Crisis, What Crisis?

Written By: - Date published: 8:00 am, March 22nd, 2022 - 88 comments
Categories: climate change, energy, International, Joe Biden, peak oil, science, uncategorized, us politics - Tags:

This oil price spike is here to stay.

We need to think and act on the consequences of that for a moment.

An important feature of the sanctions against Russia is that it shuts away Russian oil and gas production from the whole of global oil trade. It will likely stay as long as Putin is in power. That locks high prices for petroleum, probably.

A few might be able to recall President Jimmy Carter doing a 1979 to-the-people tv broadcast in an unusually frank moment with the US public, requesting collective sacrifice to a common goal.

“The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.”

It was the “malaise” speech, and attempted to name a kind of vibe. He outlined a 6 point plan to decrease United States vulnerability to Saudi oil by boosting local production and using other measures to reduce dependence. Maybe we’ll get something as stirring as that with Budget 2022. Maybe.

And sure, we’ve had warnings about how vulnerable we are here in little old New Zealand in 1973, 1979, the first Gulf War, the second Gulf war, and indeed every other time there was an oil price spike as there is now.

Four decades later from Jimmy Carter and our own version with Bill Birch’s Car-Less Days, CNG tanks, Think Big gas-to-gasoline plants,

our own drilling and exploration companies,

our own national refinery, and other measures.

Think Big as a whole was the largest single set of economic interventions New Zealand has ever attempted, facing a real and present crisis. Once prices corrected in the 1980s it was shown to simply not work. That kind of self-sufficiency effort is simply never going to be repeated again by any New Zealand government, even if it had the power to – which it doesn’t.

We are more reliant on imported petroleum than we have ever been. Ampol, an Australian company, now own over half of all petrol and diesel distribution in New Zealand and has also shut down local refining capacity as it also owns Marsden Point (Hat Tip to Blazer).

In New Zealand 91% of all distance travelled is by car or truck. Between 2000 and 2017 our car and truck fleet expanded by more than half. Ever year fewer and fewer cycle or walk to school. The percentage of electric cars in the entire fleet is going to stay under 10% for well into the next decade. New Zealanders apart from a diligent tiny minority are utterly oil people.

Our vulnerability to fuel price rises is so acute that two weeks of petrol price rises was a crisis sufficient that the New Zealand government cut fuel taxes by 25 cents and made public transport free, for three months. Does anyone know when that’s happened, or happened so fast? It’s a useful measure of addiction translating to politics.

At the same time as drivers are facing sky-high prices at the pump there is the existential threat to the climate.

With President Biden announcing an embargo on Russian energy products we are having the spiritual sequel to 1979.

We still have nearly two months to go to budget 2022 and the Carbon Zero plan. A surprisingly long time.

There is only so much New Zealand and its government can do to soften the blows of the instability that are besetting the world. Nothing in what we have seen of the Carbon Zero plan will wean us off cars or CO2 fast enough to get us through this oil crisis. Those who can cycle, safely, will likely do a bit more of it. Those who can work from home, with consent, will likely do a bit more of it. We will remain one of the most car-addicted, petrol reliant societies on earth for several decades to come.

For those who lived through it, the 1973-79 oil crisis was a global news story that jumped out of our tv screens with long queues of cars everywhere.

There were actual bumper stickers saying “save gas: fart in a jar”. Unfortunately even free public transport now will take some time to work as people are petrified that if they take public transport they will catch a disease that could make them really sick. PT use is at the worst it has been in a decade and like the tourism sector will take years to recover.

In the 1970s and into the early 1980s it took years in New Zealand for relative spending to get back to where it was before the crisis began. We went into a long economic depression, and we felt the oil crisis.

But we’ve become far, far more dependent since 1979.

We’re never going to change that consumer dependence because even our locally made things are designed for export. And we are – as we have been since our founding – an exporting trade country.

It is counter-intuitive, but this is the moment not to withdraw into a kind of fortress New Zealand. This is the time to do the opposite.

With all due respect to followers of WB Sutch and all else who want to make a self-sufficient New Zealand, with a pole vault a cape and a following wind let’s now list the things New Zealand can only get with international trade:

  • Every single thing in the supermarket with the exception of some pet food, some cereals, toilet paper, high end fish, meat, fresh vegetables, and non-tropical fruit
  • Every single thing you need to travel or run things including petrol and diesel, plastics, tarmac, bunker oil, airplane fuel, cars, trucks, bicycles, wheels, car parts, planes, tractors, most equipment
  • Most construction steel, almost all plant and machinery
  • 90% of our clothes and 98% of our shoes
  • All pharmaceuticals except a few generics
  • A large percentage of our skilled workforce in the following fields: medicine and healthcare, agriculture, construction, telecommunications, computing, utilities, and
  • All  our social media feeds, most of our news, most of our movies and television

Think Big and self-sufficiency is never coming back (other than for local greens, a few things we still make here, seasonal fruit, local wine and some craft beer).

This is the time to expand international trade, sustain strong diplomatic relationships, and act like the small state with brains and guts.

But being a small, trade-reliant, car-reliant state doesn’t mean let the moment pass us by. We will likely need our own individual and family plans for the months and years ahead – even if their effect isn’t large.

Less than four months after President Carter’s “malaise speech” gave him huge political support and an 11% polling bump – the Iranian hostage crisis upended Washington and wiped out his accurate naming of crisis into response. He was dumped the next election. The moment went.

