Monday, April 24, 2006

NZ Prime Minister out of the closet on Peak Oil

PowerLess NZ Press Release
21 April 2006

As the price of oil hangs at record heights, unmoving, like a pall threatening to choke economies and festering the sore that is inflation (October delivery contracts on the NYMEX are over US$75 a barrel), the cattle-class as well as the impotent media transfixed by daily trivialities and titillations by and large continue to remain clueless as to why we are paying almost $1.80 a litre at the pump.

Economists and “analysts” roll out the usual suspects whenever the price moves skyward, security worries in Nigeria, “weapons of mass destruction” in Iran, or was that Iraq, hurricanes in the gulf. The point today is any minor supply concern that results in a few thousand-barrel production cutback translates into a several dollar bull-run on oil on the mercantile exchange which is never clawed back. To say that “the end of cheap oil” is here is to merely state the bleeding obvious.

Matt Simmons energy investment banker and Peak Oil advocate argued that 2006 would be the year Peak Oil would be absorbed into the public consciousness as much as climate change and it seems he may be right. This week Helen Clark, New Zealand’s Prime Minister joined a rapidly growing but exclusive club, the penny has obviously dropped – she openly admitted the real reasons behind high oil prices, “because we're probably not too far short of peak production, if we're not already there” [1].

This watershed statement, which incidentally went over the heads of most of the media turkeys in attendance, has enormous economic and social implications. Firstly it absolves Trevor Mallard (acting Minister of Energy) from having to regurgitate International Energy Agency nonsense that Peak Oil is at least 30 years away. “Not too far short of peak production, if not already there” surely can’t mean the same thing as 30 years away. The minister can now base policy in geological reality rather than the flawed economic “business as usual” fantasy that has cheap abundant oil production growing alongside the economy for all eternity.

But will he? Will she?

I can already hear the screams of the damned led by Peter Dunne, all the way down every double-laned highway in the country. By this very admission the Prime Minister puts the Government in a very sticky situation. If indeed we are already at peak oil multi-billion dollar roading projects are about as sensible as New Zealand developing it’s own uranium enrichment program. But New Zealand is obsessed with the “growth” dilemma. Economic growth necessarily depends on a cheap energy subsidy, to grow economically one needs to increase energy consumption. As the price of oil continues to creep upwards the spectre of oil-shock induced stagflation looms. The economy is already stagnant. Interest rates are relatively high and inflation is expected to run at over 3% this year. Expect the ride to become somewhat bumpy over the next couple of years.

In light of Prime Minister Helen Clarks peak oil admission the concept of growth must be re-evaluated. Economic growth and oil production exhibit a linear relationship. As we enter the era of oil decline, Jim Kunstler argues the only growth we are likely to see is “growth in our exertions to stay where we are, and the truth is many of the weak will simply fall behind” [2].

If Helen Clark truly comprehends peak oil then momentous changes in public policy must follow, not to mitigate risk in light of such information incurs liability and, is arguably negligent.

The Clark led Government must start immediately with the recognition that we have adopted (and continue to develop at breakneck speeds) a suburban living arrangement for which the outlook is truly bleak. The public can no longer get what the public wants, the required message will not be popular.

Continuing to pump billions into roading projects, ultimately dependant upon the continued stream of cheap Middle Eastern oil after the Prime Ministers admission is moronic. With less oil being produced every year and as the price of petrol moves beyond Himalayan like territory, Transmission Gully (just picking one example), begins to look like a very expensive white elephant – a monument to the exuberant industrial age, as Kunstler would say, when there was always more of everything.

[1](2006) PM Talks Palestinian Aid, Health 'N' (Peak) Oil, Tuesday, 18 April 2006, 5:53 pm , Article: Scoop Audio.,

[2] Kunstler, J. (2006) April 3, Clusterfuck Nation Chronicles: Commentary on the Flux of Events.,

Steve McKinlay for
PowerLess NZ
PowerLess NZ is a growing group of scientists, energy analysts and concerned citizens whose principle objectives are to alert both Government and the general public to New Zealand’s looming energy crisis. Our aim is to support development of renewable energy resources at both a private and public level, as well as encourage a firm move away from dependence upon fossil fuels.
Steve’s blog is located at
More information about global peak oil and resource depletion can be found at

Tuesday, April 18, 2006

Oil Settles Over US$71.

Interestingly the media largely ignored the movement from around $62 a few weeks ago to the current 70 odd dollars a barrel. However the last 48 hours have seen all the usual excuses being rolled out, Nigerian concerns, Increasing descent into civil war in Iraq, Iranian Weapons of Mass Destruction etc.

So the average clueless punter queuing up at the pump is paying all time NZ record amount for petrol - almost $1.70 a litre.

Meanwhile the heavy machinery continues to roll around the Terrace Tunnel Wellington with the "bypass" well underway. It's hard not to question the sense in building all this shit. Millions of dollars building concrete ramps all for the holy grail, chopping 3 minutes off your commute time across town, by the time they are finished only the rich will be able to afford to drive on them. And I'm yet to see a single bio-fuel pump station pop into existence as the market promised. I guess there will be a run on used chip oil from the local greasy shop.

On another note, weeks ago I wrote to Trevor Mallard (acting Minister of Energy) with two points. 1. I pointed out the flaws in the MED Oil Pricing Assumptions and Modelling, I wrote a PowerLess NZ press release on this (follow the link). 2. I asked if the minister could assure me that appropriate transparent risk mitigation analysis be done before a billion tax payer dollars was spent on more roading (A billion dollars is the expected cost of the Transmission Gully road).

So far I recieved nothing although I was promised a reply. This from Bruce Donaldson, Trevor Mallards secretary.

Thanks Steve,

I can advise that a response is being prepared for the Acting Minister of Transport and will be copied to the Acting Minister of Energy for his information. The Acting Minister of Energy has noted your email Steve and is seperately enquiring of his MED officals the robustness of their and the IEAs modelling for his own information in light of your concerns.

Yours sincerely
Bruce Donaldson

Private Secretary to the Acting Minister of Energy, Hon Trevor Mallard

I wait with baited breath.
Steve McKinlay