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:
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.