Just like that the conversation moved on. That’s what politics is: one damn thing after another.

The question is whether this Ukrainian situation will last or how long oil prices will stay over US$100 a barrel – the prices that helps us to think and act harder.

In September 2019 about 2.5% of New Zealand marched for more action against climate change. That will appears to have evaporated with the fuel price increases.

Ardern, Biden, the EU and others have this moment to respond to the climate crisis using the wedge of an energy crisis. As with President Carter’s moment it won’t last long enough. The political mood is failing the left fast because our oil addiction is priced through utterly everything.

It is the only moment we have.

88 comments on “Crisis, What Crisis? ”

  • Comments are now closed

  1. Gosman 1
    22 March 2022 at 8:49 am

    While I agree with you in your conclusion that NZ would not be able to thrive if it attempted self-sufficiency you fall in to the same mistake many people make about trade. Even if we COULD be self sufficient AND were the best in the World at making each one of those items you mentioned it still would be detrimental to attempt to do that as opposed to engaging in trade.

    • Ad 1.1
      22 March 2022 at 9:51 am

      You've misread. I support free and fair trade for New Zealand.

      • Nic the NZer 1.1.1
        22 March 2022 at 10:04 am

        Gosmans a specialist and doesn't do almost anything for himself. He prefers to act more efficiently with strict specialisation. Of course this applies to both reading and commenting.

      • Gosman 1.1.2
        22 March 2022 at 10:17 am

        I never stated you didn't. I did state that the reasons you support free and fair (whatever that means) trade look to be faulty.

        • Ad 1.1.2.1
          22 March 2022 at 10:52 am

          Even if we COULD be self sufficient AND were the best in the World at making each one of those items you mentioned it still would be detrimental to attempt to do that as opposed to engaging in trade.

          Never claimed any of that. If you have a particular theory of trade you want to espouse that is relevant to this moment, go for it.

          • Gosman 1.1.2.1.1
            22 March 2022 at 11:20 am

            You listed a bunch of stuff which could only be got by NZers via international trade as if that was the major argument why free trade is a good idea. It isn't the best argument for free trade. The best argument for free trade is that it is the most efficient use of resources AND both sides are better off therefore it lifts incomes overall more than a self-sufficency approach would do even if we WERE able to make all those things here..

            • Ad 1.1.2.1.1.1
              22 March 2022 at 11:51 am

              I'm certainly not claiming that reliance for supply of key items is a good idea.

              It's just a fundamental misreading of the post.

            • lprent 1.1.2.1.1.2
              22 March 2022 at 1:29 pm

              The best argument for free trade is that it is the most efficient use of resources AND both sides are better off therefore it lifts incomes overall more than a self-sufficency approach would do even if we WERE able to make all those things here.

              Your argument has a built-in presumption – that international ocean transport is cheap. That simply wasn't a given in the past nor do I see too many signs that it will be in the future.

              We currently do not have energy efficient technology for delivering bulk international goods across oceans without hydrocarbons or nuclear powered vessels. Both of which are dangerous to continue using over the medium to long term. Oceans at the core of the earth biosphere life cycles and are the worst place to lose radio-active into. Shipping is historically notable for its abilities at sinking.

              I haven't looked up the stats recently, but ocean freight accounts for about 2-3% of all carbon emissions, and aircraft for slightly less. Both on their current usage trajectories (short-term bumps like pandemics aside) are due to increase faster than almost all other carbon emission sources.

              There is currently no tested replacements for fossil fuel ocean surface transport that comes remotely close to the scale and efficiencies of our current cross-ocean shipping. Aircraft are naturally inefficient for any bulk transport. For ocean transport, we'd almost have to drop back to sailing vessels or wood powered steamships to get to anything that is known to work.

              The best alternatives are hydrogen based. Problem is that there aren't any economic scalable sources of green hydrogen (absolutely no point in using 'grey' hydrogen) let alone cheap sources. Nor are there any working plant at anything like the scale for shipping.

              If the costs of transport increase enough, (or even if trade gets disrupted) then "the most efficient use of resources" makes international trade inefficient at providing lower value goods over oceans.

              Then the same economic based argument you used incentives local production.

              It may be expensive, but as it is at present we'd be back in 19th century ocean transport within decades because the economic costs of burning fossil carbon to societies are currently increasing rapidly. Not a lot of point in having cheap goods if all it does it raise insurance premiums dealing with disasters and infrastructural damage.

              In the 19th century, free trade was something that was restricted to the most valuable infrastructure or durable household items expensive luxuries. Most of that was due to the very high freight and stocking costs of small vessels and slow transit times.

              At the incredibly slow rate of change in international transport technology, that is where we're likely to wind up.

              Basically, free trade isn’t a religion to be taken on faith like most Actoids (like yourself) appear to venerate it as.

              It is a matter of cost/benefit economics. That rests on the available technology and in the case of international free-trade, almost entirely on transport technologies..

              • Gosman …
                22 March 2022 at 2:54 pm

                Transport cost is largely irrelevant in any equation involving trade and has been since before Roman times. Humans will develop transport options around trade before they develop trade around transport options. That is the reason why the driver behind the European age of discovery was getting access to markets in Asia via new transport routes.

