Jeff Rubin on oil & the end of globalisation
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4:29 pm, November 14th, 2010 - 29 comments
Categories: Economy -
Tags: jeff rubin, peak oil, sustainability, trade
The transcript of Jeff Rubin speaking at the ASPO-USA conference, supplied by The Oil Drum:
You know, knowing the nature of the disease is usually an essential first step to finding a cure. And so too, it is with a recession. Knowing the true nature of a recession goes a long way in helping us to avoid falling into another one. Particularly when the recession we are just coming out of happens to be the deepest global post-war recession on record.
Conventional wisdom, as espoused by central bankers, finance ministers, and the pundits that you watch on TV would have you believe that the recession that we are still feeling here in America, and, indeed, throughout the world, was all about a financial crisis, whose roots lie in the failed sub-prime mortgage market in the United States. In other words, a whole bunch of boarded up, repossessed unsalable houses and depressed property markets in places like Cleveland, all financed with easy credit and subprime mortgages, hit financial markets like some toxic hydrogen bomb, and then all of a sudden, a property market crash in the United States, somehow morphed into a deep, global recession.
Gee, I never knew that Cleveland was that big. No one has to tell me about the impact of the subprime mortgage market on financial markets. Why do you think I am an author now? But there is a big difference between blowing up the bonus pools of investment banks, and blowing up Wall Street, and what happened.
If you are wondering why risk-averse institutions like the bank that I used to work for had to write down almost $10 billion of assets of things called Collateralized Debt Obligations that were funded by pools of subprime mortgages, the reason is pretty simple: they were rated AAA, which meant that rating agencies assigned the risk of default with the same probability that the US Treasury would default. What the banks lost sight of is how rating agencies get paid. Rating agencies don’t get paid by investors; they get paid by issuers. In Economics, we call this moral hazard problem. In investment banking, we call it, “Shit happens.”
It is easy to see how sub-prime mortgages blew up Wall Street; it is a little more challenging to see it as the author of the global recession. Why were there economies that had no sub-prime mortgages that experienced even deeper recessions than the United States? Why did those economies go into recession even before the US economy went into recession? Maybe, just maybe, there was something more important going on–more important to the global economy than Wall Street or sub-prime mortgages, like $147 barrel oil, for example. If we know anything about watching the global economy in the last 40 years, we know this: feed it cheap oil, and it runs very smoothly. All of the sudden, give it expensive oil, and it stops in its tracks.
Every major recession in the post-war period has oil’s fingerprints all over it. The 1973 first oil shock led to what was then the deepest post-war recession, at the time. The second OPEC oil shock led to no less than two recessions: 1979 and 1982. And then when Saddam Hussein invaded Kuwait, and left half of its oil fields on fire, and oil spiked to the then unheard-of price of $40 barrel, lo and behold, the industrialized world again fell into recession.
Gee, I wonder what happened to oil prices before this recession. It seems to me that oil prices went from about $30 barrel, at the beginning of 2004, to almost $150 barrel by 2008. Even in real terms, that is, inflation-adjusted, that price increase was over double the price increase of either the first or the second OPEC oil shock. If they had led to devastating recessions, why would not the biggest oil shock of them all, be the obvious culprit for what has been the deepest recession to date?
There are many ways in which oil shocks create global recessions. First, the transfer of income. When oil went from $30 barrel, to about $147 barrel, over $1 trillion of income was transferred from the industrialized oil consuming world to OPEC. Now, that was not neutral for the economy, because the savings rates from which money was coming from, like the United States, was virtually 0%, meaning that consumers spent everything they made. And where the money was going to, places like Saudi Arabia, or Kuwait, or the United Arab Emirates, had savings rates of almost as high as 50%, so it certainly was not demand neutral.
High price also create recessions by crowding out non-energy expenditures. Two years ago, when gasoline cost us $4 gallon, low-income Americans were paying more to fill their tanks than they were to fill their stomachs.
But by far, the most important mechanism, the most important path, by which oil prices cause recession is through their impact on inflation, and their impact on interest rates.
There is no shortage of people to blame for the subprime mortgage crisis. We could start with fraudulent mortgage companies that approved mortgages, then quickly sold them to financial institutions. We can blame financial institutions who played Russian roulette with depositors money, and of course we can blame rating agencies who assigned AAA ratings to this. And we can blame regulators, who were asleep at the wheel, like the Securities Exchange Commission, who were either blind or indifferent to Wall Street’s systemic risk to subprime mortgages.
However, the real culprit behind subprime mortgages was the very low cost of capital and 0% interest rates. All the greed in the world could not do what the Fed’s easy money made possible. The subprime mortgage rates were created by interest rates and the subprime mortgage market was pricked by interest rates. Everybody would agree with that. What people don’t seem to ask is, “Just why did interest rates go from 1% to 5.5% from 2004 to 2006?”
Well, any central banker, even Alan Greenspan, will acknowledge that your borrowing cost is a mirror image of your inflation rate. We had 1% federal funds’ rate in 2004, because we had a 1% inflation rate. All of the sudden, in 2006, inflation was over 5.5%, the highest it had been in America, since, coincidentally, 1991, when we just happened to have the last oil shock. All of the sudden, money wasn’t free any more. All of the sudden, you weren’t getting credit cards in the mail any more that you never applied for. And all of the sudden, people who held negative amortization sub-prime mortgage rates had to start paying 7% or 8%.
Well, if interest rates hadn’t risen, that wouldn’t have occurred. Why did inflation move up? Virtually all of the increase in inflation came from one component of the US consumer price index basket–the energy component. By the end of 2006, energy inflation was running at 35%, because of one price: the price of oil. The price of oil went from $30 barrel, which incidentally, every oil analyst at the time said it was going to stay at that level, to over $70 barrel. If oil had stayed at $30 barrel, inflation would never have spiked; neither would have interest rates. All of those good folk in Cleveland would probably still be there, in their homes financed by 0% interest rate sub-prime mortgages. Lehman Brothers and Bear Stearns would probably still exist, and I’d probably still be the chief economist at CIBC.
But that is not what happened. Why did oil prices go up to $147 barrel? Somewhere where virtually every economist said it could not go. Well, there were two reasons that economists said that oil prices could not get into triple digit range, and that was the cherished principles of supply and demand. First, the theory of the upward sloping supply curve–higher oil prices would bring new supply, just like it did after the OPEC oil shocks, where oil gushed from Prudhoe Bay and the North Sea. And not only did that break OPEC’s strangle-hold on the market, but sent oil prices tumbling down.
Unfortunately, as you all know, there are no more Prudhoe Bays or North Seas to come on tap. Yes, there are tar sands, and theres is deep water, and the upward sloping supply curve did bring new sources of supply, but only at prices that we at the end couldn’t afford to burn.
What about the cherished principle of demand? Would not triple digit oil prices quash demand? Well, it did, in certain places. It did in the United States. It did in Canada. It did in Japan. It did in Western Europe. Fifteen years ago, if those economies suddenly cut back their appetite for oil, oil prices would have fallen, because 15 years ago, those countries would have accounted for almost three-quarters of world oil consumption. Today, they account for barely half. Tomorrow, they will account for less than half. It wasn’t the US consumer that drove oil demand to $147 barrel in the last cycle, and it certainly won’t be the American consumer that drives a barrel of oil to $147 and higher in the next cycle. We have already seen peak demand, in this economy, and in the economy of the other industrialized countries.
Where do you think oil demand has been growing the strongest? Many of you will probably be saying China, and indeed it has. It’s grown from around 2 million barrels a day, to about 9 million barrels a day. But I know a place where the demand for oil is growing even faster than in China. And it is the same place your politicians have told you your supply is coming from in the future. Last year, OPEC and two non-cartel producers, Mexico and Russia, consumed 14 million barrels a day. That is almost two Chinas.
What makes OPEC so thirsty for its own fuel? Well, if you ever filled your tank up in Caracas, you would get some sense of it. It is 20 cents a gallon. And if you go to Riad, in Saudi Arabia, it is a little bit more-it’s 40 cents a gallon. And it’s 40 cents a gallon, whether oil costs $20 barrel, or whether oil costs $150 barrel.
If you think drivers have a good deal in OPEC countries, they don’t have anything as good a deal as power users. What’s the coolest thing to do in Dubai? Ski, of course. I love skiing; I’m Canadian. But going skiing in an area where it’s hot enough to fry an egg on the pavement uses up a whole lot of energy. In fact, one day at Ski Dubai uses the equivalent energy that a North American would consume in a month’s worth of driving. So the question isn’t really how much productive capacity that OPEC has. How much export capacity is the real question, and every year that is less and less, because every year, more and more is consumed at home.
