Govt to borrow and spend for roads

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Govt to allow NZ Transport Agency to borrow money for 'intergenerational roading projects,' rather than current pay-as-you-go model

15th Aug 12, 8:46am by Alex Tarrant

The New Zealand Transport Agency will be allowed to use borrowed money to pay for roading projects under changes mooted by Minister of Transport Gerry Brownlee.

Currently, roading projects are funded through a pay-as-you-go model as the Agency spends fuel taxes and other registration revenues as they come in.

But the Land Transport Management Amendment Bill, tabled by Brownlee in Parliament yesterday, would "enable borrowing to be used by the New Zealand Transport Agency to fund future land transport projects, subject to the agreement of the Minister of Transport and the Minister of Finance," it says in the Bill's explanatory note.

"Currently, borrowing can only be used to manage the cash flow of the national land transport programme," it says in the note.

Labour and the Greens have attacked the move, saying it showed the government was struggling to fund the NZ$8.7 billion required for its 2009-2012 Land Transport Programme, which was dominated by the Roads of National Significance (RoNS) projects.

'Good way to fund intergenerational projects'

Ken Shirley, the CEO of road transport industry group the Land Transport Forum, told National Radio on Wednesday morning that the current model was suitable for minor projects, and for renewal and maintenance of existing road infrastructure.

"But it’s not an ideal funding model for long-term major intergenerational projects," Shirley said.

“One of the consequences of this ambitious programme [RoNS] is that it’s sucking all the available money, and has flat-lined funding for renewal and maintenance. We want the big projects, and we need the big projects, but we have to also maintain what we have.”

See Transport Minister Gerry Brownlee answering questions on the move in the video below:

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96 Comments

by scarfie | 15th Aug 12, 9:28am 1344979721

So the world wide rate of growth in the population is falling and will turn negative in a generation, but Mr Brownlee in his wisdom want this ever decreasing pool of people to some how magically fund his fantasy highways.

But as long as some fool is willing to make the loans that we will default on, I guess transport infrastructure isn't the worst way of doing it. Be better in a rail and canal network throughout the country complemented by small coastal shipping.

by steven | 15th Aug 12, 10:04am 1344981848

Actually I think roads is the worst way, but you are right I expect we will default...

regards

by scarfie | 15th Aug 12, 10:07am 1344982034

Well the roads can still be used by bicycles. I keep trying to imagine Brownlee on one.

by powerdownkiwi | 15th Aug 12, 10:00am 1344981642

Chuckle.

It won't get too far, events will overtake (maybe events should have a special lane?).

by steven | 15th Aug 12, 10:02am 1344981771

Except it robs us of time and leaves us with debt....now if the money was going on renewable energy projects, OK....ie something uselful.

regards

by Kleefer | 15th Aug 12, 11:41am 1344987705

You mean those renewable energy projects that are losing money hand over fist worldwide and requiring government bailouts? When an investment loses money it means you are wasting resources. On that basis many renewable energy projects are more wasteful than fossil fuels could ever hope to be.

by powerdownkiwi | 15th Aug 12, 11:54am 1344988451

"When an investment loses money it means you are wasting resources".

Bollocks.

Where did you get that from? You need to understand what money is (a proxy, no more, for the purchase of something in the future) versus what real resources are.

The problem is that money doesn't value things properly, and at this stage in proceedings, is hopelessly out of it's capability to do so.

http://www.ibtimes.com/partnernet/finance/chris-martenson-the-trouble-with-money_157.htm

Whether profit is taken or not, has diddly-squat to do with whether a particular action will ensure that a viable planet can be handed on to future generations. Indeed - as with a viable ETS, if one existed - the likelihood is that the valid course of action will render you 'poorer'.

Where do folk get this nonsense from? Did you do economics too?

by steven | 15th Aug 12, 12:27pm 1344990421

Worse, they did Von-mises economics and other libertarian loopy web sites...

regards

by steven | 15th Aug 12, 12:25pm 1344990324

No, because you ignore resiliance and long term outlook and care of a nation which is the duty of a Govn.

Also many Govns subsidize private company development for instance the US Govn throws billions at US arms manufacturers to develop more weapons to kill arabs or iranians on a camels...the point of that is what?

Many fossil fuel projects or projects that expect a cheap input of fossil fuels will be going bankrupt in the next decade or so. No point in putting in more roads with a 50 year life span to take more traffic when inside 10 years many of us will be no longer able to afford to drive a petrol powered car....