                • lprent …
                  22 March 2022 at 4:26 pm

                  Tell me, have you ever looked at the detail of what those trade routes actually carried, the costs, and the fragility of the routes. because I think you're simply blowing stupid ignorant horseshit off your fingers.

                  For instance the earliest bulk carriage of grains from Alexandria to Rome that fed that city with extra food? The only thing that made it work was because the Med was a relatively sheltered and moderately bad-weather free in summer. Whenever they wound up with weather or war disrupting the flow, they wound up with famine and political turmoil.

                  What they didn't wind up with was any significant improvement in technology between the time that they started that food route and when it all fell apart.

                  There are some excellent history books that detail the actual operations of organisations like the Dutch East Indies company (superb documented) from the early 1600s to 1800, right down to the contents of the cargo and the prices that they fetched when when offloading. It also shows the times taken for transport and the losses of shipping. They are a revelation to read because they make it clear on what exactly happened in the past.

                  The short answer was that they moved only high value luxuries like spices, the journeys took a year each way, and the losses on the route were intense. Between ~1627 and 1800 after the initial voyages, the technology that governed the ships didn't change very much. All that happened was they sent more ships until they hit the point max returns for minimum costs in a monopoly over.

                  That was exactly the same pattern as showed up on things like the sugar and other commodity routes to the islands and US eastern seaboard. None of them caused any significant change to ocean transport technology.

                  The only major shift in sail transport ocean technology in the 19th century was the 'clipper' ship, which was largely forced by the over-loading of slaves from Africa to plantations. They needed to go faster or they lost their cargo to disease, and that was a late adaption of previous warship technology.

                  Between the late 15th century and the late 19th century, there was little change in ocean transport technology except for some very specific adaptions of military technology.

                  The significant changes only occurred when new energy sources of coal power and then oil power happened.

                  You can get the same kinds of detail when you look at the detail on NZ trade in the 19th and early 20th century. There was a reason why promoting local industry was such a preoccupation for us. The limitations on transport put such a high overhead cost on manufactured goods. It was that major cost after profit – where local importers shoved on monumental markups based on shortages in supply.

                  The only significant technology change since oil powered ships became the norm, was the usage of containers that started in the 1970s. That was only possible because of the energy density of bunker oil was sufficient to push ships for long distance with major amounts of acargo and space.

                  Technology doesn't follow economics in ocean transport. Economics follows the technology. That aplies for almost all

                  Perhaps you should actually study some detail of history, technology and actual economics rather than making those silly broad statements of ignorant faith.

    • Incognito 1.2
      22 March 2022 at 10:30 am

      I think you’re completely missing the point and looking at it the wrong way. What is “detrimental” about being or becoming more self-sufficient and less dependent on others? Let me put it in a different way. What did you do when supermarkets ran out of essentials during lockdowns? Do you have a back-up diesel generator at home? When your internet connection goes down, do you hotspot via your phone? None of these questions necessarily leads to completely dropping everything at the expense of something else, which is the false dichotomy strawman of so many nay-sayers.

      • Gosman 1.2.1
        22 March 2022 at 11:38 am

        What is detrimental is that it generally makes people worse off overall or more precisely less better off.

        • Incognito 1.2.1.1
          22 March 2022 at 12:48 pm

          What is detrimental is crises of any kind such as wars, natural disasters destroying critical infrastructure, pandemics, climate events wiping out crops & harvest, et cetera.

          As usual, your comments are sucking up too much oxygen and you’ve been told repeatedly by others, including the Author of the Post, that you’re misreading and not understanding the Post.

          Lift your game or ship out.

        • Incognito 1.2.1.2
          22 March 2022 at 1:50 pm

          I should have added to the crises examples: a fucking big ship wedged in the Suez Canal for almost a week.

          https://en.wikipedia.org/wiki/2021_Suez_Canal_obstruction#Economic_impact

          • Poission 1.2.1.2.1
            22 March 2022 at 2:00 pm

            will they rename the company Everstuck,as another ship Everforward cannot not go forward or backward.

            https://twitter.com/mercoglianos/status/1503839836360392708?cxt=HHwWiIC-1aGX294pAAAA

            • Incognito 1.2.1.2.1.1
              22 March 2022 at 2:07 pm

              LOL! Was the captain texting while at the helm? They’ll need to call that little digger again.

              • KJT …
                22 March 2022 at 6:30 pm

                It appears it was the pilot.

                The "Captain" of a container ship, does not have "the con" in the canals, or indeed most ports.

                Ports, for insurance and legal reasons, would rather have their own staff knocking over their container cranes, or canal edges.

                • Incognito …
                  22 March 2022 at 7:43 pm

                  I stand corrected, thanks.

                • Christopher Randal …
                  22 March 2022 at 8:02 pm

                  Pilot's suggestions, captain's orders

                  https://en.wikipedia.org/wiki/Maritime_pilot

                  • Whispering Kate …
                    23 March 2022 at 3:24 pm

                    I believer the correct terminology is – Master's Orders to Pilot's Advice.

                    Technically in the Merchant Navy we do not have Captains we have Masters – from the horse's mouth – my partner a Foreign Going Master Mariner.

                    • KJT …
                      23 March 2022 at 5:22 pm

                      CTMO on PA.

                      Yes. Master, is the preferred term.

                      Historically the "Master" was the person who knew what he was doing sailing the ship. From a "Master of their trade" who learnt through a long and involved skilled apprenticeship.

