Day of rage

Written By: - Date published: 9:04 am, March 7th, 2011 - 23 comments
Categories: energy, International - Tags: , , ,

You know things are bad when the AA is saying that high petrol prices are here to stay and there needs to be more investment in public transport. Global supply and demand is so tight that tiny disruptions are causing massive spikes. What if Saudi Arabia erupts?

The pat response from drivers’ organisations during oil price spikes is usually to call for reductions in tax on petrol. Which is stupid, because the government has to make up the by taxing us more somehow else, cutting spending, or borrowing more without the fundamental problem being solved. It seems the AA now gets this. Speaking about current prices and the likelihood they will exceed the previous record, the AA spokesman said:

“We have to get used to the idea that as global demand increases and supply doesn’t, we are going to be facing these kinds of price fluctuations, and whenever any little crisis comes along it’s going to lead to price spikes. The only way we can manage that is by reducing our consumption.”

Btw, what is up with the Herald journo who wrote that article attributing the 2008 record price to Hurricane Katrina, which happened in 2005?

I guess it’s part of the media’s general unwillingness to examine the fundamentals underlying the oil price situation. Of the several articles on petrol prices in the Kiwi media over the last few days, none mention peak oil, except for the AA spokesman’s allusion to it. I guess it’s far easier, and more reassuring, to blame one-off events than face the realities of peak oil.

Previously, the Libyan crisis would not have affected oil prices much. The country produces just 2% of the world’s supply, which could easily have been covered when there was plenty of surplus production capacity. Now, there is claimed to be just 5% extra production capacity worldwide, most of it lower grade crudes that not all refineries can handle and which produce less useable oil. Libya and demand growth would eat up most of that spare capacity alone, if it even exists. Many analysts think Saudi Arabia, which claims 90% of the spare capacity, is exaggerating and can’t supply an extra 4 million barrels a day even if it wanted to, and why should it want to?

Nonetheless, the only reason that oil prices haven’t gone absolutely stratospheric is the hope that the Saudi spare capacity will be there when needed. Which makes stability in the Kingdom vital to the global economy. And that’s why everyone in the know is holding their breath for Friday, the Muslim holy day when a ‘ day of rage’ like those that have started revolts across the Arab world is planned for Saudi Arabia. The regime has sent ten of thousand of extra security troops to the oil-producing Qatif region, which is populated by Saudi Arabia’s discriminated-against Shi’ite minority, to try to smash any uprising. If the Saudi people rise up for change, and I fully support them in doing so, and especially if the Shi’ite oil workers strike, then you’ll look back on the days when you could get petrol for $2.10 a litre with fondness.

I like to end these oil posts with a bit on what we can do to ease the problem. The key is to lessen our reliance on oil. That means no more white elephant motorways. It means investing in public transport, which should be electrically-powered where possible. It means that the rebuilding of the Christchurch CBD needs to have low-energy use at the heart of its design – zero-energy buildings, pedestrian and public transport-centred layout, mixed commercial and residential space to reduce commuting.

23 comments on “Day of rage”

  1. Peter Hollis 1

    We may as well start mining more land as well as we will no longer be able to afford driving out to see it, at least we can use the minerals drawn out of the ground to help with our self sufficient ways we will need to head down. With low oil does this mean we can burn more coal since CO2 emissions will reduce? In the future it may be harder to get the rare earths for wind turbines & electric cars.

    [lprent: Just realized that you’re on the permanently banned list. I’ll leave this message in because it has had responses. ]

    • You are taking the micky arn’t you Peter. Do you have a coal fired car?

      • Colonial Viper 1.1.1

        Back to good ol’ steam power.