Now, it’s their oil and gas, and if they want to consume their oil and gas going skiing in one of the hottest deserts in the world, that is their right. All I’m saying is, chances are, your future oil supply ain’t coming from OPEC, and chances are, it ain’t going to be cheap.
Now sure, oil prices fell to $40 barrel during the recession. And for many folk, that was evidence enough that it never had any business being in triple digit range in the first place. But what a lot of those folk forget is that in the last recession, world oil demand actually fell. It fell for the first time since 1983. Such was the severity that the recession was.
Peak oil is not a problem if the economy that it is powering is shrinking. Peak oil is only a problem if the economy we are in is starting to grow. The first thing you know about an economic recovery is that economies start burning more oil. The next thing you know about an economic recovery is that oil prices start rising. Where is oil trading today? It is trading at over $80 barrel. With the exception of Germany and Canada, every other economy in the G7 is still miles below the level of GDP that they were at before the recession began.
And yet, where oil is trading today, turn the clock back to three years ago, and that would have been a world all-time record high. Now, it is where oil trades in the shadow of the deepest global post-war recession. Where do you think oil prices are going?
I will tell you where I think oil prices are going. Even in this most anemic of economic recoveries, we are going to see triple digit oil prices. We are not going to see triple digit oil prices in 10 to 15 years. And it is certainly not clear to me that the global economy is better able to handle that than in 2008. Now, a lot of people will say, “Jeff, economic history tells us that scarcity is the mother of invention. Give us 10 to 15 years of adjustment, and we will develop alternate technology, so we won’t be carbon-dependent.”
And they are right. Give us 10 to 15 years, and we will solve this on the supply side. But as I say, our rendezvous with triple digit oil prices is not in 10 or 15 years; it is in 10 or 15 months. So instead of trying to turn cow-shit into high octane fuel, we are going to have to learn to get off the road, and that is just what happened. In 2009, there were 4 million fewer cars on the road than there were the year before. In the next ten years, 40 million North Americans will be taking the exit lanes. The question is, “Will there be a bus to get on?” Instead of giving $40 billon to General Motors, what we should have done is spend $40 billion on public transit, so there would be a bus to get on.
In a world of triple digit oil prices, all of the sudden the economy’s speed limit changes. And that is one of the problems that we have here in America, is that we don’t recognize that our economy’s speed limit has changed. What the economy could grow at when oil was $20 to $30 barrel is a whole different speed limit than what the US economy can grow at when oil is $80 to $150 barrel.
And that is something that I don’t think the Administration recognizes. Because what President Obama cannot bring is cheap oil. He can get expensive oil. We can build a pipeline from the Canadian tar sands down to the Gulf refineries, and we can get oil. But in order to get the kind of oil that will be required, that will require the triple digit oil prices that we can’t afford to pay. But trying to pump-prime the economy with fiscal stimulus is not a substitute for cheap oil. It won’t make the economy grow any faster. It will just make the deficit that much bigger.
Worse than that, triple digit oil prices will not only take millions off the road, it will send our economy right back into recession, unless of course, the economy changes. We can’t do a whole lot about triple digit oil prices. That is where the supply curve lies. And if you doubt that, just look at the Canadian tar sands. Like sure, there is 170 billion barrels of it there, and there is 500 billion barrels in the Orinoco heavy oil belt, but that is not the issue. Depletion is not just the geological concept, it is more fundamentally an economic concept. Because if the cost of extracting that oil from the tar is greater than we can afford to burn, it doesn’t matter how many billion barrels of oil there are in the tar sands.
So how do we adapt? How do we grow in an economy of triple digit oil prices? We change the nature of our economy. In a world of triple-digit oil prices, distance costs money. The global economy, where we produce one thing at one end of the world, to be sold at the other end of the world, doesn’t make any economic sense, because in too many cases, what will be penny-wise, will soon become pound-foolish. The wage “arb”, what we save on wages, we will more than squander on bunker fuel.
Take the steel industry, for example. Just before the recent recession, some very curious things were happening in the US market. When oil prices got to be over $100 barrel, all of the sudden, Chinese steel exports to the US fell at double-digit rates. And all of the sudden, US steel production was up. And all of the sudden, US Steel Corp., which was one of the biggest dogs in the market, all of the sudden its share price doubled.
What was going on? I’ll tell you what was going on. For the first time in 20 years, it was cheaper to make steel in the United States than to import it from China. Why? Consider what China has to do to send you steel. First, it has to ship iron ore from Brazil, across the Pacific Ocean, turn it into steel, which is itself a very energy-intensive process, then ship it back, across the Pacific Ocean, to you. At $20 barrel, that works. At $100 barrel, that doesn’t work. It added on $60 to $70 dollars, to the cost of a ton of hot-rolled steel. How much labor time do you think there is in making steel these days? One and a half to two hours. The transit costs all of a sudden exceeded the labor costs. Who would dream that triple digit oil prices would breathe new life into our hollowed-out Rust Belt? But in a world where distance costs money, that is exactly what is going to happen.
Take food. Last year, China exported $6 billion of food to America, everything from apples to frozen chicken wings, bringing a whole new meaning to having your Chinese food delivered. Steel doesn’t have to be refrigerated. Hopefully, frozen chicken wings do. What do you think powers that refrigeration unit? Bunker fuel! The same thing that is powering the boat. The world of triple digit oil prices–it won’t matter that farm labor is cheaper in China than in the United States, because the cost of bringing those frozen chicken wings to us will be too expensive.
it’s not like we are going to stop using steel in America, and it is certainly not like we are going to stop eating. What we are going to have to do is make our own steel. What we are going to have to do is grow more of our own food. Unfortunately, much of our agricultural land has been paved over with suburban sprawl. Just as triple digit oil prices will breathe new life into our hollowed out Rust Belt, triple digit oil prices will turn those far-flung suburbs and exurbs back into the farmland they were, thirty to forty years ago. The very same economic forces that gutted our manufacturing sector, that paved over our farm land, when oil was cheap and abundant, and transport costs were incidental, those same economic forces will do the opposite in a world of triple digit oil prices. And that is not determined by government, and that is not determined by ideological preference, and that is not determined by our willingness or unwillingness to reduce our carbon trail. That is just Economics 100.
Triple digit oil price is going to change cost-curves. And when it changes cost curves, it is going to change economic geography at the same time. I know that the world of triple digit oil prices has been the domain of the apocalypse. For many people, the advent of peak oil and triple digit oil price means the end of our economy. For some, civilization as we know it. I don’t share that pessimism. I don’t share that outlook. I’m an economist. I believe in the power of prices.
Sure, if we continue to want to get our frozen chicken wings from half-way around the world, where labor is cheap, if we want to get our steel from half way around the world, if we want to commute back and forth eighty miles to work in our SUVs, peak oil won’t just be a recession, peak oil will be peak GDP, and that will be apocalyptic. But as I say, I am an economist, and I believe in the power of prices. I believe we are going to change. I believe that we are not going to end up importing food from half-way around the world, or steel from half-way around the world. I don’t think we are committed, irrevocably, to suburban sprawl.
And we might just find that that new smaller world around the corner is a whole lot more livable, and a whole lot more sustainable, than the big “oily” one we are about to leave behind.
Thank you very much.
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Just ten days ago, South Korea's president attempted a self-coup, declaring martial law and attempting to have opposition MPs murdered or arrested in an effort to seize unconstrained power. The attempt was rapidly defeated by the national assembly voting it down and the people flooding the streets to defend democracy. ...4 days ago
- 2 Men, 1 Haircut
Hi,“What I love about New Zealanders is that sometimes you use these expressions that as Americans we have no idea what those things mean!"I am watching a 30-something year old American ramble on about how different New Zealanders are to Americans. It’s his podcast, and this man is doing a ...5 days ago - Chris Penk’s Hate Parade
What Chris Penk has granted holocaust-denier and equal-opportunity-bigot Candace Owens is not “freedom of speech”. It’s not even really freedom of movement, though that technically is the right she has been granted. What he has given her is permission to perform. Freedom of SpeechIn New Zealand, the right to freedom ...5 days ago - Tell me a story
All those tears on your cheeksJust like deja vu flow nowWhen grandmother speaksSo tell me a story (I'll tell you a story)Spell it out, I can't hear (What do you want to hear?)Why you wear black in the morning?Why there's smoke in the air? Songwriter: Greg Johnson.Mōrena all ☀️Something a ...5 days ago - As Our Power Lessens: Accepted
2024 is now officially my best-ever year for short stories. My 1,850-word dark fantasy piece, As Our Power Lessens, has been accepted for the upcoming solstice edition of Eternal Haunted Summer (https://eternalhauntedsummer.com/), thereby making that six published short stories for the calendar year. As always, see the Bibliography page for ...6 days ago - Six years of work wasted – Holidays Act reform now years away
Brooke van Velden has wasted six years of work from businesses, unions, and government by binning planned Holidays Act reforms, said Acting CTU President Rachel Mackintosh in response to today’s announcement from Minister for Workplace Relations and Safety. “The Minister has cynically kicked the can on Holiday Act reform even ...6 days ago
- Come Undone?