                      The "Captain" was the fop who had bought a commission

                      Captain is a courtesy title only used for Masters who have/are commanded a ship. The usage came from the Navy, where anyone in charge of a vessel, even a subby in charge of a patrol boat, is the “Captain”.

                      Occasionally someone like Cook held both positions, due to obvious competence.

  2. Blazer 2
    22 March 2022 at 8:52 am

    I'm not so sure that….millionaires…worry too much about the price of…petrol!laugh

    • tsmithfield 2.1
      22 March 2022 at 10:55 am

      It doesn't take much to be a millionaire these days. Many who own their own house and are mortgage free are probably a millionaires these days. So, a lot of "millionaires" probably care more about the price of petrol than you think.

      Anyway, a lot of people who are millionaires get that way by being frugal with their money, sometimes to the point of being obsessional about it.

      For instance, I had a friend (deceased now) who lived in that way. He still owned a Datsun 120Y he purchased new in the 1970s. He eventually de-registered that and went everywhere by bus. And he would do things like go to the library to read the newspaper so he didn't have to buy one. Yet, he was worth millions.

      A bit sad though. The reason he died was that he got cancer. There was a test available, that if taken much earlier, could have saved his life. But his doctor assumed he wouldn't be able to afford it so never offered it to him.

      • Blazer 2.1.1
        22 March 2022 at 11:08 am

        Very good!laugh(not laughing at the demise of the 'Scotsman' btw)

      • pat 2.1.2
        22 March 2022 at 6:02 pm

        "A bit sad though. The reason he died was that he got cancer. There was a test available, that if taken much earlier, could have saved his life. But his doctor assumed he wouldn't be able to afford it so never offered it to him."

        How old was he when he died?

        The statement that "it could have saved his life" comes with the inference that he could be immortal but for his choices…think about it.

        Most make decisions in the full knowledge of their mortality.

    • Macro 2.2
      22 March 2022 at 11:20 am

      I'm not so sure that….millionaires…worry too much about the price of…petrol!

      Only how it affects the value of their stock.

  3. roy cartland 3
    22 March 2022 at 10:12 am

    So just because we don't produce the goods we like now, means we can't? Same for infrastructure and systems, like transport?

    It's fine to say it, we just don't want to. frown

    • Gosman 3.1
      22 March 2022 at 10:18 am

      More like it makes little sense to try to do so.

      • roy cartland 3.1.1
        22 March 2022 at 10:56 am

        Wouldn't work so don't try. What is being left unsaid there?

        • Gosman 3.1.1.1
          22 March 2022 at 11:15 am

          Not that it wouldn't work just that why would you want it to work? It makes little sense.

          • Macro 3.1.1.1.1
            22 March 2022 at 11:42 am

            When I was at Staff College, one of the considerations for assessing a country's ability to provide an effective defence was its "national power" ie its ability to to sustain itself when under attack. We see a prime example of this right now in Ukraine. Obviously Putin completely overlooked Ukrainians ability to sustain a period of outright attack.

            But to get back to the topic at hand. Just what is NZs ability to to sustain itself if for some reason our supply chains from offshore were suddenly cut off? Take oil for example. We are told that there is sufficient stocks available for 12 months. But that is far from the truth as up to 1/3 of that is in carriers on their way to the country and another large proportion is in overseas promises of supply.

            The decision to close Marsden point is a huge blow to our country's national security.

            • Subliminal 3.1.1.1.1.1
              22 March 2022 at 12:42 pm

              Marsden Point closure is a travesty. Just in time as a business strategy is done and dusted for the forseeable. It requires a lot of lubrication and this has been removed by numerous shocks that make streamlined "efficiency" a recipe for disaster. We now need the robustness of "inefficient" strategy that give the strength to endure the increasing number of shocks that will be encountered as climate change ratchets up. Business will have to hold more stock and we will have to get better at repairing what we have. Being totally reliant on refined product is going to bite hard. The fact that it may cost a little more to retain this capacity is a very weak argument for letting it go.

            • Gosman 3.1.1.1.1.2
              22 March 2022 at 2:43 pm

              The UK during WWII was not able to sustain itself while under attack and had to rely heavily on getting supplies of food, raw materials, equipment, and even manpower from overseas. They still managed to win with this massive handicap.

              • Macro …
                22 March 2022 at 4:42 pm

                Yes – but it wasn't just the UK involved was it – it was the rest of the commonwealth of nations and eventually the US, and at a great loss of human life and material. Even so, the UK had a copious supply of coal for energy, and food (remember the land girls?) and even then they could continue to manufacture aircraft and weapons – despite the air offensive from Germany. Its infrastructure and overall National power help to maintain that resilience. The same with Germany. The dam buster raids on the hydro dams were aimed at one main objective – to remove the ability of Germany to power its manufacturing plants.

              • Obtrectator …
                23 March 2022 at 10:42 am

                The little sideshow that started in June 1941 on Germany's eastern frontier was of some help as well.

          • roy cartland 3.1.1.1.2
            22 March 2022 at 2:07 pm

            You'd want it to work to cut down on the transport pollution costs, insulate NZ from external shocks, provide the jobs that always seem to be lacking, trade on our terms not the "market"'s.

            • Gosman 3.1.1.1.2.1
              22 March 2022 at 2:45 pm

              There is no such thing as "trade on out terms". The concept is nonsensical.