      • Robert Atack 1.1.2

        I don’t think Peter was saying we could use coal to run cars, except via electricity(?), and then he rightly pointed out limits to growth re – rare earths for wind turbines & electric cars.
        >With low oil does this mean we can burn more coal since CO2 emissions will reduce?<
        As Lord Oxburgh says 'we' are going to burn the coal anyway http://www.youtube.com/user/oilcrash1#p/u/45/XgbqAtgmALo unless we have a sudden reduction of people living in cities then as we go deeper into the peak oil cliff we will burn as much coal as we can get out hands on, thus sealing our collective doom. Fortunately 'if you think there is a bright future' coal mining is dependent on oil, so peak oil is also peak coal, or darn close to it.
        We will be burning tyers to keep warm, just like in some places and disparate times in Africa they burn cow dung to cook with, well it will be the same with us and whatever we have to burn, as we see with Christchurch, when the system goes tits up (no water flowing through the tap) then the numbers mount up quite fast, unplug New York or any city and see how fast we lose our humanity.
        I was laughed at for suggesting we should look to Cuba to learn what the other side of peak/crash looks like, and how to maintain our humanity, as we slide down the razor blade.

    • bbfloyd 1.2

      panic over peter. i’ve contacted the doctor, and he will be round with some nice men to ensure your sedatives are administered as painlessly as possible… now you can have a good relaxing lie down.

  2. When we hit $2.00 about three years ago every ‘reputable’ state forecaster was saying it was merely a one-off blip and we would be back down to not much above half that within a space of months. (Although, interestingly, private oil company forecasters were just then starting to talk peak oil.) The price has never dropped significantly since then. And, now that it is back at $2, there is nowhere near the outrage or excitement that there was last time – because everyone knows $2 is not a peak, it is the new ‘minimum base-line’. Meanwhile Treasury and MED are still refusing to talk about peak oil as a possibility, let a lone a certainty that we need to prepare for – it is irresponsible that those two ministries do not give their ministers proper advice.

  3. Bill 3

    Question. If you are aware that something is happening that has the potential to undermine the basis of privilege and power that you have in relation to society’s majority, do you…

    a) acknowledge that something bad is happening and risk losing your privilege and power in the short term?

    or

    b) put on a public face of ‘business as usual’ while using the time bought by such a strategy to lay the groundwork that might preserve your position of power and privilege in the long term?

    IMO, b).

    So harping on to ‘deaf’ ears hoping those between those ears will formulate solutions and hand them down is a naive and futile excercise.

    • Colonial Viper 3.1

      Many with the basis of privilege and power will see Peak Oil as another money making and asset grabbing opportunity. Just like they see wars and earthquakes as money making and asset grabbing opportunities.

      Their world view:

      Higher volatility = faster profits.

      And some of them may not realise until too late that (as DTB might put it) money is not a resource. And that there are some situations where even a million dollars will not get you a glass of clean water.

      • M 3.1.1

        CV, couldn’t have put it better myself.

        Had a cup of tea with my righty debater friend but he still does not get that PO will be ever more vicious. He still clings to the idea that spare capacity can be found if demand is great enough and the technology for deep sea drilling will become better, faster -sounds like the bionic man.

        Realising I was chasing my tail, I said we’d have to agree to disagree and I think the only thing that will really drive the point home is the increased cost of his commute or worse unavailability of of fuel which even with his considerable resources he will be unable to obtain.

        • Lanthanide 3.1.1.1

          I’m not convinced that we have peaked. We might see flows up over 90, maybe even 95m/b day. Timeframe for that would probably be in the next 5 years or so.

          I think oil would be pushing at $200/b though, and the downslope would be significantly sharper (as it’s just moving future production earlier in time).

        • Colonial Viper 3.1.1.2

          He still clings to the idea that spare capacity can be found if demand is great enough and the technology for deep sea drilling will become better, faster -sounds like the bionic man.

          Yep, its the neo-classical belief in the price/supply curve. As long as the price of something keeps going up, they think that supply will keep going up. There will never be a shortage as long as people are willing to pay what it takes.

          But they’ve not realised that even as trillions in new money is printed, no new oil is being created.

          And they’ve forgotten an even older and truer rule. That sometimes you can’t have the thing that you need or want, for any amount of love or money.

          • George.com 3.1.1.2.1

            Whether we are at a peak of production or somewhere near to it is one point of debate. I am not qualified to state one way or the other. I doubt few people are, they can estimate, but we may only likely know when looking back in time. There could be the possibility, given a high enough price of oil to produce speculative exploration, that a number of large oil fields will be found that can substitute for the decline in the older wells and maintain increased demand for a period of time. I believe such large oil fields will be in expensive and difficult to extract places however. The cost of extracting the oil will be high. The matter at what cost for oil globalised free market economies can operate then becomes the question.