Just because a stupid spent too much on a project and didnt get the return they expected does not make the resource a waste....when its sold at a firesale price the new owner will make a decent living.

regards

by steven | 15th Aug 12, 10:01am 1344981704

Laughable.....more roads....now if we were building real infrastructure, OK I oculd see that might be an option, but not more roads.

regards

by powerdownkiwi | 15th Aug 12, 10:10am 1344982201

Best place for effort - the debt won't be repaid, so the accounting is sort of irrelevant - is future-proofing current housing. We can't replace more than a fraction, so it has to be retro-fit.

We're already triaging roading - how much seal is reverting to gravel p.a.?

by Albert Hall | 15th Aug 12, 10:43am 1344984185

The upgrading of roads and the RoNS projects are actually good things - but borrowing to pay for them is certainly questionable.

However of all those that consider borrowing for roads a bad idea, how many would be prepared to pay tolls? Certainly a viable option for the funding of roads and used by other countries a lot more than ever seems to have been contemplated by NZ.

by powerdownkiwi | 15th Aug 12, 11:18am 1344986287

Albert H - the money to pay the toll, would come from the expending of fossil fuels.

See the problem?

by Albert Hall | 15th Aug 12, 11:59am 1344988797

Sorry, I don't quite see how... The consumer who purchases 'fossil fuels' to operate their vehicle also pays the toll to use the road, I wasn't aware that one paid for the other. Maybe you could explain?

by steven | 15th Aug 12, 12:29pm 1344990587

Impact on the Nation in terms of cost to provid ethe infrastructure....

So you would do a road because it benefits GDP, the cheapest way is for the Govn to borrow or pay as you go....this gives the best economic return to the Nation as there is cheaper lending and no profit and costs....

Those costs are money which is a proxy for energy....so labour to collect tolls has an energy expenditure for one.

regards

by Albert Hall | 15th Aug 12, 12:41pm 1344991304

So once the infrastructure is in place, what would the ongoing costs be? A system that is largely provided electronically wouuld require minimal labour once it is in place.

How is the best economic return to the nation provided by a plan that has no profit? User pays, not the taxpayer as would happen both in the pay-as-you-go and the borrowing (servicing of the interest incurred).

by steven | 15th Aug 12, 12:56pm 1344992204

Ongoing costs would be monopoly rent, interest payments on the capital borrowed and actually the cost of the IT equipment is actually significant., IT isnt cheap. The actual cost to build and repair it whether public or private should be minimal. Although in saying that a public road could be built to last say 50 years economically. A private company may only get a 30 year lease so they will build the road to last 30....long term that is a waste/impact on the country.

The idea as in no profit on the road is that businesses make the profit as their overheads are lower, they dont pay monopolistically derived charges to use it.....there is still profit its just made elsewhere by others.

So say we have 50 small businesses, they all enjoy infrastructure in this case the road at minimal cost so its easier to enter a market and operate in it....etc etc.

I guess its a case of you having to look at the bigger picture and not just the one thing. Everything is interlinked and has a cost and impact on other things...

regards

by Albert Hall | 15th Aug 12, 1:00pm 1344992426

Again we have this private company argument, how many roads are owned by private companies in NZ? And of them, how many are toll roads?

by powerdownkiwi | 15th Aug 12, 12:45pm 1344991557

AH - for sure. (Others here will yawn!)

Money either is, or isn't, underwritten by something real. If you got an inflated 'valuation' of an existing property, borrowed on the basis of that, and 'spent' it on tolls, you didn't actually pay anything. Economists have trouble with that, but it's a negative pig

http://www.adbusters.org/magazine/81/the_crisis.html

Only payment in 'positive pigs' (something real done) eventually counts. Anything real needs work to be done, which requires energy to be expended. You can track global energy, plonk in an efficiency factor, and get a fair handle on how much of the wealth is underwritten in real terms.

The rest is debt, sooner or later irredeemable (as we are seeing globally now).

I put this up this morning, but read it well:

http://www.zerohedge.com/news/chris-martenson-trouble-money

few get it. I suspect less want to get it, and a lot have stuff riding on it not being true. Won't change the 'actual' of it.

by powerdownkiwi | 15th Aug 12, 12:49pm 1344991787

ah 12.41 - the maintenance isn't the ticketing, it's the oil-based bitumen, oil-driven trucks and diggers........

by Albert Hall | 15th Aug 12, 1:04pm 1344992667

How simply dreadful, perhaps you could come up with alternative and cost effective alternatives to the oil-based substances so necessary to the project?

