah, think I’ll walk or take the electric train which is far more efficient and I can socialise with everyone else as well.
What does socialising with people have to do with anything?
It’s more interesting than sitting alone in a car.
You could turn on the radio or bring a friend?
Anyway, if I was on public transport and some stranger started muttering to me about how being an employer is immoral and that they are glad to have me to socialise with I would probably go sit somewhere else.
Ah, well if you’re neuro-typical you tend to like socialising.
*cough*
You might catch something from the unwashed heathen.
jturd where is all the lithium to make batteries and the fuel to make motorways which require huge amounts of deisel to be made, as well as the concrete and bitumen and steel all using massive amounts of fuels to be made as well as transported and built.
We need to upgrade the sewage system and put an end to you and your cohorts who continue to bury your heads in the sand.
If NZ wants to be in a better financial state the quickest and easiest way would be to reduce our dependence on oil; our single biggest import.
Oil as a percentage of imports has grown out of control like our right wing trolls!
“people are going to keep driving the same as they have always done regardless of whether petrol is $3, $4 or $5/l”…. is utter bollocks…..
i live right on top of the major arterial route between aucklands eastern suburbs and the central city… four years ago,traffic on the road outside my house was at a standstill by 7.30am at the latest….the same going the other way by 4.30pm….this would typically take upwards of two hours to clear…..
for the last six months it has been only one, or two days a fortnight when that level on traffic has built up to the same degree… and it only takes a maximum of an hour to clear……
i know it’s not a scientific study, but, quite literally, every car and bus that travels from botany/ howick/ pakuranga ect has to go past my house to get to the city/west auckland…so i’m in a very good position to judge traffic volumes……and it has been noticeable how full the buses are compared to a year ago…..
given that it costs over $4 each way to get to the city from where i am, and taking into account how much the fare would be from further out, the obvious conclusion is that, even with the prices for public transport going up significantly here, it is still cheaper than driving….
This is most excellent news as it exaggerates existing demographics. The highly populated places will get more populated as travelling is too expensive, and empty places will get emptier as travelling is too expensive.
But in reality, all else being equal, an alternative to the combustion engine will arise and roads will get made of something else such as cardboard.
Back to traveling the length of the country by sailing and rowing boats?…. and that early 20th Century idea of a canal across the Auckland isthmus could be revived?
Them cutters and scows from early days ….. half dozen men about six-nine months to build. Add it up, it aint much. And then add on the pleasant sailings around the coast on deliveries. It is just about feasible …. in fact, the only thing stopping it is the absurdly low cost of driving in a truck, but the $5 a litre cold well change the formula. I can’t wait. It is on people’s minds.
that canal could be a power generator as well – there’s a significant sea level difference between the two harbours for most of the day due to NZ’s complex tides.
Cheesecake…. roads made of cheesecake. All the way to the Emperor’s palace!
Look at the bright side: The road toll will drop significantly. Speed will no longer kill quite as effectively as it did and no more boy racers tearing down old man Cranshaw’s street at 2am. Happy New Millenium NZ! Let’s all sleep in on Mondays.
Not if they die from hyperglycemia brought on by excessive consumption of cheesecake.
Extremes of the left have been willing urban apocalypse for over half a century… hmmmm…does that mean that the extremes of the right have been willing more and more unsustainable urban behavior??? Or is it just a denial of reality.
Dont tell me peak oil has just been reached again!! Out with the Skateboards ,and horse and carts
conventional oil production peaked in 2006, according to the international energy agency. Overall production is remaining stagnant only thanks to short-term and expensive non-conventional sources
Thanks Deano. Jimmy Dipsticks grip on reality suits his paradigm, backing bravely blindfolded into the future with eyes fixed firmly on the past. Well done Jimmy, a few more steps and there’s the cliff. Unfortunately the ambulance at the bottom has run out of fuel.
Deano
Depends who you believe you being from the Left will always take the most negative view as the left seem to dwell in and master all facets of Negativity. There are many that believe Peak oil hasn’t even been reached yet some have it as far out as 2020. No need to shut up shop just yet smile it’s a beautiful day out there. Here are two reports from Wikipedia that say it hasnt been reached yet just because Mr Hubert presumed it had
A 2010 Kuwait University study predicted production will peak in 2014.[22]
A 2010 report by Oxford University researchers in the journal Energy Policy predicted that production will peak before 2015
Jimmy Dipstick, non believer of non believers, maker up of bullshit excuses etc says “the Left will always take the most negative view as the left seem to dwell in and master all facets of Negativity”…breath taking piece of empiricism. To quote Gos “Evidence please”.
I am one of the first ‘peak oilers’ and I am no way left wing. More into dictatorship, along the lines of Fidel.
Having a dictator does sound pretty left-wing – Stalin, Kim-Jong il, Castro, etc.
[lprent: Hi. You look like a ghola of redbaiter risen (with transcription errors) proclaiming the world of the future as expressed by that divine prophet Senator McCarthy in 1950. While I don’t mind having people around of different views to cause discussion, I do tend to draw the line on really dumbarse commentators who can’t argue beyond tired old crap that they have heard (but never understood). Please read the policy on trolls and improve your commenting standard or leave voluntarily or via a ban for stupidity. ]
Democratic socialism all the way my man.
