Asset sales delayed
Breaking news – the government is delaying the sale of assets until at least March next year.
Economy
energy
Iraq and Big Oil
Author Greg Muttitt writes on Iraq and Big Oil. A very useful contribution to our understanding of the forces shaping the geopolitical landscape and the likely shape of the coming energy conflicts.
A Good Idea?
Planning permission has been sought to construct the world’s largest windfarm off the Scottish coast. Estimated to cost around 4.5 billion pounds and […]
Petrol hits record
Z has set a new record for petrol prices with 91 up to $2.23. The others are expected to follow. We are in a new oil shock due to peak oil. The once unimaginable $2 a litre is now the low price. Ironically, the high dollar that is killing our exporters is protecting us from much higher petrol prices. So why is our government investing $12 billion on deepening our oil addiction?
Sell assets to avoid debt; take on debt to build motorways – huh?
So, let me get this straight. Debt is bad. So bad, in fact, that the Government is willing to sell assets that produce higher returns than its cost of borrowing to free up money and avoid taking on more debt. But this same Government is now planning to borrow to fill a $5 billion hole in its transport budget caused by its unneeded motorway projects.
Nats lied – power prices to rise
Minister after Minister denied it, but it turns out that common sense is right. Private power companies charge more. Privatisation surely means that prices will rise. Is it even news when this government lies these days?
140,000 for a clean energy future
The biggest petition to Parliament in 3 years was presented yesterday with Greenpeace’s 140,000 signature call for the Government to halt subsidisation of fossil fuels and invest in a clean energy future instead. 140,000 signatures is a remarkable achievement. Predictably, it got a nasty response from the Government. Their ugly attitude is turning off voters.
Stranded in suburbia
We know that more sprawl is actually twice as expensive to the rate- and tax-payer than increasing density within existing urban limits because […]
A golden age that will never end
Whether you accept the evidence that the consumption of oil is currently peaking or not, it is undeniable that a) the world’s fossil fuel resources are finite and we’ve already consumed a large fraction of it and b) we won’t keep consuming evermore per day until it’s all gone. So, inevitably, the shape of human fossil fuel use is going to look like this.
One RoNS down
The Government has binned part of the Northern Wellington Corridor ‘Road of National Significance’ – the four-lane expressway between Otaki and Levin that would have cost $400m. The government’s not getting enough road tax revenue and they had already cut all other transport funding to the bone – so something had to give. But it’s just the start.
Buyer beware
Are you keen to buy shares in Mighty River Power with a dividend return of 4% pre-tax? You can beat that in the bank, and paying off debt is a far better use of money. But say you’re still keen. What about the threat of Mighty River losing water rights or having to pay for them – will you buy in with that unresolved? Only nutters would take Key’s offer with that up in the air.
A rock and a hot place
Yesterday National pollster David Farrar excitedly quoted from a George Monbiot article saying peak oil isn’t happening. Two problems: 1) Farrar omitted to quote the bits of the article saying that the flipside of no peak oil would be runaway climate change. 2) the report Monbiot’s article is based on is written by an oil executive who claims we’ll stumble on endless cheap oil and all live happily ever after.
Iwi and the riverbeds
The only remaining possible legal threat to the Nats’ plans to sell off our power companies is a Treaty based claim to water rights or riverbeds.
It’s for efficiency
Now we learn that directors’ fees are set to double after National sells or assets. Who pays for the fat-cats to get twice the cream for the same work? We do. Through higher power prices. It’s just another cost of privatisation that we all pay – despite the fact that Treasury reckons 95% of us won’t buy shares. No wonder 100,000 of us have signed the referendum petition already.
Undeniable logic
Lose our assets, get higher power prices
Efficient market hypothesis
Bill English has attacked the MED numbers showing that private electricity companies are 12% more expensive than public ones saying that argument assumes “that hundreds of thousands of New Zealanders are systematically paying more for electricity than they could?”. Um… Has English heard of Powerswitch? That multi-million dollar government campaign is based on exactly that premise.
People make a mess
Like the character, Nick Taylor, in the movie, ‘Thank You For Smoking’, self-styled “Oil lobbyist”, David Robinson is a highly paid apologist for the fossil fuel lobby. But even he says he wouldn’t want fracking in his neighbourhood.
Rock and a hard place
We’re in a second mini-recession/stall since the Great Recession began in 2008. As in 2010, oil prices ramped up and growth petered out. Now, oil prices have dropped back a little. But the moment the economy shows mild signs of life, they’ll be back up again. Short periods of weak growth, oil price shocks, recessions – sounds like the cycle peak oil economists have predicted for years.
$5 a litre petrol, here we come
Last week, the IMF warned that oil prices will double over and above inflation in the next decade. The Greens crunched the numbers and say that means we’ll be paying $5 a litre for petrol in 2022. If it wasn’t clear before, it is now. A handful of white elephant highways is a poor use of $14 billion, especially when petrol is only getting more expensive.