In the long run, the roads are going to be made and this is actually a matter of how they are paid for effectively and fairly... not about what they are made out of and what drives the machinery that makes them.

by powerdownkiwi | 15th Aug 12, 1:22pm 1344993764

sad reply.

Translated: At some price, we will always find an alternative. (Money is somehow superior to real stuff, and will somehow force it's creation. And in exponentially--increasing quantities too, I presume?).

I have studied the EROEI of alternative energy sources since '75, designed my first solar/efficient house in '83, built it '87, and this one '05. Built and developed my own efficient appliances, and power system. I'm a past co-chair of Solar Action (non-profit lobby) and a champion of renewables. Just cleared the debris from my pelton-intake, in the last half-hour.

but

The time to morph from oil, was before peak supply-rate. You simply have to use the existing, pre-peak, to effect the morph. We haven't found any successor to oil, yet this is a classic example of us creating an even-bigger oil-based (and oil-for-maintenance-requiring) infrastructure.

Blind reliance on money always providing more and more for ever and ever, only worked until it didn't.

http://www.odt.co.nz/opinion/opinion/135743/time-now-fireside-chat

by scarfie | 15th Aug 12, 5:31pm 1345008714

Funny how it is always 'other' people that have to come up with alternatives to oil.

by Albert Hall | 15th Aug 12, 5:43pm 1345009385

I suppose the reason to that would be that some of us aren't actually concerned about using oil... Those people that are, should be the ones who come up with an alternative - yes or yes?

by steven | 15th Aug 12, 6:14pm 1345011286

No, your lack of knowledge on your use of oil is par for the course....and sadly, you are wrong. Just about everything you do/buy consumes fossil fuel somewhere in the system and probably quite a lot.

regardsd

by scarfie | 15th Aug 12, 7:53pm 1345017225

It really is an astoundingly stupid comment, head in the sand material.

by steven | 15th Aug 12, 6:10pm 1345011055

There are no cost effective and scalable alternatives to fossil fuel....hence the likes of me and indeed most in here wont have a car inside a decade. Hence in the medium run, we dont need any more roads.

regards

by Albert Hall | 15th Aug 12, 12:57pm 1344992236

Would the tolls be that high that you need to borrow to pay them? If you were on the minimum wage for an eight hour day, you would need to go through the toll road about 50 times before it had a negative effect on your pocket. (based on driving a car with a toll incurred of $2.20 each time) Even then, I'm sure you would be able to negotiate a high-volume discount.

I may not have caught your drift but then, I'm almost certain you didn't catch mine...

by steven | 15th Aug 12, 11:32am 1344987138

Tolls suggests private investment that wants to see a profit and they have to borrow at a higher rate and they need ppl or systems to collect that toll, 3 whammies over the Govn funding it.

Some of the numbers I think I came across was if its private funded then the bill is 50%+ more than if its Govn funded....

However I'd be happy with that as I'd then not have to cough it up as a tax payer....user pays....then the company goes bankrupt...

regards

by Kleefer | 15th Aug 12, 11:43am 1344987803

So what's the problem? If roads are provided privately at a higher (I would say more accurate) cost, this surely means there will be fewer of them. Isn't this what you want?

by steven | 15th Aug 12, 12:35pm 1344990909

Not more accurate.....less, the true cost or accurate cost is the cost to build minus profit and any borrowing costs to get the capital. Also if you have the only road then you have a monolpoly and can charge accordingly...

ie the problem is a privately funded road costs more in terms of GDP.

A classic example is public v private healthcare, the latter is twice the cost of the former and delivers a worse outcome on a natioanl basis.

That doesnt mean some ppl cant have private healthcare just as long as there is a public alternative. Same can apply to roads, except of course if you build 2 roads thats twice the materials waste......

regards

by Albert Hall | 15th Aug 12, 12:44pm 1344991452

In most places in NZ there are and would be alternative routes anyhow, there would be no need to build two roads...

And where did this idea come from that the roads would be privately funded?

by steven | 15th Aug 12, 12:58pm 1344992339

See the heading....

regards

by Albert Hall | 15th Aug 12, 1:08pm 1344992906

OK, I'm still missing something vital... Please show me the part that indicates privately owned companies: Govt to allow NZ Transport Agency to borrow money for 'intergenerational roading projects,' rather than current pay-as-you-go model

by Albert Hall | 15th Aug 12, 12:23pm 1344990224

So does the Northern Gateway Toll Road have private investors then?

