Destructive Ignorance

Oil and Gas Exploration Ban is a Mistake

Jonathan Young MP
Stuff

 I'm not disappointed – I'm angry!

A kick in the guts, a wrecking ball for the region, killing the golden goose. All these phrases express the emotional response to the Ardern-Peters Government's announcement to end new offshore oil and gas exploration. Without doubt more bad news is still to come as the Green Party and Greenpeace make onshore exploration their next target.

This decision was made with zero consultation with the petroleum industry and there lies the problem.  The Ardern-Peters' government's announcement to end new offshore oil and gas exploration is a wrecking ball for the Taranakli region, writes New Plymouth MP Jonathan Young.

Not only is it incredibly disrespectful to an industry that has supplied billions of dollars of revenue to the Government and the people of New Zealand, but it has meant that the Government has made a decision regarding the industry with little understanding of how it works.

The opportunity for a positive way forward gets lost in the disruption and destruction of business confidence they have created. The Government may think they have attacked the problem, but unfortunately, they have attacked the solution.

As National's Energy and Resources spokesperson I would support a transfer of knowledge, skills and investment into the greening of the petroleum industry rather than ending it.  Apart from 50 per cent of all oil produced being for environmentally benign purposes, we should continue to pursue the goal of utilising hydrocarbons as feedstock for ultra-low or zero emission fuels.

Research is already underway for this, such as methanol, and hydrogen. There is a tremendous amount of research taking place on improving engine and fuel efficiency. The petroleum sector has some of the smartest people in the country when it comes to understanding carbon and molecules. Utilising their knowledge and skills here and collaborating with other industry-based research is the smart thing to do.

The Ardern-Peters Government has made a significant misstep in their approach.

Letter from the UK (About Vlad the Impaler)

 A Good News Day

In politics and government, the unintended consequences are usually the silent killer.  In this case, however, it appears the unintended consequences of Vlad the Impaler's lawless soft-war overreach into the Ukraine, with its implicit threats to Europe, is going to prove a great boon to the European Union, whilst ending up a  self-inflicted economic blow to Crazy Ivan.  Vlad will have impaled his own nation's foot with his short-guy-syndrome, tough-talk sabre-rattling. 

Vlad had calculated that Europe would be suppliant and cowering before the might of the Russian bear, since it depends upon Russia for natural gas. But . . . 
 

Vladimir Putin: Hero of the European Union

By James Delingpole  

14 Mar 2014

Breitbart Britain

Vladimir Putin's adventurism in the Ukraine has had a strange side effect: it may well have prolonged the life of his chief rival and antagonist – the European Union – by several years. (h/t Benny Peiser - Global Warming Policy Foundation)

Until Russia began rattling its sabre, the EU's economy was locked in a downward death spiral.

Energy, Energy Everywhere

Abundance and Plenty

In New Zealand we have been learning that a state owned enterprise, Solid Energy which mines coal is on the brink of collapse.  It owes over 300 million dollars to its bankers.  Apparently it decided to "diworsify" away from coal mining and invested heavily in "alternative" energy sources, by which we should probably understand "green energy". 

The government was absolutely stupid to let that happen, but then again the NZ government pays lots of lip service to "green energy" so it would have been somewhat difficult to object.  The reality is that "green energy" has proved to be a big black hole down which billions of dollars have been poured and lost.  An article in the The Weekly Standard reviews the current global state of play.

A New Energy Age

Irwin M. Stelzer

February 23, 2013 12:00 AM

“The tectonic plates are shifting” is a much over-used expression. But when it comes to the international energy industry, the expression is apt.

Here in America, where policymakers have spent decades worrying about over-dependence on oil from unstable or hostile regimes, a new technology—fracking—is producing such an abundance of supplies of crude oil that refineries are having difficulty processing all of the crude being produced, and talk of exports can be heard from Wyoming to Houston. As for natural gas, this writer remembers when supplies were so short that burning gas for decorative illumination was forbidden in some states and frowned on in others. 

Now the same technology that is making America the next Saudi Arabia (to borrow the jargon of overwrought analysts) is also adding decades of supplies of natural gas to its available resource base, driving down the price and making it possible for us to become a major exporter of natural gas. Unless, of course, the government accedes to the wishes of DuPont and other large users of natural gas and refuses to allow exports, no matter their potential for reducing our trade deficit. 

The discovery of virtually unlimited supplies of natural gas comes at a convenient time—just when the Obama administration has decided to make the construction of new coal plants effectively impossible, and is to tighten regulation of existing plants to the point of making many uneconomic to operate. Natural gas has already taken a big bite out of the coal market, and is making it more difficult than ever to justify the construction of costly nuclear plants, especially since the administration refuses to activate the nuclear waste repository in Nevada, the home state of the leader of the Senate’s majority Democrats and an opponent of bringing nuclear waste into his state. A few plants will be built here, as some utilities reckon that their customers are willing to pay for insurance against a spike in natural gas prices, and they do have some non-trivial government subsidies. But most of the 60 reactors under construction worldwide are in countries such as China, Russia and South Korea, where governments can saddle taxpayers and customers with the relatively high cost of nuclear power as part of a national quest for energy security.

