The 2022 Energy Crisis Is Right Here Right Now

Written By: - Date published: 4:56 pm, June 19th, 2022 - 44 comments
Categories: budget 2022, climate change, Economy, energy, Environment, Russia, uncategorized, war - Tags:

OMG diesel just hit $3 a litre in Auckland. 91 Petrol is over $3.15.

Anyone wants to figure where inflation gets its rocket fuel from, start there. Add RUC.

Every part of our energy-dense life from plastic to tarmac to food to clothes to building materials is about to get smashed like we ain’t seen. Every person on a fixed income poor or in-denial-poor are just getting ground into the dirt.

It is like the entire corporate oil world has turned all of our banking accounts into cocaine and is sucking it up into its nose with tight-rolled hundred dollar bills.

Out in front of us, for as long as the Ukraine-Russian war goes on, is a global fuel price war. And there is actually nothing this government can do about it, beyond just buying fuel for us like it were mothers’ milk. A 50-50 milk and cocaine.

And it gets worse. With the global spike in natural gas prices, government market regulators near and far are struggling to manage electricity generation.

This week the Australian Federal government intervened into the national electricity market and required generators to deliver.

This was in no small part because natural gas prices are so high globally that the gas-fired generator companies simply passed on it and kept exporting. I’d link but the complexity is head-exploding.

Minister Bowers has ruled out expanding the life of the coal-fired plants in Australia. The entire energy market in Australia was suspended. Don’t forget: like New Zealand, it’s a market not a network.

Lest we get cocky in little ole’ eNZed, in August 2021 we went into a near-total North Island blackout. There is still no regulatory reform after it, so we will get more total blackouts. Not so much as a raised finger. We have not even tried to get to the limits of what politics can do for our energy reliance. Addiction. Disease. Whatever.

Anyone close to the industry knows how big the accelerating stress on the Transpower central North Island network is. The Electricity Authority continues to put strong pressure on Transpower’s Asset Management Plan and its old central North Island assets so the renewals are far too slow.

This government is instead beset by yet anotherdecade to consent, then multiple further years to build – in this case the National Battery Project.

Our new Resource Management Act does not favour to renewable energy. Instead we are reliant on the National Policy Statement on Renewable Energy. I can tell you this: the net outcome of that is every new major project still takes a decade to consent, then multiple further years to build.

But we only have until 2030 to get to the 100% renewable generation, and 2040 to get to 100% carbon neutral. 7.5 years to fully renewable.

Under this government we are improving and this year we were at 90% renewable generation.

All that TBH is Wellington bullshit to any family. There’s nothing redemptive about it.

They in fact we are getting electricity bills through the roof, and petrol and diesel prices are just budget-ruining.

What matters right now is that we are one of the most car-reliant countries on earth, we are getting crushed by petrol companies, and for as long as the Russia-Ukraine war is going this is going to screw us for month after month after month.

44 comments on “The 2022 Energy Crisis Is Right Here Right Now ”

  1. Maurice 1

    Let them ride Bikes!

    … pulling HUGE trailers to carry the kids ….

    If it goes on like this there will simply not be enough "old" energy to transport the components needed to build "new" energy infrastructure.

    OR to grow any food to keep us alive till the new stuff comes on line.

    WE ARE DOOMED!

    • lprent 1.1

      Which is why shifting this should have started several decades ago.

      And it did. Then we had the short-sighted disaster of the John Key National failure….

      All those ignorant dipshits did was build roads, water down the price signals in an already anemic ETS, and push for housing in the boondocks.

      The intelligent meanwhile long ago adjusted their lifestyles to suit. This Aucklander don't have to travel more than 5km unless we're visiting family in Rotorua or Invercargill. I mostly ride a bike. And spend time on the phone and video to them.

      I work in Hamilton and Texas mostly. I have been doing remote work since the 90s. We try to fill cars at least once every 6 weeks and often a lot longer, and they're efficient cars.

