Drill, Baby, Drill!

Foreseeable Crisis: The mile-deep disaster that overtook the Deepwater Horizon oil-rig in the Gulf of Mexico had massive technological assistance within a day's sailing of the catastrophe. Even so, it took BP several months to bring the massive ecological crisis under control. Given the authorities' obvious logistical difficulties in dealing with the comparatively small oil-spill from the Rena, is deep-sea oil exploration really the best answer to New Zealand's energy deficit?

“DRILL, BABY, DRILL!” It’s the battle-cry of the believers in “business as usual”. Sarah Palin’s infamous injunction is also the Populist Right’s translation of former American Vice-President, Dick Cheney’s, much more ominous observation that: “The American way of life is non-negotiable.”

What did the Vice-President mean? In brutally simple terms, Mr Cheney’s words meant that nothing should be allowed to come between Americans and the supply of cheap fossil fuel that underpins the USA’s extraordinary wealth.

“Drill, baby, drill!”, also sums up the National-led Government’s policy on fossil fuels. The Rena may be leaking heavy fuel-oil into the Bay of Plenty, but the Government’s plans for promoting deep-sea oil exploration within New Zealand’s exclusive economic zone (EEZ) have yet to be put on hold. Indeed, the Greens and Labour have been chastised for even suggesting such a moratorium, and thereby giving the relevant authorities time to absorb the causes, consequences and lessons of Rena’s grounding.

Why the gung-ho attitude? Why is the Government so determined to proceed in the face of so much evidence suggesting the need for extreme caution? The enormous difficulties already encountered in off-loading just 1,700 tonnes of fuel-oil from a coastal container ship pale into insignificance when compared to the ecological tragedy which unfolded in the Gulf of Mexico between April and July of 2010.

That disaster took place within a day’s sailing of the USA and Mexico, two of the world’s largest energy producers and refiners. So, help was close at hand. A similar deep-sea drilling accident occurring off the coast of New Zealand: a country at the end of the world’s sea-lanes; thousands of miles, and weeks of sailing, away from international assistance; would swiftly dwarf the Deepwater Horizon catastrophe.

Simple common-sense suggests that even the most rudimentary of cost-benefit analyses would flag deep-sea exploration in New Zealand’s EEZ as, at best, marginal, and, at worst, grossly irresponsible.

Of course, the same could’ve been said (and was) about the radical deregulation of our coastal shipping industry. Allowing so-called “flag of convenience” vessels (crewed not by the best, but by the cheapest officers available) to supplant New Zealand flagged and crewed vessels, made a Rena-style accident all-but-inevitable. The Maritime Union of New Zealand warned successive governments over and over again about the risks. Nobody listened.

So, what is it? How is this refusal to recognise simple common sense, and heed the warnings of experts, to be explained?

The answer is frighteningly simple. Politicians like Sarah Palin, Dick Cheney, Gerry Brownlee and Hekia Parata (Mr Brownlee’s stand-in as Energy Minister) are all in a state of denial.

Even though a succession of reputable international agencies (the latest being the IMF) have warned the world’s governments that the moment of peak oil production occurred five years ago, and that the chances of the current and future global demand for oil being met by the discovery and exploitation of new deep-sea fields are extremely low (the world needs to locate the equivalent of four Saudi Arabia’s to meet the looming shortfall of cheap oil supplies) the politicians just go on denying that any of this alarming information is true.

Given New Zealand’s acute vulnerability to price and supply shocks, our political leaders’ refusal to face the facts is, perhaps, understandable. The best evidence available suggests that this country’s domestic fossil fuel reserves will be largely exhausted by 2020. That will leave our automobile-dependent society and economy dangerously exposed to the vagaries of international supply and demand.

Try these numbers for size.

The current price of “Brent Crude” is between $US100-$US120 per barrel. The NZ Treasury forecasts that in 2015 our exchange rate with the US dollar will be 0.60$US/$NZ. Assuming that by 2015 the declining global supply of oil has pushed the price of Brent Crude to $US200 per barrel, means New Zealand would need to find an additional $10.5 billion, annually, to pay its net fuel import bill. (Compare this with the total cost to Government of rebuilding Christchurch, estimated by Treasury to be $8 billion.)

The economic consequences of such a massive increase in the price of oil are easily imagined: falling GDP, rising inflation, declining real income, decreased consumer spending, increased unemployment, recession.

And so the cry of “drill, baby, drill!” goes up. Because it’s easier to imagine some lucky offshore prospector uncovering another North Sea oil and gas field than it is to imagine how any government might even broach, let alone manage, the winding-back of our fossil-fuel-based civilisation.

It’s all too hard. Just as it was too hard to resist the deregulation of our coastal shipping industry – and so keep our beaches and wildlife free from stinking, toxic sludge.

Fifty years from now, when the foreign ships no longer call, may our grand-children laugh where we now weep – and wonder at our folly.

This essay was originally published in The Press of Tuesday, 18 October 2011.