The Greens and environmentalists have been talking about peak oil forever. Unfortunately, the Cassandras of New Zealand politics have been ignored for far too long.
Now, the IEA and IMF have joined them in warning that governments need to act immediately.
After decades of bouncing from cloud to cloud, predicting that enough oil to satisfy demand would simply show up when needed, the IEA has, over the past few years, cut its future production forecasts dramatically (and embarrassingly) to the point where it now concedes production of conventional crude peaked in 2006. This interview with the IEA’s chief economist, Faith Birol, on RNZ is well worth a listen.
Oh and the IEA says New Zealand is well past its own production peak, no matter how many millions the government spends subsidising foreign oil companies to come and undertake risky deepsea drilling off our coast.
The IMF has joined the IEA in suddenly waking up to the danger of peak oil that it had wanted to ignore. It’s major report on oil predicts a “downshift in the trend growth of oil supply”. That ‘trend growth’ has been flat for the past half a decade, so what do you think a ‘downward shift’ means?
The UK government is reacting by putting together an oil shock response plan based on $250 a barrel oil by 2014 (remember when oil was $25 a barrel? Aren’t we in an oil shock now?)
What about New Zealand?
Well, if you want really good energy policy, of course, you look to the Greens. They’ve been right for so long and we all know what they’re saying, so lets see what the major parties are doing.
Almost overlooked among the talk of ETS, R&D, and fair minimum wage at its congress, Labour also pledged to cancel one of National’s white elephant motorway. Great stuff but that must only be the beginning. Labour has framed the cancelling of the $1.7 billion Puhoi to Wellsford holiday highway as a ‘nice to have’, a choice that we can’t afford to take when there are other more important things to fund. I’m not actually worried if Labour doesn’t start talking about peak oil explicitly as long as it walks the talk by cancelling more useless highways and putting money into energy R&D. The economic argument for doing this writes itself without the need to get into the peak oil side of things.
And what about our government? What is the Nats’ reaction to the oil shock we’re currently experiencing and the warning from major institutions that more are on the way? Well, they gave more money to oil exploration in the budget, and they’re planning four more ‘Roads of National Significance’.
These ‘vital’ roads include forking out hundreds of millions on an improved highway between Cambridge and Taupo – a road that sees 6,000 cars a day at present. Given that the current RoNSs have benefit cost ratios as low as 0.6 (we’ll get 60 cents of benefit for every dollar we spend on Transmission Gully, and they’re planning to spend a billion on it), I shudder to think what wastes of money the next four down the list will be. Looking at the list, new RoNSs seem to be part of the silly old romantic notion of a four-lane highway running the length of the country, which Maurice Williamson used to talk about. National plans to pull money out of highway and local road maintenance as well as public transport infrastructure to pay for these new white elephants. This in a time when traffic levels on the motorways we have are falling.
It’s simple. If you want affordable transport in the coming years, you want a government that is going to build a transport system better designed for future oil shocks. And that means you want a Labour-Green government, not the day-dreamers we’ve got now. Remember that on November 26th.
– Bright Red
[hat-tip to the indefatigable Dennis Tegg whose blog on oil is an amazing resource.]