Asset sales mean power price rises
Molly Melhuish was one of dozens of oral submitters on the Privatising Your Assets Mixed Ownership Model Bill yesterday – all opposed. Her research shows the average price of power from a private provider is 3.31 c/kWh higher than from an SOE. Contact Energy’s boss says private investors need prices to rise even more. The implication is privatisation will remove the shackles.
Earth Hour
OK – so we’re a bit late with this – but it’s Earth Hour, 8:30 – 9:30pm NZ time.
Farrar discovers peak oil, nearly
Barack Obama will be breathing a sigh of relief after David Farrar endorsed his call to end oil subsidies. It seems the 3rd oil price spike in 5 years is getting the attention of even the Right. Something, they’ve got an inkling, is wrong and rising petrol prices are here to stay. Pity that, on the cusp of revelation, Farrar opts for the security blanket of neoclassical economics.
Iran
Israel and the US have both been ratcheting up their rhetoric against Iran in the past few months and an attack on Iran’s nuclear facilities looks highly likely. Just the other day, Obama told Iran to stop its nuclear programme or else adding, “I don’t bluff”. I really, really hope he’s bluffing. Because Iran’s ready to make an attack on it cost the world big time.
Ryall confirms asset stripping on the cards
So, National wants to re-assure us that, when they sell our assets against our will, they’ll keep 51% and control. But, um, minority shareholders have rights and private boards have to maximise profits ahead of the national interest. If they decide to sell off the dams later they can, and the Nats won’t stop them.
MoT reveals massive budget shortfall from peak oil
Almost missed among all the blacked out paragraphs of the Transport Briefing to the Incoming Minister are 2 interesting graphs. While not explicitly mentioning peak oil, the graph of the National Land Transport Fund shows a massive shortfall in revenue in a ‘high oil price, low growth’ scenario. The other shows how low-quality National’s highway spending is.
NRT: Climate change: Cross-purposes
No Right Turn has a look at two of the incoming minister briefings impacting on climate change. They are incoherent and it is clear that neither ministry talks to the other. If it wasn’t affecting a important long term issue, it’d be as funny as a Yes Minister episode. But since it does, it just highlights the growing incoherence of this incompetent government and their increasing politicization of the civil service.
Oz & NZ govts suppress official peak oil warnings
Dennis Tegg has a good piece on the release of a secret Australian government report that warns peak oil is upon us: The Daily Telegraph has revealed how the Australian government has attempted to suppress its own report on peak oil. The response from the New Zealand government had been equally secretive and obfuscating.
Adapting to peak oil
As peak oil slowly grinds down our economy – meeting any hint of growth with sky-high petrol prices and making $2 a litre the ‘new normal’, we are actually, gradually,starting to react. Not at a governmental level, where action is most urgently needed, but in the decisions made by ordinary Kiwis every day.
Texas of the South Seas?
Every few years, since the 70s, they’ve promised the great New Zealand oil boom is coming. It ain’t going to happen. If there is lots of oil, it’s deepsea and expensive. And they haven’t found it in 40 years of looking. We have a worse production-consumption ratio now then the 80s. Even if we somehow become a massive oil exporter, it’s not the economic panacea you might think.
In praise of David Cunliffe
I enjoyed Jenny’s piece the other day on David Shearer’s leadership abilities. His skill at taking the ball and running with it, and doing what he thinks is right. I want to similarly praise David Cunliffe for his leadership in economic thinking. God knows we need someone who gets the problems and the solutions. Cunliffe brings that understanding in droves.
Buying back the assets
David Cunliffe has said that, if he is Labour leader, he will look to buy back any assets National sells once he is PM. Under the existing Takeovers Code, that wouldn’t be too hard. But why not go a step further and make it clear to any potential investor that our energy sector won’t be their cash cow? A bit of regulatory reform would sink the assets’ share value.
NoRightTurn: National on energy
NoRightTurn reviews the joke that is National’s energy policy: “National has released its energy policy. The short version? “Drill it, mine it, sell it”. Yes, seriously. A bright, shiny future, funded by magic money put in the ground by Leprechauns. Which we haven’t discovered yet. Its like basing your household budget on winning the lottery.”
The innovation that we need
We’re going to need a lot of innovation to survive the coming decades. Today’s innovation is a simple modification that at least doubles the energy output of a wind turbine. Brilliant.
Nats clueless on privatisation consequences
If electricity assets were part privatised, future governments couldn’t make the kind of reforms that National made earlier this year because of the need to consider private investors’ rights. Pretty simple, eh? Tell that to Hekia Parata. Bill English has his head in the sand on the effect of falling markets and can’t guarantee Kiwi ownership.
Denis Tegg: Officials muzzled on peak oil
Denis Tegg on National’s head in the sand Energy Strategy. All the official international warnings have been dismissed and the government has forced official to remove any reference to peak oil. The minister flatly refused to answer questions about the impact of peak oil on her fossil-fuel centred plan at the strategy launch.