Meanwhile, in Britain energy shortages loom. Renewables have proved expensive and difficult to get built; coal is being phased out pursuant to made-in-the-UK green policies and orders from EU headquarters in Brussels; and nuclear power is so costly that one company has pulled out of a nuclear construction project, and another, France’s EDF, is insisting that the government guarantee it will be allowed to charge a price high enough to cover costs and a profit. Clearly, it is assuming that power from its nuke will be uncompetitive in energy markets.

Which leaves natural gas. Britain will be bidding against Asian countries for overseas gas supplies prompting, Alistair Buchanan, outgoing head of energy regulator Ofgem, to predict that imported gas will be extraordinarily expensive, especially if protectionists succeed in persuading President Obama to ban exports. Worse still, natural gas, now 30 percent of power-station fuel, will account for 60 -70 percent by 2020.

Germany is not in much better shape than Britain.  Its pursuit of what are probably the greenest policies of any industrialised country, combined with the phasing out of nuclear to calm safety concerns, has the country headed towards severe energy shortages. And, paradoxically, has at least for now driven up reliance on coal—it seems that when the wind doesn’t blow and the sun doesn’t shine renewables are problematic sources of energy. Indeed, in order for its manufacturing industries to remain competitive in world markets Germany has decided it needs to keep energy costs down, and so is building some new coal-fired plants to replace older ones that are being retired. Those German plants will be among the 1,000 being planned worldwide, three-fourths of them in China and India. 

         

Although renewables remain the power source of choice for greens, they require such massive subsidies that their role in meeting soaring electricity demand will remain incidental. Spain is only one country that has decided that it can no longer afford the subsidies that renewables require, and only Obama’s antipathy to fossil fuels, his war on climate change, and the political clout of some of his donors keep subsidies flowing to uneconomic solar and wind companies.

China is doing more than subsidizing renewables and building coal and nuclear plants, although it is doing plenty of each of those. It is locking up overseas supplies of crude oil. Its state-owned enterprises (SOEs) are in a position to include in their bids for oil supplies the value assigned by the regime to security of supply, while private-sector bidders have to base the prices they will pay only on the commercial value of the resources. The SOEs—among them CNOOC and Sinopec—are estimated to have spent almost $100 billion acquiring foreign oil companies in the past few years, and the International Energy Agency estimates that by 2015 China will have doubled the overseas output under its control from levels in 2011, and match such OPEC producers as Kuwait in overall controlled production.

The Chinese are also acquiring foreign energy technology, either by making access to its markets conditional on the handing over of important technology, or by what we might politely call less overt means.

It is obvious from even this partial list of the changes in the energy markets that we are entering a new energy age. With major geopolitical implications.

·     An oil- and gas-rich America will care less about ruckuses in the Middle East, although even a self-sufficient America remains subject to developments in international markets. Even more important, Jin Zhongxia, head of the research arm of China’s central bank, says America’s new energy opulence assures that “The dollar’s global dominance will continue.”  

·     China is using its lock-up of oil supplies to extend its political influence in Africa. Private-sector companies can’t compete with China’s SOEs in countries in which China’s rulers can add a new port, an airport, an air traffic control system to supplement the SOEs’ cash bids. The regime is also becoming more belligerent in offshore areas believed to hold large deposits of oil and gas, causing a shift of some U.S. military assets to the Pacific region.  

·     Europe and the UK, their economies already under strain, are finding that green comes dear, and that costly energy is interfering with their export-led growth strategies.  

·     The energy deck is being reshuffled. Fracking is likely to drive down oil prices in the long run. Coal will remain a major player, green wishes notwithstanding. Renewables continue to be dependent on subsidies, which cash-strapped countries are putting under review.  Nuclear power is a high-cost option, its role largely dependent on how much governments are willing to extract from customers and taxpayers or, in a few instances, how much utilities are willing to pay to avoid too-great dependence on natural gas.

Real tectonic plates move slowly, about at the rate that your fingernails grow. The energy economy’s plates are moving far faster than that, with profound political adjustments to follow.

Creation's Abundance

Energy and Ignorant Greenists

We are all familiar with the Greenist propaganda concerning "Peak Oil".  It has been thoughtlessly trotted out as a reason to "invest" in alternative forms of energy: wind, solar, and tidal.  The case betrays the Greenists' ignorance of economics, on the one hand, and their relentless penchant for tax and spend fiscal policies, on the other.

A knowledge of  economic history of energy development shows repeatedly that new energy sources replace current sources long before the current energy source runs out.  As Sheik Yamani of OPEC observed in the 1970's, the steam age ended long before wood and coal ran out; likewise the oil age would end, long before oil ran out.  Yamani has been proved correct.  But the difference between a market led change (diminishing oil supply leads to gradually higher prices making alternative energy source development economical over several decades, providing time to develop a replacement infrastructure to deliver a new energy source in an efficient and lower-cost fashion) and government fiat led is that the latter results in huge market and economic dislocations, false starts and blind alleys, exorbitant waste of tax payers' money, and massive economic costs--which we all have to pay for.  Greenist hubris and folly does not come cheap.