Words, playing me deja vuLike a radio tune, I swear I've heard beforeChill, is it something real?Or the magic I'm feeding off your fingersWho do you need?Who do you love?When you come undoneSongwriters: John Taylor / Simon Le Bon / Nick Rhodes / Warren Cuccurullo.When this three-way coalition was being ...6 days ago - ‘Tis The Season …
Last week, I was speaking to a doctor in a public health hospital.She was wearing a brown Christmas seasoned shirt littered with pics of candy canes, elves, Xmas trees and mini Santas.And it took me a few minutes into the conversation before the realisation slowly struck me: “It’s Christmas time..!”How ...6 days ago - Friday 13 December
More public service job cuts are on the way, with hundreds more jobs set to be axed at Health NZ, and close to 50 jobs at Te Arawhiti. Winston Peters is saying Nicola Willis’ ferry proposal is now dead in the water and that he is going back to the ...6 days ago
- Govt cancels Tauranga housing expansion
Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Friday, December 12 in The Kākā’s Dawn Chorus above and the daily Pick ‘n’ Mix below are:The National-ACT-NZ First Government, which has a ‘Going for Housing Growth’ policy designed to massively ...6 days ago
- Weekly Roundup 13-December-2024
It’s one of the final Fridays of the year and we are getting into the last couple of weeks before the summer shutdown. We hope everyone’s excited to have a break! Here’s some of the stories that have caught our attention this week. This post, like all our work, is ...6 days ago
- The Hoon around the week to December 13
The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night features co-hosts & talking about the week’s news with: on the Government’s inadequate final emissions reduction plan and pro-business climate appointments; on the lightening overthrow of Bashar al-Assad’s regime in Syria and what might ...6 days ago
- Our Education System Will Be the Battlegrounds for the New Culture War
Luxon is the best negotiator. He’s just negotiated us into a culture war and he doesn’t even know it. Neoliberalism is preventing our school system from serving the population. People — most people — cannot really select the schools their children go to unless they are wealthy enough to pay ...6 days ago - The ferry saga; cracks in the coalition and closing Wellington’s container port
Yesterday, the coalition showed the first real public signs of cracks, as Ministers and the Prime Minister spent the day contradicting each other over the future of the inter-island ferries. The cracks between ACT and New Zealand First have always been there. But what made yesterday’s exchanges different was that ...6 days ago
- Chris Penk Personally Intervenes for Holocaust Denier
The general advertising strategy of far-right speakers for the last few years has been to announce they’re coming to New Zealand, wait for their visa to be denied or their venue to cancel on them, and then use that free promotion and outrage generation (sponsored by the Free Speech Union) ...6 days ago - Wulf vs Beowulf: A Review of The War of the Rohirrim (2024)
Oh good. Back to the Tolkien adaptations. Not just any Tolkien adaptation either. The story of Helm Hammerhand, as done in anime style – something a bit different. It’s actually the first animated Tolkien adaptation since Rankin-Bass’ Return of the King in 1980, as well as the first Tolkien adaptation ...6 days ago - Georgescu and the Arrogance of the West
I enjoy reading the views of pundits and people. I like knowing what they think, and why they think it. But sometimes I look at what commentators are saying and where conversations are leading and I despair. How often do we here on the left do the right’s job for ...6 days ago - Gordon Campbell On The Latest Round Of Ferry Follies
The scorned iRex option would have entered service in 2026. Thanks to Finance Minister Nicola Willis, there will now be a three year delay until 2029 at the earliest. Instead of fit-for-purpose iRex ferries, Willis is likely by then to have saddled us with smaller, less capable, more weather vulnerable ...6 days ago
- Rotten to the core
Just a few months ago, Deputy Commissioner Jevon McSkimming was one of the final two candidates for the position of police commissioner. Now, he's on leave and facing multiple investigations for unspecified wrongdoing: The second-most powerful police officer in the country is on leave pending separate investigations, the Herald ...6 days ago
- Skeptical Science New Research for Week #50 2024
Open access notables: Regional Impacts Poorly Constrained by Climate Sensitivity, Swaminathan et al., Earth's Future: Climate risk assessments must account for a wide range of possible futures, so scientists often use simulations made by numerous global climate models to explore potential changes in regional climates and their impacts. Some of ...6 days ago
- About Syria.
I have been thinking about Syria and coverage of the fall of the Assad regime, and to be honest I believe that there is something missing from the picture being painted, at least in NZ. Although I am no expert … Continue reading ...7 days ago - The Two Hundred Million Dollar question
Here we see Napoleon delivering glory in Russia.Here we see Elizabeth Holmes delivering a blood test for anything. Read more ...7 days ago - Luxon & Willis Double Down on Ferries Debacle
The day before today, Nicola Willis told the House that they would have to wait until the ferries announcement for the details about ferries cost etc. It was the same promise Luxon has been making in Parliament over the last weeks and months: the details are coming, the details are ...7 days ago
- Luigi Mangione and Jury Nullification
Luigi Mangione, the shooter of the Ultimate Healthcare CEO, has been caught by the cops after a tip-off from a McDonalds worker. (A timely reminder, perhaps, that there is an official boycott against McDonalds for their profiting from and support of Israel’s occupation in Palestine, and it has been having ...7 days ago - Thursday 12 December
There has been widespread condemnation of the Government’s mishandling of the Cook Strait ferry replacements, including from unions, industry, and political parties. It has also led to public division among the coalition, with Winston Peters and David Seymour at odds regarding cost and privatisation. In other political news, Labour says ...7 days ago
- Foreshadowing HYEFU 2024
By way of prologue, the closest parallel to the current economic situation may be when Ruth Richardson became Minister of Finance in late 1990. The economy had been contracting, although there were signs of a fragile recovery. She was an Austerian and cut public spending savagely. The economy plunged a ...7 days ago - How unusual is current post-El Niño warmth?