      The grids are my major vulnerability. So when we buy a new place, I will fix that.

      None of what is happening now is surprising. It is what happens periodically, and usually after you have put the stupid NationalAct into power. They always screw the future.

      • Belladonna 1.1.1

        Having just spent more than 5 hours in the car over this weekend (driving various family members to and from events, social gatherings, rehearsals, camps, etc.) – I feel the petrol pump pain.

        However, the Auckland PT system (especially on a weekend) simply would not have enabled us to participate in these events, without private transport. Bus routes either don't exist, or are prohibitively time-consuming.

        Without private transport, many things that Aucklanders currently do in their spread-out city, will simply not happen.

        And, they will feel very unhappy about it – you always feel the loss of something you used to have, far more than future sacrifices of things you've never had.

        • lprent 1.1.1.1

          And, they will feel very unhappy about it – you always feel the loss of something you used to have, far more than future sacrifices of things you've never had.

          Agreed. However for me that was years ago in the mid-90s and again at the end of 00s when I broke that kind of wasteful addiction.

          I looked at how much time and revenues that I was spending in transport. I decided that simply wasn't where I wanted to waste my life. Not to mention that running a active daily use vehicle is frigging expensive with WOFs, registration, maintenance, insurance , parking and the time that some idiot rear-ended me on the bridge (and drove away).

          Moreover I realised that I was invariably doing these things for other people. Mostly employers who simply didn't pay for it. So I stopped twice (classic addition pattern).

          I've used public transport where the routes were viable – ie a single trip or a trip to a hub and out. Stopped working out of walking (and now biking) distances.

          Of course if you have kids and away games you'll drive for them. Maybe – personally I'd be asking about group vans or buses for any team sports, with room for parents.

          But for an employer every day for 1.5-2 hours? No way. Daily commuting is where the costs of transport really add up.

          I'll drive 3 hours to see my father in Rotorua occasionally as a break from the phone calls or fly to Invercargill for my partners parents.

          But travelling for an employer? I'd used to fly offshore to sites when the return was lucrative enough. I probably won't do it again.

          These days I don't take jobs that are not remote or outside a easy cycling distance of about 5km one way.

          • Belladonna 1.1.1.1.1

            Yep, I don't do it for work (or at least, not without significant recompense). However, I do acknowledge that I'm in the lucky position of being professionally able to make that choice – I can tell my employer what I will and won't do (and make it stick). Not everyone has that luxury.
            But it's harder to stop for family.

            This weekend was (almost) all about driving so other family members could participate in activities or social gatherings. It just happened to be a perfect storm of everything happening over two days.

            We don't do the sport thing – our kid activities are theatre, dance, music, debating and scouts. Scouts already car-shares for away trips (On this occasion, I had to collect the teen early from camp, for another commitment). The others draw kids from all over the Auckland region – so PT and vehicle sharing aren't really viable. And, for some of them, there *is* no public transport option on evenings/weekends, or at all (without a 20 minute walk in the dark/rain)

            Removing these activities would radically cut the social engagement of the teen (who I already struggle to keep from disappearing into a computer). Speaking to sporting parents, I hear the same thing. Many have kids in multiple sports, and especially when you get to the representative level – you quickly lose any possibility of ride-sharing, and PT is slow (if available) and often doesn't get them where they need to be, when they need to be there.

            I'm perfectly willing to try PT options – but they need to get a lot better in frequency, timeliness and reliability. And, I live in an inner Auckland suburb – so not exactly in the remote regions. It's just that kids/teen activities are very rarely in the CBD – which is where all the Auckland transport goes.

