Peak Oil could halve New Zealand's econony - says Study

Two Canterbury University academics have analysed the impact of fuel restraint (peak oil) on New Zealand's economy.

Their alarming conclusion is that with just 10% less fuel available, New Zealand's economy would shrink by around  $115 billion in just five years. If a 10% fuel restraint continued for 20 years, New Zealand economy would shrink by $412 billion compared to a business as usual scenario. Put simply, New Zealand's economy would "be more than half the size it could have been if no fuel constraints were imposed"

Past oil crisis, such as the Iranian revolution, the Persian Gulf War and the Suez Crisis created a reduction of world oil output of between 7.2% and 10.1%, so a 10% reduction in fuel available to the New Zealand economy has some historical credibility. All of those past oil crisis resulted in worldwide recessions.

There is a growing body of analysis that the current global financial crisis was at least partly triggered by a spike in oil prices to $147 US a barrel in 2008. And there is a flood of reports which all point to a peak of global oil production occurring within five years, and certainly with this decade, with an ongoing, perhaps permanent, decline in the availability of oil on world markets from that point forward. Many credible analysts believe the peak of production has already occurred.

Mainstream economists and politicians get highly agitated when our economy moves even marginally -- say 1% or 2% -- into negative territory (a recession). And we all feel the real life effects on "Main Street". But when there is a looming threat from global oil depletion which could occur within five years or less, and which could potentially shave over $100 billion from our economy in five years, and halve our economy within 20 years, our economists, mainstream media, and politicians are eerily silent.

Okay there are plenty of assumptions in this academic report which might be challenged. It may be grossly pessimistic. On the other hand it may too paint a rosy picture. It's time to bring this information out of the closet.  Lets have an open and informed debate, and start working out as a nation how we respond.

Deck's picture

Halve New Zealand's economy?

I could have this all wrong, but my view of the future of the New Zealand economy is that there won't be a New Zealand economy - not in the way we consider an economy today. Many of our corporations (especially those from over seas) will disappear (it's very hard to manage a company remotely and international communications is likely to get harder - not easier. Our home-grown corporations, especially those that are heavily dependant on oil for transportation, electricity, manufacturing and administration will also find it harder to operate on a national scale. If I was the head of a national corporation here I'd be looking at splitting up the operation into regional groups.

I'm pretty sure my world is going to shrink from a 13-hour flight to a day's ride by horseback.

I'd love to be proven wrong.

-- Deck

I absolutely agree with what

I absolutely agree with what you say - this change is going to come upon us much more quickly than anyone would like and most of us are asleep at the wheel.

On this note Michael Ruppert gave a keynote speech in Portalnd, Oregon where he talks about this and sets out the spiritual underpinnings of his Gaian view point.

Daily news stories which bear out what you are saying are available on my blogsite

There will be a lot of disappointed and angry people

Yet politicians of all colours continue to dole out promises of plenty for all if they get elected in.

Deck's picture

Disappointment and anger

I think you're very right Michael - it will be the easiest and quickest response to a lower standard of living. I feel it myself every day - I want to make a note of each person I read about, or see in a video that claims that there is nothing to worry about and no need to prepare for Peak Oil. I'd save the list and when the dust clears I'd visit each of them for a little talk. (with a baseball bat).

I know that's a knee-jerk reaction -- it's the dark side and it worries me almost as much as food shortages. If we give in to the dark side I doubt that we would ever make it back to the light.

Peak oil is a chance to start over -- an opportunity to get it right -- how many beings in the entire universe ever get a chance like that?

- Deck