            So, the question of peak oil means two things to me. It could be taken to mean a genuine peak when we have actually exhausted 1/2 of the worlds oil reserves and what comes next is a downward slide. It could also be taken to mean a situation where oil is still available to replace what is being drawn down and meet increased demand but at a far higher cost. Which one? Maybe an academic question for peak oil experts to argue over. Either scenario, which ever we are in, spells danger to me.

    • just saying 3.2

      b) put on a public face of ‘business as usual’ while using the time bought by such a strategy to lay the groundwork that might preserve your position of power and privilege in the long term?

      The most cold-blooded, and I suspect Key might be mainly in this camp, are straight out lying about the ‘it’s gonna be fine – “business as usual”‘ while plotting and gathering… there’s probably a clear plan. Others lie to themselves most of the time, as well as to you and me, maybe paying others to say what they want to hear, often being downright self righteous with religion and/or social darwinism.

      But there are different kinds and levels of privilege, and it seems to me most people are lying to themselves and/or others about what’s going on,at least part of the time, often while trying not to be seen to be grabbing and greedy.

  4. exit lane 4

    The AA in the peak oil camp ! without use of the “P” word of course. But as you allude to the response from our media has been pathetic. Meanwhile thousands of articles have appeared in the international press making the link between an oil shock and a renewed global recession
    http://oilshockhorrorprobe.blogspot.com/2011/02/starting-to-join-dots-finally.html

    Is it something about our isolation that so many think we are immune here, or is it the good ole sheel be right attitude?

    But the real villans are BOTH major party’s failure to plan for and mitigate against the impacts of oil shocks which have been thoroughly predictable.

    In an election year where are the policies from not just the Government but from Labour to aggresively front up? We need to act on a war footing. The last 2 weeks in Christchurch show that when confronted with adversity we can respond.

  5. Deadly_NZ 5

    Damn may have to sell the car I can’t afford petrol now let alone reg and wof and it just keeps on going up. And i have just had the cam belt done too, more money wasted 🙁

  6. spam 6

    How do you propose that 1.) we generate sufficient electricity for electric cars, and 2.) increase the electrical infrastructure to handle the increased loads?

    • Colonial Viper 6.1

      Who is going to buy me a new electric car? Because I’m definitely not shelling out $65K for one, and neither are most people that I know.

  7. I remember about 6 years ago, when petrol hit $1.20 per litre and we were all aghast.

    Someone commented on another forum, that in the not so distant future petrol prices would skyrocket further, and we’d all reminisce about the days when petrol only cost $1.20 per litre. He said that if we were to hear of a petrol station offering gas at $1.20 a litre we’d all queue up for miles to get it.

    That day is soooooo here.

    I wonder how long til we look back on the good old days when 91 cost “only” $2 a litre.

    • ianmac 7.1

      In Britain last year the petrol was as high as $NZ2.70 pl. Lower in some districts.

    • Bright Red 7.2

      the price last week was $2.06 on average but the importer margin (how local distribution system is funded and local profits) was only two thirds of normal. Without things getting any worse – just on the price rise so far this week and the exchange rate drop, and the importer margin needing to return to normal – the price could lift to $2.15 this week.

      captcha: requirements

  8. Irascible 8

    This talk examines the problems of our current economic system / policies and illustrates for NZ how Key & English & Hide are taking us down the wrong path with their economic policies.