            Family gatherings are another thing which isn't really PT friendly. I come from a huge clan – which is spread widely across the Auckland region (well, across the whole of NZ – but the Aucklanders are the ones we see most often).
            Again, these are almost never in the CBD (why would you pay those prices) – and are on weekends (with reduced PT timetables). Getting together for a beach BBQ, or an 80th birthday (one of this weekend's activities) at a local-to-the-birthday-girl RSA – just isn't really do-able for many people (takes too long, if, in-fact, there are any PT options. In this case, I was also taking my elderly mother, who has health issues. On the rare occasions when I haven't been able to take her – she just doesn't go. While she's an active user of local PT – never owned a car – the complexity of trying to get to a new and different suburb, with 3-4 different changes, is just too much for her.

            I use Auckland as an example – because I live and work there. And I can see just how impractical the current PT (basically buses) is for our current lifestyle.
            Changing the lifestyle will be painful – we'll miss out on a lot of things we currently enjoy. Changing the PT to support what we want to do is something I'd support, but I don't think that more (often empty) buses, which don't go where you need them to, are the answer. And bicyles just don't work for what we need to do (too far, takes too long, inclement weather)

            • lprent 1.1.1.1.1.1

              The problem with sport in Auckland is just how far everything is. It was bad enough when I was a kid.

              But these days Auckland leagues are spread out over must of the 607 square kilometres of the urban area of the current city. More than 50km end to end. This map from 2019 gives a sense of the scale – it was and probably still is more than the area of the next largest 12 cities in NZ combined.
              Click for larger image

      • joe90 2.1.1

        Going back five years, the crack spread sits within a very narrow range of around $20, until this February, when it starts spiking to triple that amount

        […]

        Moss sees some of these shutdowns as more than a coincidence. “The most direct and effective exercise of market power is to take a plant out of service,” she said. “And it’s not illegal under the antitrust laws to restrict output and jack up the price.” But it’s very difficult to distinguish between accidents and business decisions. “It’s easy for a company to say, ‘We’re not intentionally restricting output, we have this glitch,’” Borenstein said.

        Nope, no fuckery going on here.

        • RedLogix 2.1.1.1

          Well there is a balancing narrative as well – that I quoted below.

          It is my inside info that the US oil refiners have operated in a low margin market for a long time now, and this has had consequences in a number of directions. If these guys now have a stick to beat consumers with – it's because it was handed to them.

          And for no other reason that no new capacity will be built until the margins justify it.

        • lprent 2.1.1.2

          Yeah like Gazprom, who needed to do 'maintenance' to drop the Italian gas take by half this week. And France off.

          Now there is company with no future.

          Short sighted company…

          • RedLogix 2.1.1.2.1

            yeah – when billions of dollars are at stake, trust tends to be a one-time thing.

            • lprent 2.1.1.2.1.1

              I think that that Gazprom are calculating that they can get other customers like China or India or far eastern markets.

              However doing this kind of underhanded political trick would make any customer querulous and hesitant about relying on them. Especially the Chinese that they've been providing cut-price to.

              Not to mention that they don’t have good seaborne supply lines and few pipelines going that direction. Ukraine should start looking at how to build a long term navy for commerce raiding Russian cargos.

      • RedLogix 2.1.2

        A good read. At the risk of being selective – because the article covers a fair bit of ground – the core claim for me is this:

        Borenstein added that refiners also followed market signals. When the COVID pandemic collapsed transportation use, companies expected lower oil demand in future years, because of the transition to electric vehicles, projected changes in commuting patterns, and the belief that the fiscal response to the crisis wouldn’t be particularly strong. Stories about peak demand proliferated.

        Those expectations did not hold. Demand came roaring back, with people breaking free of pandemic lockdowns while remaining wary of public transit that puts them in close contact with others. And the imperative of a looming green transition made boosting refining capacity a tough economic play. “You can’t keep telling an industry that we will stop using your product and expect big investments,” Borenstein explained.

        Chevron’s CEO, Mike Wirth, said earlier this month that no new refinery will ever be built in the U.S. again, because of the large capital investment necessary to build one, set against governmental desires and activist demands to wean the world off fossil fuels.