This is a re-post from The Climate Brink As I noted a few months back, despite the end of El Niño conditions in May, global temperatures have remained worryingly elevated. This raises the question of whether this reflects unusual El Niño behavior, or a more persistent change in the underlying climate forcings ...7 days ago
- Nicky No Boats
I remember you by, thunderclap in the skyLightning flash, tempers flare'Round the horn if you dareI just spent six months in a leaky boatLucky just to keep afloatSongwriters: Brian Timothy FinnToday, a tale of such ineptitude, unwarranted confidence and underplanning that you will scarcely believe it. I can hear you ...7 days ago - Ferries delayed again, then handed to Peters, who hits out at Seymour
Willis wouldn’t give a cost estimate or confirm new ferries would be ‘rail enabled’ rather than ‘rail-compatible’, but Seymour has let slip the ferries and ‘landside’ development would cost around $1.5 billion. Photo: Lynn Grieveson / The KākāMōrena. Long stories short, the six things that matter in Aotearoa’s political economy ...7 days ago
- When Should You Consider Retreat? – The Sooner the Better
This is a guest post by Waitematā local board member Dr Alex Bonham, about the Auckland Council’s Shoreline Adaption Plans. Currently consultation is open for the Auckland Central & Ōrākei to Karaka Bay SAPs until December 18th. If the sea bowls through your front door, through the house and ...7 days ago
- Shameless advertising: Two days only — 50% off subscriptions, forever
But wait!! If you would like to pay me LESS, on Friday the discount will be bigger. Subscription benefits include my endless gratitude, warm fuzzy feelings, bragging rights, and a slight spring in your step. ...1 week ago
- Release: Hikes for company directors but not ordinary Kiwis
Working people are going backwards while company directors are being given huge pay hikes. ...17 hours ago - ECE no place to cut corners
The Ministry of Regulation’s report into Early Childhood Education (ECE) in Aotearoa raises serious concerns about the possibility of lowering qualification requirements, undermining quality and risking worse outcomes for tamariki, whānau, and kaiako. ...18 hours ago - Release: Strengthening Justice Services for New Zealanders
A Bill to modernise the role of Justices of the Peace (JP), ensuring they remain active in their communities and connected with other JPs, has been put into the ballot. ...20 hours ago
- Release: Labour will continue fight against destructive projects
Labour will continue to fight unsustainable and destructive projects that are able to leap-frog environment protection under National’s Fast-track Approvals Bill. ...2 days ago
- Green Government will revoke dodgy fast-track projects
The Green Party has warned that a Green Government will revoke the consents of companies who override environmental protections as part of Fast-Track legislation being passed today. ...2 days ago
- Government for the wealthy keeps pushing austerity
The Green Party says the Half Year Economic and Fiscal Update shows how the Government is failing to address the massive social and infrastructure deficits our country faces. ...2 days ago
- Release: Visa changes let migrant workers be paid less
The Government’s latest move to reduce the earnings of migrant workers will not only hurt migrants but it will drive down the wages of Kiwi workers. ...2 days ago
- Release: Nightmare before Christmas for Nicola Willis
With more debt and a larger deficit, Nicola Willis’ reputation is in tatters after her failure to return the Government’s books to surplus. ...2 days ago
- Warning to Fast-Track Applicants – ‘Exploit the Whenua, Face the Consequences’
Te Pāti Māori has this morning issued a stern warning to Fast-Track applicants with interests in mining, pledging to hold them accountable through retrospective liability and to immediately revoke Fast-Track consents under a future Te Pāti Māori government. This warning comes ahead of today’s third reading of the Fast-Track Approvals ...2 days ago
- Release: Govt cuts wages for lowest paid NZers… again
For the second year running, the government has effectively cut wages for the lowest paid workers in New Zealand. ...2 days ago
- Govt’s miserly 1.5% minimum wage will take workers backwards
The Government’s announcement today of a 1.5 per cent increase to minimum wage is another blow for workers, with inflation projected to exceed the increase, meaning it’s a real terms pay reduction for many. ...2 days ago
- Release: Govt shirking responsibility for rate hikes
All the Government has achieved from its announcement today is to continue to push responsibility back on councils for its own lack of action to help bring down skyrocketing rates. ...2 days ago
- Luxon’s ‘localism’ strikes again
The Government has used its final post-Cabinet press conference of the year to punch down on local government without offering any credible solutions to the issues our councils are facing. ...3 days ago
- Release: Govt breaks promise on EV chargers
The Government has failed to keep its promise to ‘super charge’ the EV network, delivering just 292 chargers - less than half of the 670 chargers needed to meet its target. ...3 days ago
- Greens call for end to subsidies for Methanex
The Green Party is calling for the Government to stop subsidising the largest user of the country’s gas supplies, Methanex, following a report highlighting the multi-national’s disproportionate influence on energy prices in Aotearoa. ...3 days ago
- Govt child poverty targets allow for increase in poverty
The Green Party is appalled with the Government’s new child poverty targets that are based on a new ‘persistent poverty’ measure that could be met even with an increase in child poverty. ...6 days ago
- Release: Four weeks annual leave under threat
The Government’s attack on workers continues with news it is scrapping work on the Holidays Act. ...6 days ago
- Govt’s emissions plan for measly 1% reduction
New independent analysis has revealed that the Government’s Emissions Reduction Plan (ERP) will reduce emissions by a measly 1 per cent by 2030, failing to set us up for the future and meeting upcoming targets. ...6 days ago
- Greens stand in solidarity with Whakaata Māori on sad day
The loss of 27 kaimahi at Whakaata Māori and the end of its daily news bulletin is a sad day for Māori media and another step backwards for Te Tiriti o Waitangi justice. ...6 days ago
- Sanctions regime to create more hardship for families
Yesterday the Government passed cruel legislation through first reading to establish a new beneficiary sanction regime that will ultimately mean more households cannot afford the basic essentials. ...6 days ago
- Govt gifts renters housing anxiety for Christmas
Today's passing of the Government's Residential Tenancies Amendment Bill–which allows landlords to end tenancies with no reason–ignores the voice of the people and leaves renters in limbo ahead of the festive season. ...6 days ago
- Release: National Party urged to support modern slavery legislation
Labour is urging the Prime Minister to walk the talk and support legislation combating modern slavery. ...7 days ago
- Release: Labour has lost confidence in the Speaker
The Speaker of the New Zealand Parliament made an unprecedented decision on the government amendment to the Fast Track Approvals Bill last night. ...7 days ago
- One year on, still no progress on new ferries
Today’s announcement from the Government on its plan for new ferries throws more uncertainty on the future of the country’s rail network. ...1 week ago
- Release: Nicola Willis’ smaller ferries will cost more
After wasting a year, Nicola Willis has delivered a worse deal for the Cook Strait ferries that will end up being more expensive and take longer to arrive. ...1 week ago
- Bill to sanction unlawful occupation of Palestine
Green Party co-leader Chlöe Swarbrick has today launched a Member’s Bill to sanction Israel for its unlawful presence in the Occupied Palestinian Territory, as the All Out For Gaza rally reaches Parliament. ...1 week ago
- Release: Labour fully supports greyhound racing ban
The Government has done the right thing in moving to ban greyhound racing. ...1 week ago
- Greyhound racing industry ban marks new era for animal welfare
After years of advocacy, the Green Party is very happy to hear the Government has listened to our collective voices and announced the closure of the greyhound racing industry, by 1 August 2026. ...1 week ago
- Rangatahi voices must be centred in Government’s Relationship and Sexuality Education refresh
In response to a new report from ERO, the Government has acknowledged the urgent need for consistency across the curriculum for Relationship and Sexuality Education (RSE) in schools. ...1 week ago
- Govt introduces archaic anti-worker legislation
The Green Party is appalled at the Government introducing legislation that will make it easier to penalise workers fighting for better pay and conditions. ...1 week ago
- Winston Peters – Kinleith Mill Speech
Thank you for the invitation to speak with you tonight on behalf of the political party I belong to - which is New Zealand First. As we have heard before this evening the Kinleith Mill is proposing to reduce operations by focusing on pulp and discontinuing “lossmaking paper production”. They say that they are currently consulting on the plan to permanently shut ...1 week ago - Swarbrick calls on Auckland Mayor to end delay of revival of St James Theatre
Auckland Central MP, Chlöe Swarbrick, has written to Mayor Wayne Brown requesting he stop the unnecessary delays on St James Theatre’s restoration. ...2 weeks ago
- He Ara Anamata: Greens launch Emissions Reduction Plan
Today, the Green Party of Aotearoa proudly unveils its new Emissions Reduction Plan–He Ara Anamata–a blueprint reimagining our collective future. ...2 weeks ago
- Fossil fuel lobbyist appointment to EECA board called out
The Green Party condemns the Government’s appointment of a fossil fuel lobbyist to the Energy Efficiency & Conservation Authority Board. ...2 weeks ago
- Release: Boot camps must be shut down today
The Prime Minister has committed to shut down his government’s boot camps if there is evidence of harm to children – so he must do that today. ...2 weeks ago
- Greens echo OECD call for electricity market reform
The Green Party has welcomed the OECD urging the Government to re-examine separating ‘gentailers’ to make a fairer electricity market for New Zealanders. ...2 weeks ago
- Release: Govt breaks Auckland housing promise
Housing Minister Chris Bishop has confirmed National has broken yet another election promise. ...2 weeks ago
- Government smokescreen to downgrade climate ambition
Today the ACT-National Coalition Agreement pet project’s findings on “no additional warming” were released. ...2 weeks ago
- Release: Health NZ admits errors led to claimed deficit
Health New Zealand has exaggerated its deficit to justify job cuts. ...2 weeks ago
- Release: More cuts to research, science and innovation sector
The Government’s latest round of cuts to research and innovation targets the long-established and successful Marsden Fund. ...2 weeks ago
- Levelling the playing field for media advertising