              • roy cartland …
                22 March 2022 at 2:51 pm

                Hhhhhhh. Trade on our terms then. I think I agree with Incog, that you're refusing to just say: "it's not impossible, I just don't want to, because it's more difficult, or it's a change, or I'd have to give some things up, or something…". Which is essentially what my first comment was saying.

                • Gosman …
                  22 March 2022 at 2:57 pm

                  Sorry I was trying to edit out to our. The concept of trading on "our" terms is nonsensical unless you threaten the other party with physical violence. Then it really isn't so much as trade as extortion.

                  • Incognito …
                    22 March 2022 at 3:13 pm

                    What kind of moron absurdum is this? Extortion and physical violence?

                    You know it is about choices, right? Choices that you poo-poo because a) you don’t understand, and b) you think they don’t fit your narrow ideological dogma.

                    • Gosman …
                      22 March 2022 at 3:21 pm

                      Trade is a voluntary agreement between two parties ergo ANY trade from both sides is done on "Our terms".

                    • Incognito []
                      22 March 2022 at 3:35 pm

                      Hence the need for extortion and physical violence? Are you self-trolling or self-gaslighting? Maybe you want a separate personal thread where you can comment, then edit out your mistakes, and then argue for and against them, using upper case words, with yourself, knowing that your Right is right and your Left is wrong?

                    • Gosman …
                      22 March 2022 at 4:28 pm

                      No, I pointed out that as both sides in ANY trading situation are effectively doing it on "Our terms" it is essentially nonsensical to state we want to be able to trade on "our terms". It is like stating I want to ensure any physical exertion I do is done while I am alive. Being alive is vitally important to the physical exertion I do but it is also a given and therefore it is nonsensical that I mention it.

                    • Incognito []
                      22 March 2022 at 5:26 pm

                      You pump iron to stay alive? How much do you squat, on your terms? Is your favourite song by the Bee Gees? Can you remember what you had for breakfast? Your comments are essentially nonsensical, aren’t they?

                  • roy cartland …
                    22 March 2022 at 4:15 pm

                    Come on, "our terms" means if we want to (if it's in our interest); not because we have to (or the sky will fall in, or ThE eCoNoMy or whatever). That's all, no threatening or violence, from or at us. Even in an economic sense.

                    • Gosman …
                      22 March 2022 at 4:23 pm

                      Again – There is no "because we have to". If we don't want to trade then we don't need to trade.

  4. tsmithfield 4
    22 March 2022 at 10:28 am

    A good article thanks Advantage.

    This Financial Times article argues for three potential scenarios to end the war. The most likely is a long grinding war. The second is a peace settlement. And the least likely outcome is a coup against Putin.

    https://www.ft.com/content/63fc662c-098d-4263-b69b-34d55c9f5e0a

    So, I think we should expect a long war. Thus sanctions are likely to be in place for a long time.

    Probably from the world's immediate economic perspective, the best scenario would have been a quick Russian victory. In that scenario, I expect the west would have imposed some sanctions on Russia and huffed and puffed as usual, and life would have carried on as usual for most of us until the next crisis.

    But the extrodinary resolve of the Ukranian people, and the inspiring communication from Zelensky has brought the world much more in behind Ukraine.

    Also, Ukraine is indicating that Russia's current strategy of intimidation and psychological warfare against the Ukranian population is unlikely to work. For instance, Ukraine is refusing to surrender Mariupol to the Russians despite the ultimatum just given by the Russians:

    https://www.ft.com/content/5cf1d56a-1474-482b-be7c-5f928155c4a6

    Thus, for the Russians to take Mariupol they will have to engage in brutal house to house combat that will be very costly to them in lives and resources even if they do end up taking the city.

    Mariupol is a city of only 400000, so is quite small compared to the larger cities in Ukraine. Yet Russia is really struggling to take what should be a relatively easy objective for them.

    Thus, if Russia wants to continue on, it is likely to be a very lengthly, costly campaign to subdue Ukraine, in the unlikely event it is even ever able to do so.

    Thus, we should be prepared for a prolonged energy crisis.

    While a quick win was probably best for the world in the short-term, I think this current situation is giving Western nations pause to reconsider their over-reliance on potential future enemies.

    So, some return to self-sufficiency could be a potential outcome of all this. For instance, a lot of our local manufacturing has now been outsourced to China. Perhaps we might see more of our local manufacturing returning.

    Or companies that currently contract manufacturing to China might start seeking alternative cheap labour economies such as India or the Phillipines.

    Either way, I think there will be fundamental changes going forward from all this. A positive note could be an accelerated move away from fossil fuels and a move to renewable energy.

    • lprent 4.1
      22 March 2022 at 1:40 pm

      This Financial Times article argues for three potential scenarios to end the war. The most likely is a long grinding war. The second is a peace settlement. And the least likely outcome is a coup against Putin.

      That was my assessment at the start of the invasion, even before I saw the level of Ukrainian resistance, or the sanctions regimes.

      I also feel like a peace settlement will just be a prelude to another conflict. Who in the hell could trust Russia for the next decades. Ukraine isn't going to disarm, it is more likely to rearm. Even it doesn't, then every state close to Russia will.

      Aggressive militaristic states with form for unprovoked invasions aren't pleasant neighbours. They historically also view peace settlements and formal agreement as not something they have to follow.

