Oil and Water Mix.

Written By: - Date published: 11:17 am, June 20th, 2017 - 23 comments
Categories: capitalism, Economy, energy, Environment, Ethics, global warming, political alternatives, science, tax, water - Tags: , ,

When we turn on the tap and pour ourselves a glass of water, fill the jug, have a shower or whatever, we don’t pay for it. All of the infrastructure that delivers the water to our tap has been paid for and is maintained through rates. In times of drought, we might have by-laws enacted that mean we give up watering our lawns or washing our cars. Money does go towards providing a resource – water for households. But it’s not generally paid for on an individual ‘user pays’ basis, and in certain scenarios, regulations kick in to limit its use.

Why don’t we have a similar situation governing our use of fossil fuels?

If climate sensitivity is low (a very optimistic assumption) then we have about 20 years to make our energy system completely fossil free. That would give us an outside chance of holding any rise in the world’s average surface temperature below 2 degrees C, and ensure that only hundreds of millions of people in equatorial and the tropical regions died. That’s probably the best we can aim for now. We can price, tax, or trade in CO2 as much as we like for the next 20 years, and the result will be a world beyond 2 degrees. In the time we have available, there are no existing price mechanisms within our current economic paradigm that will reduce our fossil fuel use anything like fast enough.

But that’s okay – by taking some pointers from how we manage our water we can see possible ways forward.

In 2015, the IMF calculated that the NZ government subsidised the fossil industry to the tune of some $NZ 3.6 billion per year (up $NZ 0.43 billion from 2013).

Now we’re being told that the government intends to pay out another $NZ1 billion per year for 14 years, with the idea that those payments will somehow allow us to continue pouring ever increasing amounts of CO2 into the atmosphere. In some abstract world of economics, one where physics doesn’t exist, that might make some sense. But this is the real world. Physics exists.

So in recognition of reality, why doesn’t the government take that $NZ 1 billion, add on the other $NZ 3.6 billion identified by the IMF, and use the resultant $NZ4.6 billion to buy all of NZ’s gas and oil needs from the oil companies at current wholesale prices, and then, with a caveat that we’ll come to in just a second, provide liquid fossil to end users in much the same way we do water?

Last time I looked, NZ consumed about 2 billion litres of diesel and petrol every year. The wholesale cost of a litre of diesel or petrol is less than $NZ1. So if the government was to buy up the whole lot there’d still be some $NZ 2.6 billion left over in the first year. And with the introduction of a hard sinking cap (that’s the caveat), an increasing amount left over in every subsequent year.

Does anyone think that $2.6 billion wouldn’t be enough to cover gas purchases from the public purse and fit the 1500 petrol and diesel storage tanks in NZ with the  hardware and software required to manage a hard sinking cap on fossil availability?


I’ve cheated a wee bit on the figures. The $3.6 billion the IMF calculated was the total cost of both direct and indirect subsidies to fossil fuel. So maybe the government would  need to introduce a new tax for high earners (who tend to be high fossil users) in order to cover any short term gap between on-going but shrinking indirect costs (eg – fossil related health expenditures) and the monies required to buy up the country’s fossil needs.

A hard sinking cap that reduces the availability of fossil fast enough, as per required by the best scientific information we have, gives us some time to adapt to fossil free living. The first year or so would likely be quite painless, and by the time it’s getting around to being difficult well, at least we’d be into the swing of things.

Our other option of course, is to keep on with the strategy from the past quarter of a century, of doing nothing useful in the hope that we (and everything around us) can adapt to all the effects that will come with an ever increasing rise in the world’s average surface temperature.

One of the above two options is complete madness.

23 comments on “Oil and Water Mix.”

  1. Wayne 1


    Clearly you do not live in Auckland. We do pay water rates on a volumetric basis. That is when you fill your glass from the tap, you pay for that use. These water rates pay for the water storage and reticulation system. Many other towns and cities have similar systems of water charging.

    • weka 1.1

      Given that most places in NZ don’t pay for water by the glassful, and you are old enough to remember when all water was free, your comment is pretty much irrelevant to the post and to the comparison that Bill is making as a way of looking at fossil fuel use and how to lower it fast.

      • mordecai 1.1.1

        Actually, given the proportion of the population do live in Auckland, and given that Auckland is far from the only region in which the citizens pay for water, the opening sentence of the post is downright misleading. But then given other comments in the post (eg ” then we have about 20 years to make our energy system completely fossil free.”) the entire article hardly rises above the initial error.