Legislation that will repeal all advertising restrictions for broadcasters on Sundays and public holidays has passed through first reading in Parliament today, Media Minister Paul Goldsmith says. “As a growing share of audiences get their news and entertainment from streaming services, these restrictions have become increasingly redundant. New Zealand on ...16 hours ago - Inspector-General of Defence appointed
Today the House agreed to Brendan Horsley being appointed Inspector-General of Defence, Justice Minister Paul Goldsmith says. “Mr Horsley’s experience will be invaluable in overseeing the establishment of the new office and its support networks. “He is currently Inspector-General of Intelligence and Security, having held that role since June 2020. ...16 hours ago
- Fire and Emergency New Zealand final levy rates confirmed
Minister of Internal Affairs Brooke van Velden says the Government has agreed to the final regulations for the levy on insurance contracts that will fund Fire and Emergency New Zealand from July 2026. “Earlier this year the Government agreed to a 2.2 percent increase to the rate of levy. Fire ...16 hours ago
- More AML relief on the way for Kiwi businesses
The Government is delivering regulatory relief for New Zealand businesses through changes to the Anti-Money Laundering and Countering Financing of Terrorism Act. “The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, which was introduced today, is the second Bill – the other being the Statutes Amendment Bill - that ...17 hours ago
- Hawke’s Bay Expressway moving at pace
Transport Minister Simeon Brown has welcomed further progress on the Hawke’s Bay Expressway Road of National Significance (RoNS), with the NZ Transport Agency (NZTA) Board approving funding for the detailed design of Stage 1, paving the way for main works construction to begin in late 2025.“The Government is moving at ...17 hours ago
- Government seeks partnerships to plant trees on Crown-owned-land
The Government today released a request for information (RFI) to seeking interest in partnerships to plant trees on Crown-owned land with low farming and conservation value (excluding National Parks) Forestry Minister Todd McClay announced. “Planting trees on Crown-owned land will drive economic growth by creating more forestry jobs in our regions, providing more wood ...17 hours ago
- Wide ranging legislation to make justice system more efficient
Court timeliness, access to justice, and improving the quality of existing regulation are the focus of a series of law changes introduced to Parliament today by Associate Minister of Justice Nicole McKee. The three Bills in the Regulatory Systems (Justice) Amendment Bill package each improve a different part of the ...17 hours ago
- Diverse skills in community trust appointments
A total of 41 appointments and reappointments have been made to the 12 community trusts around New Zealand that serve their regions, Associate Finance Minister Shane Jones says. “These trusts, and the communities they serve from the Far North to the deep south, will benefit from the rich experience, knowledge, ...18 hours ago
- Torture redress for survivors of the Lake Alice Unit
The Government has confirmed how it will provide redress to survivors who were tortured at the Lake Alice Psychiatric Hospital Child and Adolescent Unit (the Lake Alice Unit). “The Royal Commission of Inquiry into Abuse in Care found that many of the 362 children who went through the Lake Alice Unit between 1972 and ...19 hours ago
- A busy year in the House
It has been a busy, productive year in the House as the coalition Government works hard to get New Zealand back on track, Leader of the House Chris Bishop says. “This Government promised to rebuild the economy, restore law and order and reduce the cost of living. Our record this ...20 hours ago
- Consultation opens on working with engineered stone
“Accelerated silicosis is an emerging occupational disease caused by unsafe work such as engineered stone benchtops. I am running a standalone consultation on engineered stone to understand what the industry is currently doing to manage the risks, and whether further regulatory intervention is needed,” says Workplace Relations and Safety Minister ...21 hours ago
- Greater reporting on Treaty settlement commitments
Mehemea he pai mō te tangata, mahia – if it’s good for the people, get on with it. Enhanced reporting on the public sector’s delivery of Treaty settlement commitments will help improve outcomes for Māori and all New Zealanders, Māori Crown Relations Minister Tama Potaka says. Compiled together for the ...21 hours ago
- New appointments to the Charities Registration Board
Mr Roger Holmes Miller and Ms Tarita Hutchinson have been appointed to the Charities Registration Board, Community and Voluntary Sector Minister Louise Upston says. “I would like to welcome the new members joining the Charities Registration Board. “The appointment of Ms Hutchinson and Mr Miller will strengthen the Board’s capacity ...22 hours ago
- Building consent processing times improve
More building consent and code compliance applications are being processed within the statutory timeframe since the Government required councils to submit quarterly data, Building and Construction Minister Chris Penk says. “In the midst of a housing shortage we need to look at every step of the build process for efficiencies ...23 hours ago
- Faster access to support through Innovation Fund
Mental Health Minister Matt Doocey is proud to announce the first three recipients of the Government’s $10 million Mental Health and Addiction Community Sector Innovation Fund which will enable more Kiwis faster access to mental health and addiction support. “This fund is part of the Government’s commitment to investing in ...23 hours ago
- New Zealand to assist Vanuatu on earthquake response
New Zealand is providing Vanuatu assistance following yesterday's devastating earthquake, Foreign Minister Winston Peters says. "Vanuatu is a member of our Pacific family and we are supporting it in this time of acute need," Mr Peters says. "Our thoughts are with the people of Vanuatu, and we will be ...24 hours ago
- Government takes steps to reduce card fees for Kiwis
The Government welcomes the Commerce Commission’s plan to reduce card fees for Kiwis by an estimated $260 million a year, Commerce and Consumer Affairs Minister Andrew Bayly says.“The Government is relentlessly focused on reducing the cost of living, so Kiwis can keep more of their hard-earned income and live a ...1 day ago
- Review recommends ECE regulation shakeup
Regulation Minister David Seymour has welcomed the Early Childhood Education (ECE) regulatory review report, the first major report from the Ministry for Regulation. The report makes 15 recommendations to modernise and simplify regulations across ECE so services can get on with what they do best – providing safe, high-quality care ...1 day ago
- Offshore Renewable Energy Bill passes first reading
The Government‘s Offshore Renewable Energy Bill to create a new regulatory regime that will enable firms to construct offshore wind generation has passed its first reading in Parliament, Energy Minister Simeon Brown says.“New Zealand currently does not have a regulatory regime for offshore renewable energy as the previous government failed ...1 day ago
- Local Government (Water Services) Bill passes first reading
Legislation to enable new water service delivery models that will drive critical investment in infrastructure has passed its first reading in Parliament, marking a significant step towards the delivery of Local Water Done Well, Local Government Minister Simeon Brown and Commerce and Consumer Affairs Minister Andrew Bayly say.“Councils and voters ...1 day ago
- Gene Technology Bill passes first reading
New Zealand is one step closer to reaping the benefits of gene technology with the passing of the first reading of the Gene Technology Bill, Science, Innovation and Technology Minister Judith Collins says. "This legislation will end New Zealand's near 30-year ban on gene technology outside the lab and is ...1 day ago
- New Zealand ratifies AANZFTA Upgrade
New Zealand has ratified the Upgrade to the Agreement establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), Minister for Trade Todd McClay announced today. “ASEAN which is comprised of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, is New Zealand’s fourth largest trading partner in two-way trade – ...2 days ago
- PM’s Space Prizes highlight talent and innovation
The inaugural winners of the Prime Minister’s Space Prizes showcase the depth and breadth of talent in New Zealand’s dynamic space and advanced aviation sectors, Prime Minister Christopher Luxon and Space Minister Judith Collins say. “The Government established these prizes to recognise and encourage innovative expertise and rising talent in ...2 days ago
- One-stop shop fast-track bill passes third reading
The coalition Government’s new one-stop shop fast-track consenting regime for regionally and nationally significant projects will help rebuild the New Zealand economy, say RMA Reform Minister Chris Bishop and Minister for Regional Development Shane Jones. The Fast-track Approvals Bill passed its third reading in Parliament today. Applications for projects to ...2 days ago
- Antarctica New Zealand Board appointment
Foreign Minister Winston Peters has appointed Craig Ellison to the Board of Antarctica New Zealand. The appointment is effective from 18 December 2024 for a three-year term and brings the Board to its full capacity of seven members. “Mr Ellison joins the Board with a background in Antarctic ...2 days ago
- New diplomatic appointments
Foreign Affairs Minister Winston Peters has announced four new diplomatic appointments. “Our diplomats play an important role in ensuring New Zealand’s interests are maintained and enhanced across the world,” Mr Peters says. “It is a pleasure to announce the appointment of these senior diplomats from the Ministry of Foreign ...2 days ago
- Financial measure and capital allowance updated
The Government is adopting a new financial indicator and a new approach to capital allowances, Finance Minister Nicola Willis says. These changes follow reviews, announced at the Budget, of the operating balance before gains and losses (OBEGAL) and the multi-year capital allowance (MYCA). “Since 2008, governments have used OBEGAL to ...2 days ago
- Lifting productivity key
Lifting the productive capacity of the economy is the key to realising New Zealand’s potential, Finance Minister Nicola Willis says. “The Half Year Economic and Fiscal Update released today shows the Crown’s financial position has deteriorated over the past six years, but the economy has reached a turning point. “Inflation ...2 days ago
- Consultation on Arms Act rewrite to begin
Associate Justice Minister Nicole McKee has welcomed Cabinet’s decision to undertake public consultation on the rewrite of the Arms Act 1983. “Phase four of my firearms reforms is the rewrite of the Act and, as promised, we will be consulting with the New Zealand public. The consultation period will open ...2 days ago
- Government confirms reduction to Forestry ETS annual charge
The Government has today confirmed a 50 per cent reduction to the annual charge for forest owners participating in the forestry Emissions Trading Scheme (ETS), Forestry Minister Todd McClay announced. “This decision delivers on the Government’s promise to rebuild confidence in the forestry sector and support its role in achieving ...2 days ago