      • tsmithfield 4.1.1
        22 March 2022 at 2:36 pm

        I think Russia is going to come out very weak from this conflict as the ongoing cost of the conflict combined with the effect of sanctions is going to ruin them economically.

        Did you see this report? On the face of it, a Russian tabloid inadvertantly published Russian casualties as 10k KIA and 16k WIA. The figure was quickly taken down as it obviously wasn't good for the Russian narrative.

        https://www.forbes.com/sites/masonbissada/2022/03/21/500-or-10000-deaths-russian-media-finally-seems-to-report-dire-troop-casualty-numbers-and-then-deletes-them/?sh=23cde2a823d1

        I assume these losses don't account for the soldiers that have deserted either, and if they are the Russian figures, then the true figures could be higher.

        Also they have apparently lost quite a few of their generals.

        These losses are huge. They could have lost around 15% of their fighting force that went in one way or another, plus enormous amounts of equipment.

        If things keep going this way, they could end up with potentially 50k casualties including KIA and WIA.

        This is just sending troops into a meat grinder. A lot of these are conscripts, and photos I have seen a lot of them look to be just teenagers.

        I think this sort of callous action by Putin showing such disregard for his own troops is a crime against humanity in itself.

        • Blazer 4.1.1.1
          22 March 2022 at 2:55 pm

          With the greatest respect your discussion seems to be de railing the thread topic.

          • tsmithfield 4.1.1.1.1
            22 March 2022 at 3:08 pm

            With the greatest respect, I was replying to Iprent, and I don't think you are a moderator.

            But if it is an issue, I am sure it will be pointed out to me by someone more official.

          • Ad 4.1.1.1.2
            22 March 2022 at 6:36 pm

            I'm deliberately doing posts that are broad and baggy at the moment to scoop all comers into a single room where possible.

            • tsmithfield 4.1.1.1.2.1
              22 March 2022 at 7:10 pm

              Thanks. Other than the reply above which is a little bit off topic, I am trying to keep to the parameters of your post, which I thought was very good.

            • gsays 4.1.1.1.2.2
              23 March 2022 at 5:44 am

              Without wanting to appear like I am telling people what to do, it feels like we might be getting near the time for a separate post for 'Russia/Ukraine' a'la 'Wellington Protest'.

              The important angle in this post, IMO, is the lack of resilience Aotearoa now has in regards fuel supply and the lack of courage and imagination from our politicians. Hiding behind the skirts of 'official's advice'.

              A reasonably well connected buddy says the important, hard to replace infrastructure is what is being removed from Marsden Point first.

  5. Blazer 5
    22 March 2022 at 11:01 am

    '. The percentage of electric cars in the entire fleet is going to stay under 10% for well into the next decade. New Zealanders apart from a diligent tiny minority are utterly oil people.'

    I would bet any number of chocolate fish that you will be way,way wrong on this prediction.

    Takeup of EV's is accelerating around the world.

    Look at Norway-

    Electric cars hit 65% of Norway sales as Tesla grabs overall pole | Reuters

    NZ has plenty of hydro capacity.

    A determined Govt can push E.V uptake big time in a decade.

    Look at all the coy's in China manufacturing E.V's.

    Here's the full list of the best-selling electric cars in China for 2021 (cnbc.com)

    • Ad 5.1
      22 March 2022 at 11:53 am

      Your optimism is admirable but goes against our trends here.

      We didn't have the Howl of a Protest in favour of electric vehicles. Or even a counter-protest of any note.

      • Blazer 5.1.1
        22 March 2022 at 12:10 pm

        Trending up…

        According to MoT, as at June 2021 there are: 27,925 EVs in NZ.

        Infometrics-'If you want to get a glimpse at what this means in the shorter term, according to our estimates, these projections suggest EV sales will almost double in 2018, and reach around 11,000pa in 2019.

        Still a small % overall of the total fleet,but promising uptake.

      • barry 5.1.2
        22 March 2022 at 1:38 pm

        In 10 years you won't be able to buy a new model ICE vehicle. Some manufacturers will keep making the old models for fossil markets like ours.

        In 20 years you will find it hard to get petrol.

      • KJT 5.1.3
        22 March 2022 at 6:11 pm

        Most New Zealanders are not overly demonstrative people.

        We vote with our feet, like the 95% that quietly got vaccinated.

        And the people I know that you would expect to be right wing NACT voters, quietly buying electric cars.

  6. alwyn 6
    22 March 2022 at 11:20 am

    You make this claim about the oil industry in New Zealand.

    " Ampol, an Australian company, now own over half of all petrol and diesel distribution in New Zealand and has also shut down local refining capacity as it also owns Marsden Point (Hat Tip to Blazer)."

    Where do get the information to back up these claims? How can you possibly get that "over half" number?

    And how do you come up with your claim that Ampol "owns" Marsden Point.

    I think these claims you are making are simply not correct and I would love to see how you can justify them.

    • Ad 6.1
      22 March 2022 at 11:49 am

      Z covers the old Shell and Caltex stations – that's your 55% share.

      It's a part ownership of the refinery.

      There's no chance it will be converted to biofuels now.

      Marsden Point's Fuel Company Owners Split On Biofuels | Newsroom

      • alwyn 6.1.1
        22 March 2022 at 7:16 pm

        "It's a part ownership of the refinery.".