    • Bill 1.2

      Yes Wayne. Obviously I don’t live in Auckland.

      And obviously you didn’t read the post with any degree of mindfulness. This line about domestic water, that I’m helpfully adding emphasis to “it’s not generally paid for on an individual ‘user pays’ basis” covers off your attempt at avoidance.

      Anything to say about the substantive issues raised in the post or about the general thrust of the post?

      • Wayne 1.2.1


        Obviously my comment was not directed to the main point. But the opening sentence was certainly a bit odd for an Aucklander to read.

        As for rationing fuel which is what a “hard sinking cap” would be, well “no.” In principle I dont like that level of government interference.

        Price signals as per the ETS is better. It is really a question of the cost of the credits that gets added to the fuel cost.

        I prefer positive incentives, such as making electric cars more desirable.

        Perhaps a rebate of the GST. Which is different to making them GST exempt, but would provide the same economic incentive.

        That would bring the new price of the cheapest practical E cars down to around $40,000. If the cars were good enough (and the Nissan Leaf wasn’t being too range limited) then we should see substantial purchaser uptake. Even the BMW i3 would be around $55,000 or so without the GST component.

        • Bill

          Do any of those measures equate to a 15% reduction in fossil use this year Wayne? And in the following year too? And in every year thereafter? That’s the order of the cuts we need for just an outside chance of ducking 2 degrees C of warming.

          This isn’t about ideological preferences Wayne. This is about doing something that works.

      • mordecai 1.2.2

        ““it’s not generally paid for on an individual ‘user pays’ basis””
        How do you define ‘generally’? Add the population of Auckland, Rotorua etc and you’ll get a substantial proportion of the country’s population paying for their water on a usage basis.

    • RedLogix 1.3

      The whole fossil fuel/climate change issue was politicised, not because of the science, but because the right was afraid of the measures they knew would be necessary to combat it.

      • Bill 1.3.1

        Denial and/or avoidance isn’t a right/left thing RL.

        If it was, there would be plenty of examples of worthwhile action to point to that came from governments that claimed to lean to the left. But there are none. It’s been over a quarter of a century’s worth of meaningless bullshit from left and right.

        • Draco T Bastard

          True, Labour’s just as bad about propping up capitalism as National is.

        • weka

          Actually Clark’s Labour government at the department level was doing significant work on preparing NZ for the coming climate change issues and they just got ignored by the incoming National Party. Even though the left aren’t there yet, they’re still miles ahead of the right, and at least moving in the right direction.

          • Bill

            The rhetoric coming from Clark’s government was definitely streets ahead of anything we’ve witnessed this past, however many years in NZ, true.

            But in terms of action or proposed action, it was still very much mired in incrementalism – by which I mean the notion, that although the problem might be recognised, the solution is seen as lying in changes being made to current political and economic settings with an aim of preserving the basic underpinnings of those settings.

            Whereas that might have been possible back in ’91 or whenever, it’s just not an option now. Anything suggesting such a direction of travel today is going very much in the wrong direction.

            To expand. We need cuts that are somewhere in the order of 15% per annum.

            But the very powerful ‘high priests’ of mainstream economics has been very insistent that CO2 cuts above about 5% per annum will lead to the collapse of liberal capitalism. So that 5% as a maximum has been fed into just about every Integrated Assessment Model of global warming. Scientists have accommodated that over-riding ideological consideration by ‘fiddling’ other parameters such as peak emission dates or emission rates. (Kevin Anderson has done a lot of sterling work revealing it if you care to look it up)

            I’m away now, but will pick up on this post/ this thread tomorrow.

          • RedLogix

            Agreed. Same here over the Tasman, climate change is an issue that has torn apart one government after another. But fundamentally it was the left who strove for a carbon tax and the right which succeeded in sabotaging it.

            Now almost two decades later Turnbull’s govt has tacitly conceded that some form of carbon pricing is necessary … but still fights off reactionary idiocy from the right of the Coalition.

      • Andre 1.3.2

        Opinion pieces that come across as being motivated by wanting to upend capitalism and completely change the structure of society, and responding to climate change is simply a handy tool for that goal, also do a good job of politicising the issue in an unhelpful way.