- First quarterly Oranga Tamariki performance data released
Children’s Minister Karen Chhour has welcomed the release of the first quarter of Oranga Tamariki performance data. “Since becoming Minister for Children, I have been clear that Oranga Tamariki must be relentlessly focused on the safety of children and young people in its care. “This is why I introduced key performance ...2 days ago
- Public to have their say on disability funding
The wider disability community will have their say early next year on how the Government should deliver disability support services that are fair, consistent, transparent, and sustainable, Disability Issues Minister Louise Upston says. “The Government is committed to better public services and building a disability support system that delivers better ...2 days ago
- Securing the skills and experience NZ needs
The Government is supporting businesses to secure the skills and experience New Zealand needs by continuing to refine the Accredited Employer Work Visa (AEWV). “A responsive immigration system is fundamental to rebuilding the economy,” Immigration Minister Erica Stanford says. “Earlier in the year, we made initial changes to the AEWV ...2 days ago
- Minimum wage set for 2025
The adult minimum wage rate will increase by 1.5 percent to $23.50 an hour from 1 April 2025, Workplace Relations and Safety Minister Brooke van Velden announced today. This minimum wage increase meets the NZ First-National coalition commitment to moderate increases to the minimum wage every year. Cabinet’s decision reflects ...2 days ago
- Extra security to again keep EDs safe this summer
Health Minister Dr Shane Reti is again reminding New Zealanders that violence against patients, visitors and health workers won’t be tolerated, with additional security for hospital emergency departments across the country this summer. “Staff and patients in our EDs deserve to feel safe when they’re working or visiting hospitals across ...2 days ago
- Q4 plan sets NZ up for growth and infrastructure
It will soon be easier to get things built in New Zealand due to the actions delivered by the Government as part of our Quarter Four (Q4) Action Plan, Prime Minister Christopher Luxon says. “The modern and reliable infrastructure New Zealand desperately needs is a lot closer thanks to the ...3 days ago
- Government getting local government back to basics
The Government has agreed to reforms that refocus local councils on delivering essential services and core infrastructure, spending responsibly, and operating under greater scrutiny, Local Government Minister Simeon Brown says.“Homeowners face the fastest rates rise in more than twenty years. Rates are out of control and the Government is taking ...3 days ago
- Cabinet circular paves way for better regulation to benefit everyone
Regulation Minister David Seymour says that changes to the way regulations are made will ensure the process is more efficient, transparent and effective. From 1 January 2025, government agencies making new regulations will follow a more simplified and streamlined process, saving time and energy by focusing only on what’s important. ...3 days ago
- Ministers recognise health volunteers
Seven outstanding individuals and organisations have been recognised in the 2024 Minister of Health Volunteer Awards. The recipients hail from across the country, and range in age from 17 to 90 years old. Their work includes leading exercise groups for people with lung conditions, school students supporting disabled people, and ...3 days ago
- New plan for reducing family and sexual violence
The launch in Auckland today of the second Te Aorerekura Action Plan for the prevention of family violence and sexual violence featured three government ministers, together to symbolise this government’s commitment to reducing harm from violence. The launch was hosted by Karen Chhour, as Minister for the Prevention of Family ...4 days ago
- Swimming loses public funding but elite duo protected
High Performance Sport New Zealand will invest $162.8m into 36 national sporting organisations and athletes over the next four years, up from $131m in the four years leading up to this year’s Paris Olympics.From March next year, nearly $41 million per annum will go directly to national sports organisations for ...50 minutes ago - Former National MP joins push for University of Waikato’s third medical school.
A former National MP and incumbent Hamilton City Councillor has been hired by the University of Waikato to advocate for its proposed third medical school. ...1 hour ago - Transmission Gully: New plan to tackle long-standing fight
A new plan has been hatched to try to resolve a years-long fight to protect native fish at Transmission Gully. ...1 hour ago
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The problem that the economy is having is an economic problem caused by over reliance upon a monetary theory that pretty much ignores the economy while boosting the importance of the financial sector. This causes the economic problem to look like a financial problem.
economic problem = resource constraints
Neo-liberalism, which is the underlying theory of our “economies”, isn’t an economic theory but theory about money. In the world of money, where infinite amounts can be printed, then neo-liberalism and it’s assumption of a non-zero-sum game works but in reality, where there are finite resources and finite competition (because competition costs too much of those finite resources), the whole thing falls down.
The real economy, the one we actually have to live with, is a zero-sum game delimited by the renewable resource base.
Draco, the real issue is not the theory or practice of market economics, it is the end result for those who control the economy. The rich. More importantly the mega rich. These monsters could not really give a f**k about whether the method is laissez faire or totalitarian command, all they care for is that we meakly donate our bodies minds and souls to their enrichment. They and their allies have to be taken out of the loop, their control of the economy leaves us with a facade of democracy that is just that, a facade.
“Rating agencies don’t get paid by investors; they get paid by issuers.”
Oops Marty. Does that mean that NZ ratings are in that category? Seem to Bill English applauding our ratings. Same thing?
The rating agencies have all totally blown any credibility they may have had. Another of the great mysteries is why anyone even uses them any more?
http://www.youtube.com/watch?v=lgBpt9_FSV0&feature=related
Jeff Rubin is a good listen.
.
At the G-20 meeting, one very brief discussion over global warming was scrunched into a meal break. According to Scientific American, this despite pressure coming from EU leaders to raise this issue at the G-20, they were unable to even get it on the formal agenda.
So what is it that so distracts the governments of the G-20?
What is it that is absorbing their attention so much that dangerous global climate change endangering the lives of millions of people, mostly in the third world, is not even considered worthy of being an official topic for discussion?
Currency wars between the major powers each trying to shore up national profit taking at each others expense, have pushed climate talks on the back burner.
In response to the economic recession Central Banksters, and the governments they advise, are trying to increase export trade advantages by slashing the value of their currencies.
As well as consuming the G-20’s full attention and putting global warming off the agenda, Currency Wars have a number of other effects.
1/ The most important effect and the reason for doing all this- It Increases Profits and protects the privilege and power that spring from profit.
2/ In a world awash in unsold goods, and glutted markets, it makes your country’s trade goods cheaper on the world stage.
3/ Theoretically this increases export sales, while cutting imports. (as long as everyone else doesn’t do it as well.)
4/ It slashes the buying power of working people delivering a massive wage cut to the working people of each country that devalues.
5/ It threatens a race to the bottom and a call for trade protectionism to avoid this.
5/ It increases the likelihood of trade wars and heightens the tensions that lead to shooting wars.
At a time of falling profits due to the recession, you can see why the governments of the G-20 would be concerned, as maintaining profit is their main obsession.
In the 20th Century most of these same governments fought wars for profit, violently suppressed unions for profit, stood by while public and private enterprise were allowed to recklessly pollute and damage the environment for profit. So it is no surprise to me that in the 21st Century these same governments are preparing to commit ecocide in the name of profit.
It is like being locked in a burning house that is being looted by gangsters, who are too distracted fighting each other over the loot, to attend to putting out the fire…
Except in this case, there is no other house to go to, and these gangsters are locked in the house with the rest of us.
Oil prices ending so called free trade and globalisation may be the best thing that has happened for a long time. It will force re-investment in local manufacturing and local work forces world wide as well as forcing New Zealand to develop local sustainable energy.
The end of the oil age may signal the first sea change in economic thinking, but it will not result in a change to the modus operandi of the ruling elites. They will find another method of ensuring that they control the worlds resources and economies for their own benefit. It may be totalitarian (why else do you think that in the “land of the free” the apparatus and legislation for a police state is already in place?), it may be false populism, it could be patriotic wars. Oil was always going to run out, on the contrary the will of the elite to take our worth for their benefit will remain. We will have to fight them for our freedom.
Indeed.
Free trade?, maybe not.
(registration required)
If the Tea Party continues to influence the Republican agenda, it may not only spell bad news for the South Korea free trade agreement — it could also mean a fundamental reorientation of our country’s attitude toward trade and globalization.
Interesting link there Joe.
It’s like the 1930’s being replayed. An extreme right wing mass movement springs up in a major world power calling for more domestic repression, alongside a more belligerent foreign policy.
I can’t help wondering if the left can’t work out a better counter response than last time.
Old Photos has a few posts about the Weimar Republic (scroll down) and a devil dodger worries out loud.
“Triple digit oil price is going to change cost-curves. And when it changes cost curves, it is going to change economic geography at the same time. I know that the world of triple digit oil prices has been the domain of the apocalypse. For many people, the advent of peak oil and triple digit oil price means the end of our economy. For some, civilization as we know it. I don’t share that pessimism. I don’t share that outlook. I’m an economist. I believe in the power of prices.”