        Indeed it is. In fact it is 12.9% which isn't even the largest shareholding and certainly isn't anything close to being a controlling one. You really can't say "It owns Marsden Point" can you.

        "that's your 55% share.". I can't find anything that would show that it's share of the trade is that much. Where does the 55% come from.

        By the way. Ampol doesn't actually own Z does it? It was given permission to buy it last week but all it has done at the moment is to offer to buy the shares. The shareholders have to agree to sell. I agree that it will almost certainly go through but it hasn't happened yet. Frankly it has been a lousy investment for anyone who was sucked into the IPO back into 2013. when Infratil and the New Zealand Super Fund cashed out so I imagine they will accept and get out.

        • Ad 6.1.1.1
          22 March 2022 at 7:42 pm

          The shareholding is 15% currently in the refinery, but they get the critical Board vote, and BP is in lock step with everything Ampol wants on that Board. They've jointly agreed to get out of refining, so the importing duopoly (apart from Gull which gets spun off) can rort as much as they want.

          Depending on who you ask, it was 45% even before they bought Caltex stations.

          Z sales steady but market share falls | Otago Daily Times Online News (odt.co.nz)

          5fea4710-d251-47c0-9f0e-0b1382bb692b (z.co.nz)

          There were claims that the Caltex takeover only got them to 50% control of retail. No one believes it except the Commerce Commission.

          As of 5 days ago the Commerce Commission has given clearance for Ampol to buy Z.

          Ampol gets clearance from Commerce Commission to buy Z Energy | RNZ News

          Infratil and NZSuper sold out in 2013.

          • alwyn 6.1.1.1.1
            22 March 2022 at 8:33 pm

            Thank you for the link to the ODT. I see where the 55% comes from but I think that the numbers on the top left circle are wrong. It is labelled as being Z 55%, Caltex 19% and others as being 26%. I would say the 55% and 26% have been transposed. Look an the size of the segments and remember that "other" comprises Mobil, BP and all the rats and mice.

            26% for Z and 19% for Mobil would tie in with the claimed 45% total claimed in the blurb to the left of the diagram, and with the segments sizes as illustrated.

            On the other hand I can make no sense at all of the right hand diagram. I doubt if anyone can.

            "so the importing duopoly". It isn't just the 2 of them. You are overlooking Mobil which is, in fact, the biggest shareholder in the Refining Company. Z and BP only hold about 23,4% of the shares.

            "Infratil and NZSuper sold out in 2013". Yes that is what I said, isn't it. They cashed out in a very big way and left the people who bought into the IPO hype holding the rather rancid smelling baby.

  7. Barfly 7
    22 March 2022 at 11:56 am

    Hehe I think Putin and Saudi Arabia need to beware of the law of unintended effects. The Ukranian War is going to drive massive strides in renewable energy in Europe and likely elsewhere as well. The oil and gas market may look enormously different in a few short years with the current massive incentive for the world to free itself from Russian fossil fuels – Putin could be an unknown "hero" in fighting climate change LOL. devil

  8. Tony Veitch (not etc.) 8
    22 March 2022 at 1:05 pm

    Ad, your post highlights (again) the catastrophe which was the 4th Labour government.

    Douglas, Prebble, et al should be all publicly castigated for devastating local manufacturing!

    • Gosman 8.1
      22 March 2022 at 3:05 pm

      Yeah because making overpriced poor quality television sets and assembling cars that were actually created in another country originally made a lot of sense / sarc.

      NZ's manufacturing industry is bigger than France and the UK and about the same as the USA in terms of size compared to the rest of the economy. Are they all screwed as well?

      https://www.mbie.govt.nz/assets/f0f81b6194/new-zealand-manufacturing-sector-report-2018.pdf

      • Poission 8.1.1
        22 March 2022 at 3:48 pm

        A lot of the associated industries actually made parts in NZ and exported components to Australia and Asia for their manufacturers.

        The big shakeup for manufacturing also came with deregulation,wildwest financial markets and the creative destruction of generations of accumulated wealth via the stockmarket,and subsequent firesale of assets to overseas.

        This destroyed a substantive part of the local economy's ability to substitute locally for imports.

        in Australia there was another test,prior to an asset being sold offshore, its strategic significance which seems to be lacking in NZ.

        • Blazer 8.1.1.1
          22 March 2022 at 4:10 pm

          'strategic significance' seems to have been overlooked in the 2015…leasing of Darwin port to China for 99 years.

          Not so happy about it…these days!

          • Poission 8.1.1.1.1
            22 March 2022 at 4:18 pm

            The balanced the risk problem, by having local oversight by the Uniformed Branch of the Federal reserve.

            https://en.wikipedia.org/wiki/Marine_Rotational_Force_%E2%80%93_Darwin

            • Blazer 8.1.1.1.1.1
              22 March 2022 at 4:31 pm

              How about this one…

              'The NSW government privatised the Port of Newcastle in 2014, with an Australian-Chinese consortium paying $1.75 billion for a 98-year lease. The Chinese stake is held by a subsidiary of China Merchants Group, which was founded in Hong Kong in 1872 and nationalised in 1999.'

              • Poission …
                22 March 2022 at 4:44 pm

                Notice how they come with leases, and not title and there will be accompanying force majeure clauses in there.

