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LETTER TO HELEN CLARK

by Kevin Moore

 

Helen Clark
Parliament Building
Wellington
13 October 2004

Dear Ms Clark,

Your Government’s Policies

I trust that you have been following the rapid escalation in oil prices with as much interest as I have. For Brent Crude the following figures apply: $28 a barrel a year ago, $32 a barrel in March, $42 a barrel in August, and $52 in October. With almost daily rises, as supply fails to meet demand, it does not take much imagination to realise that the price will continue upwards and it would be a fairly safe bet that a barrel of Brent oil will cost more than $62 before the end of November and possibly more than $72 by the end of the year: there is an inevitability about this, since the supply of oil from the Brent Field is in terminal decline. For Nymex Crude the corresponding figures are around $2 to $3 higher. This is exactly the situation I warned both Ross Robertson and Pete Hodgson about earlier in the year. Needless to say, neither took a blind bit of notice and continued along the path demanded by Labour Party mantra. Indeed, your government has consistently ignored every warning I have given since publishing ‘Burn Baby Burn’ (copies previously provided): your government deserves 10 out of 10 for complacency, if nothing else.

Clearly, the only question now is how high will oil prices have to rise before excessive energy costs derail the entire world economy? Previous oil shocks indicate that, in current US$ terms, a short term figure of around $100 will be sufficient to generate a massive worldwide recession. However, unlike previous worldwide recessions, the coming oilcrash recession will be one that can never be escaped from, since, very soon, the actual quantity of readily usable oil will start to decline. Indeed, the majority of ‘good’ (sweet) oil fields are already in severe decline and increased production, where it is possible, is coming from very inferior wells, which deliver high sulphur oil (that require expensive refining) at high production cost.

One might imagine that a government faced with one of the biggest catastrophes in the history of humanity (the end of cheap energy at a time when demand has never been greater), would be taking some action to avert catastrophe. Yet all the evidence points to your government simply laughing the matter off as of little consequence and continuing with what can only be described as ridiculous policies [increased global trade, increased tourism, motorway construction, motor racing, retirement pensions …an endless list of unachievable goals] predicated on cheap oil, because a discredited think tank of economists (The IEA) have entirely deluded notions about oil geology.

Presumably, under these circumstances, we can anticipate that New Zealand will not simply participate in the coming world wide recession, but will actually be leading the charge off the cliff face.

Yours sincerely,

 

Kevin Moore
Environmental Consultant,
Energy Analyst and Educator