Emergency measures introduced in UK as energy bills soar – and NZ should brace for rising prices, too, thanks to exploration ban

Soaring energy  bills are a  problem for  firms,  households,  and  the  government. This  was  a  headline  in  The Economist last week – but it  can’t  happen here, can it?

After  all,  NZ has   plenty    of energy.  Unlike Europe, 80%  of  its electricity is  from renewable  sources. And  according  to oil industry  authorities, NZ is  surrounded  by a massive  continental  shelf — the fifth  largest in the  world, beneath  which  lie  vast  quantities  of  undiscovered  natural gas and, probably, some light oil.

So  surely  NZ  can face  the  future  with confidence?

Well,  no:  let’s not forget Prime Minister  Jacinda  Ardern had her “non-nuclear” moment and  placed a ban on new offshore exploration permits  for  oil  and  gas.  Since  then,  as  international oil explorers gave  up  their  offshore   exploration  licences, supplies  from existing  producing  wells have begun to  diminish for several reasons.

Higher  costs  are  starting  to  flow  into  household and  business  gas  bills. Vector  is  increasing  Ongas LPG  cylinders  from  $115.026  to  $125.82.

Meanwhile  wholesale  electricity  prices  which  bounced  up  earlier  this  year  are  predicted  to  stay  relatively  high  for some time yet.  That  is  having  an  impact  on industries   which  are  big electricity  consumers — though  not  to  the  extent  that Britain is experiencing.

Nevertheless it  wouldn’t be  stretching  the  long  bow  to  suggest  NZ    may  be  hit    with  more  of  the  blackouts  of  the  kind  experienced  in  August.

Across  the  rest  of the  world,  the  natural  gas  shortage  is  hitting   economies hard. Prices  have  surged,  pushing  up the  price  of power virtually  everywhere.   As  The  Economist  put it, the  first energy  squeeze  of the  green era  has  important lessons  for  governments.

It argues  governments have  not  made   enough  allowance for   the intermittency of  renewable  energy.

And  The  Economist  concludes  that if  governments  do not manage the  energy transition  more  carefully, then  today’s  crisis will  be  the  first  of  many that threaten the  vital  move to a  stable  climate.

In  many  countries,  including  Britain  and Spain,  governments  are  rushing  through  emergency  measures to  protect  consumers.  Factories  are  closing  temporarily.

The  fast-rising  energy  price  rises  are  particularly  painful  in  Britain:  since oil  and gas  was  discovered off its  north-east  coast half a  century  ago, gas has generated  much of  its electricity and  heated  almost  half  of  its  homes. But  North  Sea  gas is  running  out  and  as Britain  has replaced coal-fired plants with  wind  power  to  reduce emissions, it has  become  painfully dependent  on  natural-gas  imports,  especially  in  calm  weather.

Here  there  are  warning  signals  for  NZ,  as  the  government urges  power  companies  to  generate  more  power   from wind farms  to  get to its  100%  renewable  target.  (What happens  when the  wind  doesn’t  blow and   the  dams  have  emptied?)

Meanwhile, back  on  the  farm,  NZ’s  primary  producers  are   being  told  prices  for  beef  and  lamb  could  reach  new  records this  season,  while  over  in  the  dairylands,  the  payout  from  the  giant  co-op Fonterra   could  surpass  last  season’s  strong  result.  But  costs, particularly  for  energy   and shipping, are   rising  even  faster.

Fuel   has  never been  so  expensive  in  NZ.  Petrol price data shows  prices at the pump  are even higher than the peak in 2018. Octane 91 has cracked $2.50 and the 91 national average is $2.39.

Big  energy  users  in  NZ   will  be  ruing  that  cheap  gas   is  but  a  memory.

3 thoughts on “Emergency measures introduced in UK as energy bills soar – and NZ should brace for rising prices, too, thanks to exploration ban

  1. Energy Minister, Woods, has been absent from the limelight for some time. Where has she gone? Formerly, she was always by the side of the PM, like a faithful lapdog, smiling and nodding in unison with her beloved leader. Today, she is nowhere to be seen. Has she been banished to the gulag for one to many stuff-ups? Woods had all the answers… she would bring down fuel prices by tackling greedy oil companies; hydrogen was the future; wind power; Onslow pumped hydro would mean new hydro schemes not needed; Manapouri electricity diverted to the national grid when the smelter closes. Woods has failed to deliver, surprise, surprise. New Zealand faces an uncertain energy future because of the actions of her and Miss Ardern. The South Island will probably be OK but the North Island faces power shortages. Thank you Megan.

    Liked by 1 person

  2. Ardern banned oil and gas exploration to impress Macron and Merkel before her trip to Europe in 2018. She does not have New Zealand’s interests at heart. It’s all about managing her international brand. A disaster for this country.

    Liked by 3 people

    1. Yes, you are spot on. An unintended consequence of Miss Ardern’s hasty and ill-thought out decision to ban oil and gas exploration is the need to import coal from Indonesia to keep the lights on in Auckland. Laughable!

      Liked by 2 people

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