My understanding of Peak Oil from such websites as Oilcrash.com(Robert Atack’s kiwi contribution), Lifeaftertheoilcrash.net,Postcarbon.org and others is that we are probably on the terminal downslope now of supply and there isn’t any other energy source that can match Oil in scale and ease of use and most especially the EROEI factor which is Energy Return on Energy Invested: For Instance At the start of the Oil Age An Investment of 1 barrel of Oil might return 150 barrels energy equivalent. The Price mechanism isn’t of any use for what is to be one of the biggest transitions Humanity has ever faced! Personally I find it scary, as R.A. says we should have been preparing from 20 years ago,but we humans just are too short term in our thinking,20 years in the future might as well not exist!
The link below gives a 5 minute potted animation of the Industrial Era:
http://www.postcarbon.org/blog-post/176080-the-ultimate-roller-coaster-ride-a
A message for our local governments? Less Motorways much more efficient top class public transport! With triple digit oil prices we are in for another big economic knockdown Worldwide.Eventually triple digit oil will become the norm as supply continues downward.
“And they are right. Give us 10 to 15 years, and we will solve this on the supply side. But as I say, our rendezvous with triple digit oil prices is not in 10 or 15 years; it is in 10 or 15 months. So instead of trying to turn cow-shit into high octane fuel, we are going to have to learn to get off the road, and that is just what happened. In 2009, there were 4 million fewer cars on the road than there were the year before. In the next ten years, 40 million North Americans will be taking the exit lanes. The question is, “Will there be a bus to get on?” Instead of giving $40 billion to General Motors, what we should have done is spend $40 billion on public transit, so there would be a bus to get on.”
Peak Oil has been and gone and we have reached the End of Growth in National economies And The World economy refer this excerpt from Heinberg’s book “The End of Growth” to be published July2011:
http://richardheinberg.com/222-the-end-of-growth
its great to see this post on Jeff Rubin — follow his blog at http://www.jeffrubinssmallerworld.com/
But what is Labour’s response to a looming oil shock.? There was a deafening silence from Labour to the Parliament Report last month “The Next Oil Shock” – http://oilshockhorrorprobe.blogspot.com/2010/10/nz-parliament-report-warns-of-imminent.html
And commentators here and on other left blogs seem reluctant to acknowledge Labour’s weak response so far whenever peak oil is mentioned..
Will Labour continue to pretend like National that “peak oil = peak economy” is not an issue worthy of even acknowledgment let alone a coherent policy response? Or will Labour front foot this issue, take the public into its confidence and in a measured and rational manner, and spell out the very serious implications for our economy and way of life? And then spell out in detail its policies?
Robert Hirsch’s report to the US Dept of Energy said there needed to be world-wide wartime-like crash program of mitigation starting at least 10 years before the peak. We are likely already 10 years too late, but isn’t it time for Labour to show courageous political leadership ?
You could always ask Labour?
I’d start on RedAlert…
I agree. There are some promising signs of life from Labour at the moment, especially from a couple of the younger members.
Yeah man there is some serious fire in the Labour belly at the mo. First we are acting to take Mana, and once that is done and dusted we are going to refocus on…Botany?
“You could always ask Labour?
I’d start on RedAlert…”
searching peak oil or oil shock drew a blank.. seems they are not subjects worthy of an alert – red or otherwise
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Lets ignore all the below statements, the clowns at the MED know better … yeah right.
http://odac-info.org/peak-oil-quotes
Peak Oil Quotes
Statements by key individuals
2010
Fatih Birol, Chief Economist of the International Energy Agency, September 2010 interviewed on BBC One Planet
“It is definitely depressing, more than depressing, I would say alarming, which is what we try to do, to alarm the governments. In many OECD countries….oil consumption came to a peak and it is slowing down, but the growth of the demand is coming from China, the Middle East, India. So demand will grow. The question is, whether or not we will be able to increase the production to meet that demand growth. According to our projections in the World Energy Outlook, even if we were to assume, and this is very important, even if we were to assume the next 20 years global oil demand growth was flat, no growth at all, in order to compensate the decline in the existing fields we have to increase the production about 45m bpd just to stay where we are in 20 years, which means to find and develop 4 new Saudi Arabias, and this is a major challenge.
If we look at the theoretical potential that we have conventional and unconventional oil, then maybe we have a possibility to meet that challenge. But there are tremendous challenges.” View reference
Rebuilding Security – Conservative Energy Policy for and Uncertain World, March 2010 “The last two years have seen extraordinary volatility in the global price of oil. Prices have swung from $147 a barrel in July 2008 to $32 a barrel in December of the same year, and by the end of 2009 prices were back up to between $70 and $80 a barrel – despite the impact of the recession. With most economies now in recovery there are fears of further pressure on prices. As the Industry Taskforce on Peak Oil and Energy Security (consisting of leading companies from the power, engineering and transport sectors) warned this year: “The era of cheap oil is behind us. We must plan for a world in which oil prices are likely to be both higher and more volatile.”” View reference
The US Joint Operating Environment 2010 report, February 2010 “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.” View reference
Chris Barton, Department of Energy and Climate Change (DECC), February 2010 – “We don’t have a firm view on what the future holds for oil supply and demand but we do recognise the risks” View reference
Thierry Desmarest, Chairman of the Board at Total SA, January 28th, 2010 – “The problem of peak oil remains. We have always been relatively prudent in our assessment of a peak oil date in Total between, I would say, the International Energy Agency which was extremely optimistic a few years ago – a bit less today – and some so called experts who were announcing that the peak oil has already taken place. In our opinion it will be very difficult to raise the oil production above 95 million barrels/day, which is something like 10% above today’s level – so its not enormous. Its not that we lack reserves, there are plenty of oil to produced but a lot of it is difficult to be produced. Huge resources like the Athabasca oil sands for instance – when you look to the newsflow of the last 2 or 3 years you have just seen a lot of postponements of projects, not that much because of lack of profitability of projects but also with environmental concerns, as an example among others. So I think we must keep in mind that in a few years from now the market may be in a relatively difficult position in, the energy security concerning oil (because I think for gas we have certainly more time), will be a big problem.”
