Rutherford on the impact of the oil and gas decision

Hamish Rutherford writes:

Although New Zealand produces a fraction of 1 per cent of the world’s oil, the industry is significant in relative terms domestically.

And in terms of gas, we are a major user – and we will run out in 11 years time now.

But it will do little, if anything, to New Zealand’s use of oil and gas.

Household power bills will probably rise, because the dynamics of the gas industry have changed, if only slightly.

Oil will continue to be imported, just as it has.

So we will import more oil, and pay more for our gas.

This will feel good for environmental activists, but unless there are more significant moves to dampen demand, all this will do will be to grant more geopolitical power to countries in the Middle East and of the likes of Venezuela, holder of the world’s largest oil reserves.

As well as having less respect for human rights, these countries are also less likely to heed warnings about climate change.

Yep this is good news for Saudi Arabia and Venezuela and bad news for New Zealand. It makes us more dependent on foreign oil.

The prime minister and her colleagues repeatedly insisted that no jobs would be affected by Thursday’s announcement.

If she means that none of the 4500 people directly employed in oil and gas exploration will learn today that they are losing their jobs, she is probably right.

But the claim is tenuous beyond this. Many of the companies involved in the sector are international, operating across many countries.

Some will continue to operate in New Zealand for years to come. Others will decide to shut up shop and redeploy the capital elsewhere.

Of course they will close down. If they have no future in a country, why stay there.

Also it is unclear if current exploration permits will be effectively honoured, as if they do find a supply of gas or oil, the Government may not give them permission to actually use it.

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