Otago households are beginning to feel real financial
pressure as the country is said to be slipping into
recession.
Many of the factors involved in this come from overseas and
there is little that can be done, but in some areas, such as
energy supply, we have real opportunities to shield ourselves
from what will surely eventuate.
Although house prices are weakening, interest rates remain
high; there is little that can be done about a global credit
crisis.
Food prices are soaring. Milk and cheese prices are being
driven up by a booming export market, while other food costs
have been inflated by the headlong conversion of land and the
diversion of food crops to biofuel in the food-baskets of the
world. The destruction of natural forests to create palm-oil
plantations concerns me greatly.
Inevitably, it is the poorest people, globally and in our
society, who are most hurt by this.
More than anything, though, it is the cost of energy, and
especially petrol, that has been seen as the most dramatic,
as crude oil shot to prices unheard of before.
At the same time, we have been looking apprehensively at the
hydro lakes and wondering how well we will survive winter
demand. Thus, both motor fuel and electricity have become
vulnerable and expensive.
A recent drop in crude oil prices should not be seen as a
sign that the worst is over. Peak Oil is a reality, whether
it was last year or still years in the future; it is
inevitable that scarcity and booming global demand will keep
prices high.
Not only that, but crude oil is hugely sensitive to factors
over which we have little control. Storms in the Caribbean,
rebel threats in Nigeria, a military exercise close to Iran
and straight speculation have had enormous influences on spot
prices.
More importantly, most of those factors are associated with
something even more important than price - security of
supply. The world's oil producing regions are politically
tense, most of the major supply lines are vulnerable to
blockade or other military action.
I, for one, would not want to bet on the long-term stability
and goodwill of much of the Middle East, Nigeria, Venezuela
or other oil-producing regions. In times of great scarcity,
small remote nations are not going to be first in line for
whatever supplies there might be.
Energy security is paramount; but what can New Zealand do to
enhance this?
We can begin by adjusting our lives by walking and cycling
more, using more fuel-efficient vehicles and using public
transport, especially where it is electrically driven. In
this context, the taking back of the railways, as a strategic
asset, might well be a very wise decision.
There are possibilities for alternative fuels, especially in
our region. If cost-effective bio-fuels can be developed,
without impairing food production, then well and good. Sooner
or later fuel cells or hydrogen may fill the gap, but there
is a local resource that we should be turning to right now.
Southland and Otago contain lignite and coal resources that
could meet the nation's motor fuel needs for many decades;
the technology is well-proven and, while low crude prices
after the mid 1980s ruled them out temporarily as too
expensive, surely they are economic now.
More importantly, these are on-shore resources that we
control ourselves and, in a time of vulnerability, that is a
very big advantage.
