Trump has been not so much hinting, but sounding a fog horn for months. As we’ve been covering on this show, he’s been amassing military assets in the region since the end of January.
So not surprising. What has surprised is Iran hitting their neighbours, the Gulf states, so hard, including oil fields and refineries. This has surprised markets. Hence what we’re seeing in Asia and at home.
Same goes for the price of oil. Yesterday when we talked about that Goldman Sacks estimate of $100 a barrel by the end of the week. We got there by the end of Monday.
Remember they also warned of $150 a barrel by the end of the month? Let’s hope we’re not there by Friday.
Oil and fertilizer run our agriculture sector. I listened to a grain farmer in Christchurch yesterday say daily harvesting costs would increase by $2000-$3000. Already.
We are not immune to the price spikes, but we’re also not very well insulated from them either.
We’re reliant on energy imports to keep us afloat now more than ever. Marsden Point used to refine 70% of our petrol and 90% of our diesel. Extracting oil and gas became a cardinal sin under Labour.
You don’t know what you’ve got ‘till it’s gone.
The international shocks, which as we all know, aren’t now so shocking, are also driving a surge in support for economic nationalism and self-reliance. Think New Zealand First.
To this Government’s credit, it has extended our emergency oil back-up supplies and done deals with the Singapores of the world so we don’t run out. As a back stop, we’re about to do LNG. But again, that’s imported and subject to shocks.
The more global events we have, the more we yearn for self-reliance and greater energy independence.
Our world-beating exports keep us afloat, but what use are they without a reliable supply of reasonably priced inputs that help produce them?
Ryan Bridge is a New Zealand broadcaster who has worked on many current affairs television and radio shows. He currently hosts Newstalk ZB's Early Edition - where this article was sourced.
7 comments:
Marsden point never produced the input required to get refined petrol out. Is Ryan suggesting we start producing crude oil? Talk about your virtue signalling nonsense.
I fail to see what the closing of the Marsden Point refinery has got to do with diminished energy security. That refinery largely processed imported crude and the tankers still have to get through whether they are carrying crude oil or refined product. Our domestic crude oil always needed to be sent offshore for refining because Marsden Point was designed to process light Arabian crude, not the viscous stuff they subsequently discovered off Taranaki.
the jones boy has his reality completely reversed. Marsden Point was refining medium sour heavy crude. This provided a better mix of products for NZ right down to bitumen. Taranaki crude is light and thus exported to refineries better suited for processing it.
Anon @2.52 is correct.
However, NZ is never going to 'get into processing or refining' (again). We just dont have the capability or money to do so.
So it is what it is. By all accounts we have enough oil to last to April! It is what it is folks.
Happy for Anon 2.52 to challenge my understanding of the different labels attached to local and imported crude oil.
But it doesn't alter the fact that the great majority of New Zealand crude oil production had to be exported because Marsden Point was not set up to refine it.
MP's demise was driven by the poor economics of operating a small refinery, and the costs of operating the coastal distribution network. Ultimately it was simply cheaper for the oil majors to import refined products from Asia.
But the supply-chain risks remain unchanged. The overseas ships still need to keep arriving in our ports regularly and predictably to keep the country running, regardless of whether they are carrying crude or refined petroleum. That's a fact of life when you live in this part of the world .
The real debate should be over the size of our strategic fuel reserve and who is going to pay for it. Not whether we should have our own refinery.
In the meantime, those excess refining and distribution costs have been stripped out of the price we pay at the pump. And that's got to be beneficial for all concerned.
Great points above and some other observations I would like to add.
NZ energy policy is to stop using gas and convert industrial boilers to burn wood pellets. Many large companies have done this already.
However, the trees don’t walk to the boilers and throw themselves into the furnace, the pellets arrive by diesel powered trucks, hundreds of them, every day on the roads.
When the diesel runs out and we’re rationing petrol because of supply shocks. How will our industry keep going?
The country is forcing itself to wear a hair shirt for nothing.
Onshore fuel supply is woefully inadequate and needs to be increased. Why would the oil companies invest hundreds of millions into fuel storage when govt policy is to get rid of petrol/diesel vehicles from the fleet?
Hair shirt anyone ??
Hmmm, if you’re breeding shire horses you just might be on a winner.
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