        While it is true that no new oil refineries have been built for decades creating a very tight competitive landscape – the same is not generally true across their entire industry base which has seen a massive transition toward using natural gas to generate naptha, which in turn has become the core feedstock for their chemical and plastics industry – a role that crude oil used to play. So the refiners were being squeezed on all fronts, resulting in no investment in new capacity.

        The same has played out in Aus where one major refinery after another was closed down – often egged on by State govts who saw them as legacy heavy industry that was no longer fashionable. What will grow rapidly is however the Australian natural gas industry which sits on a massive resource. What does hurt however is a bizzare political arrangement which allows producers to sell subsidised LNG to export, especially China, while dinging domestic customers far higher prices.

        Also both Aus and NZ are over exposed to sourcing everyday transport fuels out of Singapore, and which in turn gets all of their crude from the ME. This was always a temporary arrangement as we are about to find out. Iran now has enough 60% enriched uranium to make at least one nuclear weapon – a fact of immediate and existential concern to the rest of the ME.

        What we are seeing in action is the direct consequences of the de-globalisation Zeihan has been speaking to for some years now.

        • Ad 2.1.2.1

          Australia is already looking at the biggest energy crunch in 50 years in generation. With natural gas prices this high, any rational gas producer is going to export a much as they can.

          I'm not convinced 'globalisation is dead' when cross-border energy trades are remarkably strong even as blocs firm up to pursue the cheapest energy they can find. It would certainly not surprise me to find more large ventures like the AAPowerlink from Darwin to Singapore pop up.

          AAPowerLink | Large Scale Renewable Energy – AAPowerLink

          It certainly appears to be focusing the minds of the US State Dept and Energy Dept for greater trade and relationship with Venezuela. An optimal moment to push Russia away from Maduro and get Chevron back front and centre there.

          US eases economic sanctions on Venezuela to bolster political talks (trtworld.com)

          • RedLogix 2.1.2.1.1

            Deglobalisation is going to be chaotic and very lumpy. Already we can see the first phases well underway and the world picks sides and moves into major blocs that will rapidly move toward acting like the mutually hostile empires of the pre-WW2 era.

            What happens for instance when the Indians finding that Russian oil might be cheap but unreliable – decide that some of those very fat slow moving supertankers on the way to Shanghai (there are 12 of them every day) might be better diverted to one of their major oil terminals? A few years back this was unthinkable – now what would be done about it? Certainly the US Navy is very unlikely to act to protect oil tankers destined for China.

            And that is just one of a myriad possible scenarios. So while there will be considerable trade for the immediate future, it will be either a lot less secure or a lot more expensive – or both.

          • RedLogix 2.1.2.1.2

            That AAPower project looks doable and with Hatch, Bechtel and SMEC on board an impressive pedigree.

            Ambitious.

          • Poission 2.1.2.1.3

            Australia is already looking at the biggest energy crunch in 50 years in generation.

            Same problem 5 years ago,offshoring ownership rarely helps.

  2. Cricklewood 3

    Diesel certainly is a rocket to inflation my relativly small work fleet costs an extra 5k month and with tight margins already the only option is price increases.

    It effects everything right through the supply chain all the way back to the tractor preparing land for planting, harvesting and delivery watch for steep rises in the cost of produce.

    • Ad 3.1

      Yes my joint probably runs the biggest diesel fleet in the country and there's little doubt our next Quarterly result is going to make us all pretty sick.

    • Maurice 3.2

      … and our local idiots have closed down the Marsden refinery which made both Diesel and Jet fuel from the local crude light oil product ….. the refinery is being decommissioned by filling the pipes with concrete apparently.

      No trucks/trains/tractors and no planes can move now without imported diesel – often of lower/variable quality … not to mention the urea based clean diesel product now in international scarcity.

      DOOMED! I tell you. WE ARE DOOMED!

  3. Poission 4

    Good post its an area that needs a healthy debate,on the constraints,compliance and costs.The latter being the fly in the ointment,in a climate of peak money and massive wealth destruction.