2009
Andrew Sentance, member of the Bank of England’s Monetary Policy Committee, September 2009 – “On the energy front, I can see substantial upside risks to prices over the coming recovery as demand picks up across the global economy and Asia plays a leading role in the growth of the world economy. Against the background of supply constraints, this creates the potential for continuing price volatility. I do not see supply developments and environmental policy moves changing the energy price environment which became established in the mid-2000s until much later in the next decade.” View reference
Iain Reid, Head of European Oil and Gas research at Macquarie Bank, September 2009 – “This is our view – capacity has pretty much peaked in the sense that declines equal new resources,” View reference
Christophe de Margerie, CEO of Total, September 2009 – “We are running the risk of another oil crisis when demand outstrips supply around 2014 or 2015. There won’t be enough oil and gas by the middle of the next decade.” View reference
Fatih Birol, Chief Economist of the International Energy Agency, August 2009 – “Many governments now are more and more aware that at least the day of cheap and easy oil is over… [however] I’m not very optimistic about governments being aware of the difficulties we may face in the oil supply,” View reference
Vince Cable, Lib Dem Shadow Chancellor of the Exchequer, June 2009 – “Long-term thinking is difficult in the current political crisis, when most politicians are obsessed by tomorrow’s headlines,…but our future as a country depends much more on our ability to plan ahead for the next oil shock and the post-oil world.” View reference
Andris Piebalgs, EU Energy Commissioner, May 2009 “The current relatively low oil prices give a respite to prepare for the coming new oil crisis. We have to reduce our dependency in all those areas in which black gold is not indispensable… And in all sectors, we have to accelerate our efficiency being aware that every barrel of oil that we are using is one of the last.” View reference
Christophe de Margerie , CEO Total, February 2009 The world will never be able to produce more than 89m barrels a day of oil, the head of Europe’s third-largest energy group has warned, citing high costs in areas such as Canada and political restrictions in countries such as Iran and Iraq. Christophe de Margerie, chief executive of Total, the French oil and gas company, said he had revised his forecast for 2015 oil production downward by at least 4m barrels a day because of the current economic crisis and the collapse in oil prices. View reference
2008
Katsuaki Watanabe, President, Toyota– June 2008 “Our view is that oil production will peak in the near future. We need to develop power train(s) for alternative energy sources.” View reference
T. Boone Pickens, Chair BP Capital Management hedge fund – 17th June 2008 “I do believe we have peaked out at 85 million barrels a day globally,” View reference
Shokri Ghanem – head of Libya’s National Oil Corporation, 8th June 2008 “The easy, cheap oil is over. Peak oil is looming” View reference
Jeroen van de Veer – CEO of Shell, 22nd January 2008 “Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.” View reference
Rick Wagoner – ex GM Chairman and Chief Exec, at the Detroit Motor Show, 13th January, 2008 “There is no doubt demand for oil is outpacing supply at a rapid pace, and has been for some time now,…As a business necessity and an obligation to society we need to develop alternative sources of propulsion.” View reference
Dave O’Reilly – Chevron, 15th February 2008, “We’re seeing the beginnings of a bidding war for Middle Eastern oil between east and west,” View reference
Fatih Birol – IEA, writing in The Independent 2nd March 2008 – “We are on the brink of a new energy order. Over the next few decades, our reserves of oil will start to run out and it is imperative that governments in both producing and consuming nations prepare now for that time. We should not cling to crude down to the last drop – we should leave oil before it leaves us. That means new approaches must be found soon….. The really important thing is that even though we are not yet running out of oil, we are running out of time.” View reference
George W. Bush, March 5th 2008 “We gotta get off oil, American has got to change its habits,”.. “It should be obvious to all, demand has outstripped supply, which makes prices go up.” View reference
James W. Buckee -Retired President and CEO of Talisman Energy Inc., 29th January 2008. “If you think that at the moment the world is consuming 30-plus billion barrels a year of oil and is finding seven or eight billion barrels a year, and this state of affairs has been going on now for 20 or more years. “It’s obviously unsustainable and the world is increasingly drawing on the bigger, older fields. You couple that notion with the irreversibility of decline and you’ve got a very alarming picture.” View reference
Jeremy Leggett and Shell – Advertisement appeared in Time Europe Edition, one of the CNN Principal Voices series, 31st March 2008 “A premature topping point in global oil production would wipe out economic plans currently on offer in boardrooms and finance ministries around the world. This is because such plans assume growing supplies of affordable oil for several decades to come.“ View reference
2007
Sadad al-Huseini – former head of exploration and production at Saudi Aramco, 31st October, 2007 “The evidence is that in spite of the increases – very large increases – in oil prices over the last four years, we haven’t been able to match that with increasing capacity. So, essentially, we are on a plateau.” View reference
Christophe de Margerie – CEO Total, 30/31st October 2007. “100m barrels per day is now in my view an optimistic case…” View reference
Fatih Birol – IEA, interviewed in Le Monde, June 2007 “From now to 2015, the market and the oil industry will be severely tested. In the next five to ten years, oil production from non-OPEC producers will reach a peak before starting to decline, for lack of sufficient reserves. As each day passes, new evidence of this fact appears. At the same time the peak of the economic expansion phase of China will take place. The two events will coincide: the explosion of the growth of the Chinese demand, and the fall in production of non-OPEC oil. Will our oil system be it able to answer this challenge, that is the question.” “If production does not increase in Iraq in an exponential way between now and 2015, we have a very big problem, even if Saudi Arabia meets its obligations. The figures are very simple, you do not need to be an expert. It is enough to know how to do a subtraction. China will grow very quickly, India also, and even Saudi Arabia projections of the 3 Mb/day will not be enough to meet the rise of Chinese demand.” View reference
Lord Oxburgh- former CEO of Shell, September 2007 “…you’ve got three main variables: rising world demand, and it’s a bit hard to predict exactly how fast that is going to rise; how much oil is going to be available; and how fast substitutes for oil come to market (synthetic fuels can be made in quite a number of ways). But all of that said I don’t think this is going to happen in the next five years, and I would be surprised if the difficulties ahead had not really emerged within the next twenty.”
“The message in short is that we are just about to enter hot water, quite serious hot water. And the danger is that we sit there blissfully like the frog in the pan of water gently heating on the stove until – as the Irish would say – it wakes up to find itself dead. In other words we may be sleepwalking into a problem which is actually going to be very serious and that it may be too late to do anything about it by the time we are fully aware.” View reference
2005
Dr. James Schlesinger – former US Energy Secretary, 16th November 2005 “In the longer run, unless we take serious steps to prepare for the day that we can no longer increase production of conventional oil, we are faced with the possibility of a major economic shock—and the political unrest that would ensue.” View reference
Dave O’Reilly – CEO, Chevron in their Real Issues Ad, 12th July 2005 “Energy will be one of the defining issues of this century. One thing is clear: the era of easy oil is over. What we all do next will determine How well we meet the energy needs of the entire world in this century and beyond.” “It took us 125 years to use the first trillion barrels of oil. We’ll use the next trillion in 30.“ View reference
References from the press
2010
The Financial Times, 21st April, 2010 “Are policymakers, economists and peak oilists starting to speak the same language? A rash of papers, comments and interviews have made us think this recently. It’s not as simple as ‘policymakers are waking up to peak oil’, but that all those groups — and indeed, industry — are increasingly talking about the same issues looming in fossil fuel production, even if they’re using different terminology.” View original article
2008
The Independent Lead Article, 28th April 2008 “In the broader context, this crisis must be seen as part of the global energy squeeze. It has been clear for some time that global demand for oil has been outstripping supply. That is what is pushing up prices around the world. That a relatively minor industrial dispute such as this can have such a knock-on effect demonstrates how dependent Britain is on a relatively small number of supply outlets. The Grangemouth dispute will eventually, no doubt, be settled, but the chronic crisis of our economy’s total reliance on environmentally damaging and dwindling oil supplies will continue.” View original article
Financial Times Lead Article, 17th April 2008 “Preparing for the age of peak oil – Russia’s vast oil and gas reserves were seen not so long ago as the best hope of meeting growing world energy demand. No more. This week a top Russian oil executive echoed earlier official warnings that oil production could fall for the first time in a decade.” View original article
2007
Independent, 17th September 2007 “Oil Industry ‘Sleepwalking into crisis’ – Former Shell chairman says that diminishing resources could push price of crude to $150 a barrel’ View original article
CNNMoney.com – 7th August 2007 “Why oil won’t hit $100 – New production, new energy sources and some conservation could push down prices by 2010 – but don’t expect $20 a barrel anytime soon.” View original article
William Rees Mogg, The Times, 16th July 2007 “Oil ruled the 20th century; the shortage of oil will rule the 21st. There is now no doubt about the rising trend of oil prices.” View original article
Financial Times, 10th July 2007 “World will face oil crunch in five years – IEA says supply falling faster than expected.” View original article
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Permaculture Research Institute of Australia » Peak Oil – “The Debate is Over
http://permaculture.org.au/2010/11/10/peak-oil-the-debate-is-over/
Peak Oil – “The Debate is Over”
Consumerism, Economics, Food Shortages, Society, peak oil — by Craig Mackintosh November 10, 2010
It’s been a long time coming, but the uber-significant Peak Oil issue has finally started to infiltrate the corridors of power. What they’ll do with this information remains to be seen….
There is no reason for optimism. — Dr. James Schlesinger (former Secretary of Defence and the U.S.’s first Secretary of Energy)
I made mention recently of the leaked German Military Peak Oil study (German PDF here, key points summarised in English here) which looked at the Peak Oil issue from a national security standpoint. Now the New Zealand government has created their own study — releasing it publicly, rather than forcing some conscientious and concerned person to have to sneak it out the back door.
The summary findings of the study are almost word-for-word with what I wrote a long time ago (here and here for example).
Although there remain large reserves of oil which can be extracted, the world’s daily capacity to extract oil cannot keep increasing indefinitely. A point will be reached where it is not economically and physically feasible to replace the declining production from existing wells and add new production fast enough for total production capacity to increase. Projections from the IEA and other groups have this occurring, at least temporarily, as soon as 2012.
The difference between the global capacity to produce oil and global demand is the supply buffer. When the supply buffer is large, oil prices will be low. When the supply buffer shrinks – due to demand rising faster than production capacity or production capacity falling – prices will rise as markets add in the risk that supply will not be available to meet demand at any given point in time.
When a supply crunch forces oil prices beyond a certain point, the cost of oil forces consumers and businesses to cut other spending, inducing a recession. The recession destroys demand for oil, allowing prices to drop. Major international organisations are warning of another supply crunch as soon as 2012.
The world may be entering an era defined by relatively short periods of economic growth terminating in oil price spikes and recession.
New Zealand is not immune to the consequences of this situation. In fact, its dependency on bulk exports and tourism makes New Zealand very vulnerable to oil shocks. — The Next Oil Shock? Parliamentary Library Research Paper (emphasis added)
What we’re talking about is, quite simply, perpetual recession:
There is a risk that the world economy may be at the start of a cycle of supply crunches leading to price spikes and recessions, followed by recoveries leading to supply crunches. — The Next Oil Shock? Parliamentary Library Research Paper
END SNIP