        • Bill

          Opinions that come across as being motivated by wanting to preserve current capitalist settings at all costs, and in lieu of making changes that are necessary in light of global warming are dangerous opinions that deserve nothing but contempt and dismissal.

          Either we change or global warming will force the change that you, Andre want to avoid. You’re position is lose/lose. But it seems you simply don’t want to think it through and don’t give a shit if that means taking everyone and everything down on the back of the stupidity and fear you support and defend.

        • RedLogix

          Exactly. While there is plenty of evidence of villainy on the part of fossil fuel corporates funding fear and doubt denier campaigns simply to protect their shareholder profits … it hasn’t helped that various flavours of Marxism have happily fanned those fears into full flame by proposing solutions which utterly upend the world as most people understood it.

          This should have been a relatively straightforward issue to deal with, albeit challenging at scale. No more politically difficult than dealing with CFC’s and the ozone layer. Instead it was polarised into paralysis.

          Actually I don’t have too much issue with Bill’s proposal in the OP. Quite doable as long as there is a clear path painted through the phasing out of oil.

          People do value the freedom of movement the motor car brought them enormously. I still vividly recall the little baby-blue Austin A-35 that was my father’s first car, and how much it transformed my parents lives. We forget that for much of human history the vast majority of women who ever lived probably spent their entire lives within a 5 mile radius of the spot they were born. Sack cloth and ashes is not a political substitute for this freedom.

          No wonder voters have largely opted for a passive-aggressive resistance to what needed doing. No wonder most people know the science is real, but remain tight-lipped about what to do about it. Because the agenda was noisily hi-jacked on both sides of the spectrum by extremists, the majority opted to do nothing.

          Having said this, I think the mood is changing. Fence sitting is becoming less viable as each climate disaster strikes, as the brute arrogance of the carbonites becomes less tolerable, and it becomes clear that renewables, while not yet perfect, are indeed a viable alternative.

          OK so there is every reason to hope for the demise of the fossil carbon giants, and the excess concentration of power they have accumulated. But to move and motivate the great mass of people, it is crucial to have a vision of a future which they can recognise, that they see themselves being a part of, that inspires hope rather than dread.

          • Andre

            I was getting started on something fairly close to this in reply to Bill, but you beat me to it and did a better job. Thanks

            • garibaldi

              The sad fact is that the changes the whole developed world has to make in their lifestyles are colossal and thus won’t be done until forced upon them.
              The biggest single polluter is the American military. Anyone got any ideas on how to stop them? Any ideas on how to stop the opposing militaries?
              Who is going to stop the other numerous excesses of various industries in numerous Countries worldwide?
              The problem is so vast I can’t see human beings being capable of solving it. Going to Paris and signing an unsatisfactory document was pathetic .

  2. Draco T Bastard 2

    What’s Up With That: Building Bigger Roads Actually Makes Traffic Worse

    Interestingly, the effect works in reverse, too. Whenever some city proposes taking lanes away from a road, residents scream that they’re going to create a huge traffic snarl. But the data shows that nothing truly terrible happens. The amount of traffic on the road simply readjusts and overall congestion doesn’t really increase.

    The simplest way to start decreasing our fossil fuel use seems to be to start digging up roads.

    Just think, if we turned the road outside everyone’s house into a nice community area people might actually start talking to their neighbours.

  3. Gosman 3

    Have you ever wondered why the moves to combat climate change are stalling? It might be something to do with the continued linkage people make between the economic system and the problem. You might well be right but you also will not have much luck getting traction on change. Perhaps you don’t think it is an urgent problem though. In which case please carry on as you are.

    • weka 3.1

      Well duh. Of course it’s linked to the economic (and political) system, and of course people are struggling to accept that and know what to do. Teaching your grandmother to suck eggs there Gosman, but I see you don’t offer any solutions and I suspect that’s because you value money over life. Not to worry, you’ll go down just as fast as the rest of us.

      • One Anonymous Bloke 3.1.1

        Gosman will no doubt try and figure out how to go down faster than anyone else, for a profit.

    • roadrage 3.2

      Building solar panels costs resources, it could be argued that Trumps move to decouple from Paris was to let the US compete with China. So Trump is either irrelevant as we are moving towards compliance or his ineptness is helping. Coz the way it looks is Energy industry is already moving to the new paradigm. As for carbon targets, really, were they ever just a big talk fest.

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