    We have averted power outages over last and this week due to the Taranaki tcc delaying maintenance (and extension from GE) to spring.Combined with good hydro flows on run of river,good storage,and strong winds prices decreased by 15% on the wholesale market (wk ending 12/6) and spot prices fell close to 0$mw for periods over the last week for similar reasons.

    There is also less demand due to a mill closure (with ramifications for ratepayers) and the closure of Marsden point (with similar effect on ratepayers,and angst for former directors forgoing a 1b$ windfall pa due to refining shortages)

    Transpower has around 10 large scale solar consents,along with the large scale Taranaki wind project.There are also a number of large scale solar industrial projects,which will be net users (not returning excess to the grid)

    There are also other large scale battery opportunities in the SI with Tekapo/Pukaki (designed in) and Lake Aviemore pumping back to Benmore (also previously planned) and substantively cheaper and quicker.

    There is also a need for low scale solar and increased co generation to reduce demand (and transmission waste) on the HVDC.

    • Ad 4.1

      Poisson your constant quotes of Energy futures has certainly inspired it.

      I bet this year we are going to see more pressure on US state call-in powers, more governors like Abbott of Texas getting a serious roasting.

      • Poission 4.1.1

        We need a good mix of both low cost and medium cost electricity to make NZ the cheapest producer of electricity and energy,we do not want a large scale financial burden.(of which planning constraints and delays are the number 1 driver)

    • Ad 4.2

      Would you mind just giving a bit more detail on some of those proposed developments.

      • Poission 4.2.1

        Taranaki wind is a JV with NZ superfund,and the Vikings.

        https://www.nzsuperfund.nz/news-and-media/offshore-wind-energy-commitment-welcomed/

        Si solar is canterbury with both large scale at Airport,and small scale at dairy factory.

        NI solar will be in taranaki and huntly to utilize existing transmission (with a battery at Huntly)

        • Ad 4.2.1.1

          Cheers it's the Huntly one I wasn't aware of.

          Just making sure my bid teams are across them.

          • Poission 4.2.1.1.1

            Theres another battery project for Taranaki in scope,and a smaller one for canterbury.Solar reduces transmission loss,an additional benefit not widely scoped,local distribution loss improvements are running around 75gwh 2021 and 2022 close to 100gwh (projected) savings are as efficient as production.

  4. RedLogix 5

    One of the more interesting outcomes of rising fuel costs is that couriers are being run off their wheels by rising demand.

    Younger generations are now routinely shopping online – not just for specialty items – but just about any damn thing that fits within the size and weight limits. My daughter was telling me the weirdest item recently was a box full of live bees. She carefully strapped it in on the front seat so there was no chance of it getting loose – and was much amused by the very distinct buzzing sound.

    But the point is that one courier carrying at high intensity is far more fuel efficient than hundreds of households making low intensity trips for the same total goods. How far this trend will go is hard to tell – while it see the end of brick and mortar retail once and for all?

    • Bearded Git 5.1

      Agreed red….in fact the high price of fuel is a very good thing….it has sent a signal that has forced people to think of ways to avoid using fossil fuel now and in the future.

      Excellent posts above have shown the way to go …large scale solar…small scale solar ..offshore wind farms.

      Most of these are already happening or in the pipeline. Battery technology will doubtless improve further motivating investment in these non-fossil energy sources

    • Belladonna 5.2

      But the point is that one courier carrying at high intensity is far more fuel efficient than hundreds of households making low intensity trips for the same total goods.

      Maybe…. You can definitely make the argument for something like supermarket shopping.

      However, I was at the mall last weekend – and stopped off to buy things at 7 different shops, 2 of the items required a try on first (shoes and trousers for the teen – who is growing at an alarming rate).
      Given that the shops don't co-ordinate the deliveries (and, in fact, couldn't, as they'll be shipping from a warehouse rather than the retail outlets) – I don't think that 7 different courier deliveries would have 'cost' less in fuel than my one trip.