Links to post

Recent Comments

Recent Posts

  • Government’s data-for-funding backdown embarrassing
    The Government’s U-turn on their shambolic attempt to collect private client data from social services is an embarrassment for a senior Minister, says Labour’s Social Development spokesperson Carmel Sepuloni. “After months of criticism and mismanagement, the Government has finally cut ...
    25 mins ago
  • Overloaded hospitals reach crisis point
      The country’s hospitals have reached breaking point with some hospitals discharging patients to free up bed space and patients with serious injuries having to wait hours to be seen by a doctor, says Labour’s Health spokesperson David Clark.   ...
    50 mins ago
  • National fails on critical school building needs
    Students are paying the price of the Government’s failure to invest fast enough in school buildings to keep pace with Auckland’s increasing population, says Labour Leader Andrew Little. “Parents should lay the blame for their children having to put up ...
    7 hours ago
  • Tipping culture is not welcome in NZ
    Deputy Prime Minister Paula Bennett’s comments about tipping have been in the news and have sparked off a series of furious discussions about tipping in Aotearoa. From our point of view, tipping every time you’re provided a service is a ...
    GreensBy Denise Roche
    1 day ago
  • Mental Health a huge cost for Police
      The cost of dealing with mental health incidents for our police was a staggering $36.7 million which shows just why we need Labour’s fresh approach on Mental Health, says the Leader of the Opposition Andrew Little.   “Police now ...
    1 day ago
  • Grant Robertson: Speech to Otago-Southland Employers Association
    Thanks to the Otago Southland Employers Association and Virginia for hosting me this evening.  It is always a pleasure to come back to the city and region that shaped who I am as a person. I believe that growing up ...
    2 days ago
  • Renting a home in the Wild West
    It can be tough renting a place to live, and it could be about to get tougher. Radio NZ is reporting that the American Rentberry app wants to start operating in New Zealand. Rentberry allows landlords to play perspective tenants ...
    GreensBy Metiria Turei
    2 days ago
  • Free West Papua leader in Aotearoa
    Last week I hosted Free West Papua leader Benny Wenda at Parliament and travelled with him to a number of important events. Benny is spokesperson for the United Liberation Movement for West Papua and lives in exile in England. 14 ...
    GreensBy Catherine Delahunty
    4 days ago
  • Nats unprepared for record immigration
    National’s under-investment in housing, public services, and infrastructure means New Zealand is literally running out of beds for the record number of new migrants, says Labour’s Immigration spokesperson Iain Lees-Galloway. ...
    5 days ago
  • Labour opposes Ports of Auckland sale
    Labour would strongly oppose the sell-off of the Ports of Auckland to fix a short term cash crisis caused by the Government blocking the city’s requests for new ways to fund infrastructure, says Labour’s Auckland Issues spokesperson Phil Twyford. “National ...
    7 days ago
  • Workers pay the price of Silver Fern’s Fairton closure
    The threatened closure of Silver Fern Farms’ Fairton Plant in Ashburton raises serious questions about the Government’s support of the sale of half of the company to a foreign company, when it appears this outcome may have been inevitable, says ...
    1 week ago
  • National’s answer to the housing crisis: One new affordable house per 100 new Aucklanders
    National’s fudge of a housing plan will make Auckland even more of a speculators’ paradise, says Leader of the Opposition Andrew Little. ...
    1 week ago
  • Government can’t be trusted with private data
    The independent review of the Ministry of Social Development’s data breach in April has shown, once again, that the Ministry cannot be trusted with private client information, says Labour’s Social Development spokesperson Carmel Sepuloni. “The investigation by former Deloitte chairman ...
    1 week ago
  • Another crisis, another half-baked National plan
    The National Party may have finally woken up to the teacher supply crisis facing our schools but their latest half-baked, rushed announcement falls well short of the mark in terms of what’s required, says Labour’s Education spokesperson Chris Hipkins. ...
    1 week ago
  • Nats: Don’t bite the hand that feeds you
    Alfred Ngaro’s recent comments have exposed the Government’s ‘don’t bite the hand that feeds you’ approach, says Labour’s Social Development spokesperson Carmel Sepuloni. ...
    1 week ago
  • Breaking news – National admits there’s a housing crisis