      • pat 8.1.2
        22 March 2022 at 6:08 pm

        Quality wasnt so much the issue, rather it was price…the quality of NZ produced goods was largely comparable if not superior…price was the the issue, especially when protections were removed….and the debate about this has validity on both sides, as long as you have the option.

        We find ourselves in a place without options.

    • pat 8.2
      22 March 2022 at 6:38 pm

      It highlights the role of bean counters (treasury) who could not see past the immediate financial cost and ignored everything else.

      We got a lot of things wrong when we last transitioned , and I suspect we will do so again…though this time we will will likely pay an even higher price as difficult as that may be to believe.

  9. barry 9
    22 March 2022 at 1:34 pm

    It is called "chickens coming home to roost". The earlier oil shocks showed the danger of relying on oil. In 1990 the Kyoto agreement agreed to stop using oil. Instead we have doubled and tripled down on it.

    Our response to a housing crisis is to build houses in remote locations, that will keep us oil dependent for another generation.

    Think Big failed. Maybe we need think small. We are a trading nation, and that shouldn't stop, BUT it is a travesty that we can't feed ourselves.

    We can't grow grains to compete with Russia/Ukraine, but we can grow enough to keep us fed, and import what we need to feed well.

    We don't drill oil here (and coal is killing us), but we can develop our domestic energy sources enough to sustain us.

    Yes, we have a lot of money invested in ICE vehicles, but using them is destroying the liveability of the planet. Until we can transition to EVs and move closer together so that we don't need them we are doomed by our own earlier shortsightedness. The sooner we can ditch the better for us all.

    Get active for your transport it will save money, look after the planet, and keep you healthy.

  10. tsmithfield 10
    22 March 2022 at 4:19 pm

    One thing that could cause a major and ongoing spike in oil prices is if Russia decides to use a tactical nuke in Ukraine, possibly as some sort of demonstration of their willingess to use them. Not necessarily a city killing one. But they do have smaller nukes for tactical purposes. The objective being to scare Ukraine into submission.

    This possibility is all the more real now because Russia is not doing very well with conventional means. The video below goes into all this further.

    The question is, what would Nato's response be to such a scenario?

    It could involve Nato seeing no option but to get directly involved militarily.

    But it may involve a major ramp up in sanctions. For instance, Europe may see no option but to stop the flow of Russion gas. This could have major consequences for world energy prices in the long term. Europe may be able to survive the lack of gas in the short-term given that Europe is now heading further into spring and weather should be getting warmer.

    But, the medium to long term need for energy in Europe will be an issue for some time yet, so could affect our own energy situation.

    I truly hope we don't end up there. Because it would truly become a frightening scenario. Hopefully this is where China can talk some sense into Putin.

  11. Ad 11
    22 March 2022 at 7:16 pm

    $150 to fill up the Peugeot 508 with diesel this evening. Argh.

    • Poission 11.1
      22 March 2022 at 7:34 pm

      Diesel is globally a substantive problem.Due to under investment in production as a response to clean air regs (especially in europe) and an increase in freight volumes globally.

      https://twitter.com/JavierBlas/status/1505866056975462405?cxt=HHwWisC51enM9OUpAAAA

    • pat 11.2
      22 March 2022 at 7:35 pm

      nevermind the fill price,,,its the RUC that really hurts.

      • Ad 11.2.1
        22 March 2022 at 7:45 pm

        OMG did you see the mess that NZTA made this morning of this govenrment's decrease in fuel tax?

        It's completely muddied any temporary savings with a permanent (proposed) hike in fees and charges for licensing and commercial charges.

        Giveth with the one hand for 3 months, taketh away permanently with the other.

        • pat 11.2.1.1
          22 March 2022 at 7:48 pm

          No i havnt, but I did buy some RUC yesterday that was horrendously more expensive than 6 months ago….and yes I know I should not be surprised given CC, but it still hurts.

        • Poission 11.2.1.2
          22 March 2022 at 8:22 pm

          The biofuel mandate which comes in Jan 1,will add 5c for petrol and 10c for diesel that was estimated in dec and does not include the for war levy on AG stocks and oil.

          • Ad 11.2.1.2.1
            23 March 2022 at 6:29 am

            That is a political bomb.

            Especially given Luxon is promising to scrap the Auckland Regional Fuel Tax.

            What do you predict will happen to fuel prices as a result?

            • Poission 11.2.1.2.1.1
              23 March 2022 at 12:01 pm

              Easily double the cost for petrol to 10c and bio diesel 25c due to massive shortage in feedstock.

              You only need to look at how Z mothballed its Wiri Biodiesel plant due to the high cost of tallow (forced by the increased demand for soap etc)

  12. tsmithfield 12
    22 March 2022 at 9:15 pm

    There are several emerging technologies that convert C02 to fuel. For example, this technology from NASA that uses solar energy to power the process:

    https://technology.nasa.gov/patent/TOP2-160#:~:text=NASA%20has%20developed%20a%20new,is%20powered%20by%20solar%20energy.

    Or this project that Bill Gates is investing in:

    https://www.globalcitizen.org/fr/content/bill-gates-carbon-emission-engineering-co2/

    The effect of these projects is to basically recycle C02 back into fuel so it becomes a continual loop.

    If these type of technologies can become economically viable, it could provide a much faster fix to the C02 problem as the fuel could be applied to existing vehicles rather than waiting for electric vehicles to slowly replace petrol and diesel vehicles.