  5. barry 6

    It is chickens coming home to roost. 30+ years ago we signed the Kyoto agreement and did fuck all to change things. We have had ample time to decarbonise the economy gracefully. Now we have to do it disgracefully.

    Yes big projects take time. The little projects that don't take time seem to be too hard to achieve as well.

    It is about how we live and where we live, as much as it is about where we get our energy. We are incredibly wasteful.

  6. Robert Guyton 7

    What! no! how? – who could've..? why didn't..? couldn't we just..? if only the …

  7. roblogic 8

    I suspect the map for NZ is the same. Resilience? Sustainability? Mere words

    https://twitter.com/lj_sam_/status/1537886353555222530?s=21&t=2qIHtc0uokzNsOSgIHQrHw

  8. Stuart Munro 9

    Oh – so the decision makers are finally starting to wake up.

    After ignoring us for three or four decades.

    Commercial role models were too focused on the next few quarters to anticipate the obvious problems. It's been steady as she goes straight onto the rocks.

    I wonder who they expect is going to salvage this ship of fools. Most of us will be too busy struggling to keep our heads above water.

  9. PsyclingLeft.Always 10

    The EU is still buying Russian oil

    While the EU agreed to cut 90% of Russian oil imports by the end of the year in late May, the union is still currently importing more than half of all Russian oil exports.

    The EU accounted for 61% of Russian oil and gas imports in the first 100 days of the war, buying around $59 billion worth of oil since Russia first invaded Ukraine, according to a new report out Tuesday by independent research group the Centre for Research on Energy and Clean Air (CREA).

    https://fortune.com/2022/06/14/putin-russia-oil-gas-profit-revenue-europe-china-india/

    The International Energy Agency said in May that Russia's oil revenue was up 50% since the beginning of the year to $20 billion a month, with the EU taking the biggest share of its exports.

    https://www.reuters.com/business/energy/russia-energy-revenue-may-be-higher-now-than-before-ukraine-war-us-official-says-2022-06-09/

    The World despite all the WARNINGS..still runs on fossil fuel. And not much sign of change when the profits are so disgustingly huge.

  10. Lanthanide 11

    Yep.

    Warning, this is a very grim read:
    https://ourfiniteworld.com/2022/04/21/the-world-has-a-major-crude-oil-problem-expect-conflict-ahead/

    And this one, figure 7 (Area chart showing population growth vs standard of living) is particularly chilling, I thought:
    https://ourfiniteworld.com/2022/05/17/is-the-debt-bubble-supporting-the-world-economy-in-danger-of-collapsing/

    • Cricklewood 11.1

      Whelp that was depressing… almost wish I hadn't clicked through…

      • Lanthanide 11.1.1

        "Peak oil" really means "Peak civilization".

        Which means "peak everything".

        Including people.

        Looks like Limits To Growth was more or less on track.

    • alwyn 11.2

      Welcome back. You have made my day.

      I found your comments were always the most interesting on this site and that you were one person who one could debate with in a civilized manner.

      • Lanthanide 11.2.1

        Thanks. I'm more mature now. Not sure I'm going to be posting nearly as much as I used to though.

  11. Ric 12

    If petrol and diesel prices or supplies become very difficult NZ will have more resilience if we have a higher number of electric cars. The government should legislate for various public bodies to have a certain percentage of their fleet electric.

  12. Tiger Mountain 13

    Time for an anticapitalist response to all of this. Fossil fuel days are numbered as long predicted, but the oil and gas corporates are not going to go quietly are they? no they are not–a profiteering binge is in order it seems, and any excuse will do!

    In NZ, power generation and supply needs to be returned to full public ownership and control, Fare Free public transport, extension of rail, extension of recently announced return to NZ owned coastal shipping, and subsidies galore for EVs, hybrids and domestic solar panels.

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