    National finally admits there’s a housing crisis, but today’s belated announcement is simply not a credible response to the problem it’s been in denial about for so long, says Leader of the Opposition Andrew Little. “National can’t now credibly claim ...
    1 week ago
  • Nats lay the ground for housing bust
    Goldman Sachs’ warning that New Zealand has the developed world’s most over-priced housing market, with a 40 per cent chance of a bust within two years, shows the consequences of National’s nine years of housing neglect, says Labour Housing spokesperson ...
    1 week ago
  • Well they would say that, wouldn’t they?
    Property investors’ lobby groups have been up in arms this week about Labour and Green parties’ plans to close tax loopholes and fix the housing market. That’s probably a good thing. Like an investor in any other sector, they expect ...
    GreensBy James Shaw
    1 week ago
  • Alfred Ngaro reflects National’s culture of silencing debate
    Image from Getty Images Community groups must be free to advocate for the people they serve. It’s these people who see first-hand if ideas dreamt up in Wellington actually work on the ground. It’s essential that they can speak freely ...
    GreensBy Jan Logie
    1 week ago
  • Bill English must reassure community organisations
    The Prime Minister must do more to reassure community organisations after Cabinet Minister Alfred Ngaro's apparent threats to their funding if they criticise government policy which has left a born-to-rule perception amongst many, says Labour Leader Andrew Little. “Alfred Ngaro ...
    1 week ago
  • Extremism and its discontents
    Another scar on global democracy appeared recently, this time in Germany.It seems that the number of soldiers on duty with extremist political leanings has become a concern to the military leadership in that country. Soldiers were found openly possessing ...
    GreensBy Kennedy Graham
    1 week ago
  • Government’s suicide approach disappoints
    Mike King’s sudden departure from the Government’s suicide prevention panel, amid claims the Government’s approach is ‘deeply flawed’, is further evidence National is failing on mental health, says Labour’s Deputy Leader Jacinda Ardern. “Mental health is reaching crisis point in ...
    1 week ago
  • National backs speculators, fails first home buyers
    National is showing its true colours and backing speculators who are driving first home buyers out of the market, says Labour Leader Andrew Little. “By defending a $150m a year hand-out to property speculators, Bill English is turning his back ...
    1 week ago
  • More oversight by Children’s Commissioner needed
    More funding and more independence is required for the Children’s Commissioner to function more effectively in the best interests of Kiwi kids in State care, says Labour’s spokesperson for children Jacinda Ardern. ...
    1 week ago
  • Labour to end tax breaks for speculators; invest in warm, healthy homes
    Labour will shut down tax breaks for speculators and use the savings to help make 600,000 homes warmer and healthier over the next ten years, says Leader of the Opposition Andrew Little. “It’s time for fresh thinking to tackle the ...
    1 week ago
  • Health of young people a priority for Labour
    Labour will ensure all young people have access to a range of health care services on-site at their local secondary school, says Labour’s deputy leader Jacinda Ardern. “Our policy will see School Based Health Services extended to all public secondary ...
    2 weeks ago
  • Ratifying the TPPA makes no sense
    The recent high-fiving between the government and agricultural exporters over ratification of the TPPA (Trans-Pacific Partnership Agreement) is empty gesture politics in an election year. Ratification by New Zealand means nothing. New Zealand law changes are not implemented unless the ...
    GreensBy Barry Coates
    2 weeks ago
  • NIWA report proves National’s trickery re swimmable rivers
    National have a slacker standard for swimmable rivers than was the case prior to their recent so-called Clean Water amendment to the National Policy Statement (NPS), says Labour’s Water spokesperson David Parker. “The table 11 on page 25 of the ...
    2 weeks ago
  • MPS shows new approach needed on housing
    The Reserve Bank’s latest Monetary Policy Statement provides further evidence that only a change in government will start to fix the housing crisis, says Labour Finance spokesperson Grant Robertson. “It is more evident than ever that only a Labour-led government ...
    2 weeks ago
  • Fresh approach on mental health
    Labour will introduce a pilot scheme of specialist mental health teams across the country in government to ensure swifter and more effective treatment for those who need urgent help, says Labour’s Leader Andrew Little. “Mental health is in crisis. It ...
    2 weeks ago