H1tler, Mussolini, king and queen so&so, Alexander…
Sure, there have been left wing dictators (they were state capitalists after all) but there’s been a hell of a lot more right wing ones.
So James3 the economic effects of peak oil some of us believe we are seeing now is not actually occurring but will occur from 2014. Therefore we should spend billions on motorways that will last a hundred years rather than start adjusting now, urgently.
Can you reread what you posted and confirm this is what you meant to say?
So the IMF is left-wing now, James?
Although using circumspect language a year ago it was reported that IMF analysts seem to think that growth levelled off in 2005
As opposed to the neoliberal fantasy and physical impossibility of continuous compounding growth?
So about the time that all the Roads of No Significance are finished they wont really be needed because the price of dwindling oil stocks will force everyone off of the roads…
The new Waikato expressway takes a high cutting around Huntly, this means every car and truck using it has to expend energy lifting and the dropping back down the other side, that means the flat old huntly gorge is much more efficient and direct. Did they ever do a cost benefit analysis in light of peak oil??? No. Fracking shame. This is what happens when you have a government that thinks the market can handle the collective risks and then go3es ahead with policies that lock out the efficiency of collective behavior. i.e. building a energy rich road. This is not to say that other parts of the Waikato expressway won’t be efficient, and necessary.
Aero
Only partially correct when they drop down the other side of the gorge they expend less energy than when they go up.
Depends whose universe you’re in: Righties live in a vacuum so their cars travel at constant speed for any given force regardless of hills/valleys. However they suffer increased friction where their tyres touch lefty-built roads.
It would be great to get a statement out of the Greens or Labour stating that upon winning government they will cancel the contracts for the whole remaining expressway, as well as the SH1 to Wellsford.
And divert that say to fully electrifying the rail fleet and rail line with a single current, the length of the North Island, and do the Central Rail Link as well. I hear the price is coming down for CRL.
That’s not too utopian, I hope.
jturd more BS the amount of energy expended going up is never recovered going down .
you are one dumb idiot.
The market will provide a technology that will make it so, trust the neo-liberal force.
For me its not so much about the price of oil (but certanly a worry) or cars or asphalt. Its more about the 1000’s of hectares of farmland to build these nact party wet dreams.
$5.00 is way better than rationed or unavailable at any price. The Govt are ready for rationing*, but haven’t a clue what to do when the tankers stop arriving.
*Oil Demand Restraint Options for
New Zealand
Prepared for
Ministry of Economic Development
June 2005
PDF http://oilcrash.com/articles/odr_rep.pdf
Heard an interesting statistic today on RNZ
Italy is about the same size as NZ, yet it can feed itself, with a population of 60 – 70 million.
So maybe after the first few months of anarchy New Zealand could settle down to happy friendly agrarian society?
As long as the Fuck wits can get food to the people, when the above shit storm hits, we could be one of the most survivable countries on the planet.
We just have to watch out for when the Prozac and all its mates stop coming, 3 months after that happens 100,000 people go into withdrawal, Colombian massacre comes to mind.
And along with $5.00 gas will come a shortage of insulin etc.
Make sure your teeth are in good nick, stay away from sugar. And if you are addicted make sure it is home grown. 😉
It will be $5/ltr if the Greens have their way. $4 in tax.Can’t wait for the next LABEEN govt, prob 2014. Seeing sky high taxes to pay for all the non productive promises come the next election, more free student loans, over priced train sets, green jobs etc etc. I am lucky, I have no debt and a $700K house, but will be fun watching people who voted them in start complaining they can’t pay their mortages and bills due to high tax and super high un employment. Hell even farmers will not be able to do business when they are fucked over by idelogical policy. But at least it will democracy at work.
PIPNG if you are correct in stating that fuel will have at tax of $4 dollars a litre our balance of payments will be in the positive for the first time in 30 yrs.
Our government debt will be so low we can breath a sigh of relief and farmers will still be moaning about everything and the ones that aren’t will be making real money and not just hoping the farming cycle is in their favour.
But nobody would be able to afford to pay the tax because the greens will also put up income tax to 90% on anybody who is employed in the productive sector because they would be hurting the environment. They would call that a win-win.
Over the Top why not 100% just for good measure
Peter Pap, which parallel universe are you living in?
BTW farmers get screwed in 20 years because the world runs out of phosphate.
Your joking aren’t you mate???a 700 thousand dollar house???your dreaming mate,after the compulsory aquisition bill becomes law it’ll be a State house rented out at 25% of income…
@ current rates I think $5.00 petrol would be $2.50 tax ?
Don’t forget the Greens want to help maintain growth, otherwise their Kiwisaver accounts will continue going red.
The good thing about hard times is that I’ve cured my dependence on the credit card and enjoy riding on buses.
at $ 4 dollars a litre in most of Europe it hasn’t destroyed their economies
mike e…10 countries in Europe have officially entered recession now. Eurozone unemployment is above 10%. Eurozone youth unemployment is approx twice that. Spain’s stock market is hovering around 9 year lows.
AND Europe has awesome public transport and passenger/rail freight to compensate for high petrol prices.
AND European countries have heavily favoured high efficiency small diesels and low cc petrol vehicles for many years.