Monday, March 7, 2022

Point of Order: How pain at the pump is exacerbated by the govt’s imposts on petrol prices

New Zealanders are suffering a fresh bout of “pump pain”, as the price of petrol surges past the $3 mark. It has climbed 40c in the last four weeks.

The pump pain (as the NZ Herald calls it) brings a glow to climate change warriors, but not to Kiwis who use their cars to get to and from work every day. What makes that pain worse is the prospect that it won’t be eased any time soon.

International crude oil prices have risen steeply because of Russia’s war on the Ukraine, and are now above $NZ150 a barrel. The price of Brent crude jumped from $153 a barrel last Wednesday to $168 on Thursday.

For the motorist, the pain at the pump is compounded by the knowledge that more than half the cost, 52%, is creamed off by the government, supposedly for roading improvements.

But it is being wasted in many forms, such as planning for a new bridge across the Auckland harbour for cyclists and pedestrians (since cancelled) or light rail, again in Auckland, which has been ballooned out to $14bn.

Only 37% of the price of a litre of petrol is taken in production and shipping costs. The petrol taxes include the fuel excise duty, the emissions trading scheme levy, and GST.

Aucklanders have to pay an addition al 10c a litre in the regional fuel tax.

High fuel costs manifest themselves in many ways in NZ and are often felt most acutely in provincial towns which rely on heavy transport for their supplies, particularly of groceries.

It is likely the dislocation in the international oil market caused by the Russian onslaught on Ukraine will last for some time. Already Energy Minister Megan Woods has signalled the release of fuel from NZ’s strategic reserves.

Critics say the Ardern government, which has been heavily focussed on the Covid pandemic, has failed to coordinate transport and fuel policies. It did not intervene when the closure of the Marsden Point oil refinery was announced, leaving NZ dependent on importation of petroleum products. That leaves NZ at the mercy of international oil companies.

Then there was Ardern’s own “captain’s call” effectively to ban deep sea oil drilling.

Instead of accelerating roading projects such as the motorway extension from Otaki to Levin, the Ardern government pushed many to the backburner. It has been left lamenting the rise in the road toll.

In a sense private enterprise has succeeded where the government has failed. The companies on the Kupe gasfield have lifted production and this week OMV says its in-fill drilling campaign at Māui A off the coast of Taranaki has almost doubled 2021 production levels, making it the country’s largest gas field once more, according to a Radio NZ report. .

The Austrian-headquartered company says production is back at levels not seen since 2018 when it bought Māui from Shell NZ for $US578m.

The Archer Emerald – a modular offshore drilling rig which has been directly attached to Māui A platform – has now completed an eight-well drilling programme.

A spokesperson said the target of the campaign has been previously un-drilled areas of gas within the existing Māui field.

“Seven of those wells are now in production, contributing significantly to the overall production of the field.”

The spokesperson said good progress was being made with the eighth well and the development campaign had extended the life of the Māui field until 2030.

“Without investments the field would have been in abandonment by now – the current outlook is until the end of the decade depending on further investments.”

OMV is now turning its attention to a similar in-fill drilling campaign at Māui B utilising the Valaris 249 rig, which will be jacked-up beside the platform.

“OMV has committed to a five-well programme with first production expected later this year,” the spokesperson said.

The success of OMV at Maui is to be admired. The country needs the gas and condensate from those wells.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton.


DeeM said...

Another reason, I suspect, the government won't reduce fuel taxes will be to encourage more people to switch to EVs.
The trouble is that as more switch, more power is needed to charge them up. What will they build? - wind and solar farms. Which have been so successful, NOT, in Europe and the US.

In addition, most EVs, which are used largely for urban transport, will never produce less emissions than modern petrol cars because of the huge amount of extra emissions generated in their manufacture - to build the large batteries.
Before they reach the high Km's needed to offset this and break even with ICE's, their batteries will need replaced and they're back to square one.

Yet another flawed green policy which makes the problem, if there actually is a problem, even worse!

Terry Morrissey said...

Once again the Ardern cult shoot themselves in the foot by supporting the corrupt UNs imaginary climate change. Its called theft by government.

Ian P said...

And then we shut down Marsden Point. Seems to me that we are making ourselves extremely vulnerable when we have our own accessible resources here. EVs? - who can afford one? ICE is still by far the most efficient option for most, and will be for quite some time. NZ - stop listening to the false prophecies of the International Pentecostal Climate Church, before we destroy our country.