  • Sallies back Labour’s plan for affordable homes
    The country’s most respected social agency has endorsed Labour’s KiwiBuild plan to build homes that families can afford to buy, and delivered a withering assessment of the National Government’s housing record, says Labour’s housing spokesperson Phil Twyford. ...
    2 weeks ago
  • Education is for everyone, not just the elite
    Proposals by the National Party to ration access to higher education will once again make it a privilege only available to the elite, Labour’s Education spokesperson Chris Hipkins says. “Speaking at the Education Select Committee, Maurice Williamson let the National ...
    2 weeks ago
  • Cancer support changes far too little, certainly late
    Anne Tolley’s belated backtrack to finally allow Jobseeker clients suffering from cancer to submit only one medical certificate to prove their illness fails to adequately provide temporary support for people too sick to work, says Labour’s Social Development spokesperson Carmel ...
    2 weeks ago
  • Kids must come first in enrolment debate
    The best interests of children should be the major driver of any change to policies around initial school enrolments, not cost cutting or administrative simplicity, Labour’s Education spokesperson Chris Hipkins says.   “The introduction of school cohort entry is ...
    2 weeks ago
  • Feed the Kids
    While in Whangarei last week, I had the pleasure of meeting Buddhi Manta from the Hare Krishna movement whose cafe is making lunch for some schools in Whangarei. His group have been feeding up to 1,000 primary school kids at local ...
    GreensBy Catherine Delahunty
    2 weeks ago
  • DHBs’ big budget blowout
    New Zealand’s District Health Boards are now facing a budget deficit of nearly $90 million dollars, a significant blowout on what was forecast, says Labour’s Health spokesperson David Clark.   Labour believes health funding must grow to avoid further cuts ...
    2 weeks ago
  • Govt plays catch up on drug funding
    The Government's backdown on Pharmac is welcomed because previous rhetoric around the agency being adequately funded was just nonsense, says Labour's Health spokesperson David Clark. ...
    2 weeks ago
  • Labour to build affordable homes in Hamilton
    Labour will build 200 affordable KiwiBuild houses and state houses on unused government-owned land as the first steps in our plan to fix Hamilton’s housing crisis, says Leader of the Opposition Andrew Little. “We will build new houses to replace ...
    3 weeks ago
  • Mental Health waiting times a growing concern
    There is new evidence that the Mental Health system is under increasing strain with waiting times for young people to be seen by mental health and addiction services lengthening says Labour’s Health spokesperson David Clark.   “Following yesterday’s seat of ...
    3 weeks ago
  • More beneficiaries heading to jail, fewer to study
    The latest quarterly benefit figures show a rising number of beneficiaries have left the benefit because they have gone to prison, while fewer are going into study, says Labour’s Social Development spokesperson Carmel Sepuloni. “According to recent figures, in the ...
    3 weeks ago
  • Analyst charts failure of National’s housing policy
    Respected analyst Rodney Dickens has published a devastating critique of National’s housing policy, and says Labour’s policies give more hope, says Labour’s Housing spokesperson Phil Twyford. “Mr Dickens shows since the signing of the Auckland Housing Accord in 2013 the ...
    3 weeks ago
  • Cost of Living increases hit those with least the hardest
    Beneficiaries, superannuitants and people on the lowest incomes continue to bear the brunt of higher inflation, according to the latest data from Statistics NZ, says Labour Finance spokesperson Grant Robertson. “Since National came to office (December 2008) inflation for those ...
    3 weeks ago
  • Pike River Mine families deserve more
    The Government must be more open and honest about the Pike River Mine says Dunedin South’s  Labour MP Clare Curran.   “It’s just wrong that the Commerce Select Committee has refused a Labour Party request to re-open its investigation ...
    3 weeks ago
  • Government goalposts taken off the field
    The Government’s decision to dump the Better Public Service (BPS) Target to Reduce Reoffending by 25 per cent by 2017 shows when it comes to measuring their progress the National Government hasn’t just shifted the goalposts, but has taken the ...
    3 weeks ago
  • Last call of the kea?
    Last weekend, I attended the first ever Kea Konvention jointly organised by the Kea Conservation Trust and Federated Mountain Clubs of New Zealand. It was a power-packed weekend full of presentations by scientists, volunteers and NGOS working to raise awareness of this ...
    GreensBy Mojo Mathers
    3 weeks ago