The government has sucessful systems in place to operate this road, a system that could simply be duplicated across other roads. The cost of the system woud be one-off for every road the toll was added to (physical maintenance shouldn't be high) and an ongoing income stream would result.

So do you not travel that you would not be a user of these roads? I am sure your non-usage of any toll road wouldn't cause any great loss to anyone...

by Albert Hall | 15th Aug 12, 5:47pm 1345009642

The one-off cost would be the initial cost of the system for every road it is installed on... I'm not meaning that tolls would be one-off. There really is no comparison between income tax and tolls.

by steven | 15th Aug 12, 6:18pm 1345011508

Yes there is....its the pretty much the same thing. You pay a sum of money into the Govn coffers and in return get services or an insurance policy type thing ie in case of need. A road toll is paying for a service....really there is no difference.....Either could be publically or privately funded.

regards

by Andrew R | 15th Aug 12, 9:34pm 1345023248

The tolling system on the northern motorway sucks. It is an ideologically driven system where you can only pay electronically. No lane with a toll booth or device where you can zoom past and toss in $2 or whatever and go on your way with minimum incovenience and time wasting.

So you have choices like: maintain a mimimum balance with NZTA to pay for tolls (for which they don't give you interest) or pay over the internet by credit card (NZTA giving money to the banks) or by mobile phone (ditto plus to the telephone company) or by a usually working slot machine at either end. Costs more to use the slot machine, plus takes way longer than the estimated 5 minutes travel time saving (in good conditions) that the motorway provides compared with the old route. It penalises anyone poor or old who doesn't have internet (yes there are lots of suc people0 as there is a premium on the use of slot machine.

Ironic that one of benefits of the motorway being built is reduced travel time when the toll system takes ups more time than is saved.

by Andrew R | 15th Aug 12, 9:24pm 1345022645

Have you looked at the cost benefit ratios of each of the roads of national significance or seen the way NZTA had to manipulate those ratios (eg longer payback time, add in intangibles)?

If so you would know that the holiday highway and Wellington motorway stuff and probabaly the Hamilton expressway cost more than the benefits received. Which ius why the government refuses to put such projects through the treasury's system of assesing major capital expenditure.

This government is once again demonstrating that they lack any sense of responsibility when it comes to public spending.

The breathtaking hypocrisy of the whole thing though, you have to sort of admire that.

by KH | 15th Aug 12, 11:23am 1344986616

Stupid. A policy change like this is so dumb. If you can't afford your standard of living then borrow.

by steven | 15th Aug 12, 11:33am 1344987216

Yep.....

regards

by David George | 15th Aug 12, 11:39am 1344987544

Totally agree, this "intergenerational projects" call is pure spin. Borrowing to pay for big projects would have some merit if, and only if there was no future intergenerational infrastructure required. What really happens is we have on-going stuff that we need to pay for as well as the legacy debt from the previous stuff. All we're doing is lining the pockets of the international financiers.

With the cash flow central and local governments enjoy there is no valid reason to borrow for roads and other infrastructure. Have you ever heard a politician say "we've got all the stuff we need now, we can clear up this debt", all they do is dream up some "vital project" and dress it up with this intergenerational nonsense and expect us to swallow it.

by scarfie | 15th Aug 12, 12:00pm 1344988841

The trouble is that strategy actually works......until it doesn't.

by Kunst | 15th Aug 12, 1:45pm 1344995137

Who will stop the megalomaniac’s in this country - driving the majority of the NZpopulation, tax- and ratepayers into bankruptcy ?

by Alex Tarrant | 15th Aug 12, 5:46pm 1345009577

Updated with videos of English and Brownlee on it.

by deepred | 15th Aug 12, 7:11pm 1345014668

I'm surprised no one's mentioned Think Big yet.

by Gummy Bear Hero | 15th Aug 12, 7:19pm 1345015178

Tch tch ... you really must pay attention in class !

..... the national cycleway was the Jolly Kid & the Gnat's " Think Big " project ......

Any idea how they're getting on with it ?

by Baz | 15th Aug 12, 9:58pm 1345024735

The good news is Powerupkiwi we will never run out of oil.Rest easy in bed tonight PK

with the fact that we will never run out. Bitumen dont u love the smell there doing the

roads up around us at the moment carnt bet the smell.behind my house they are laying

nice bitumen paths around the golf course walk ways between the green and tees just

beautiful.Reminds me of the film Apocalypse Now when the soilder shouts out Napalm

I love the smell of Napalm in the morning.

Baz

by powerdownkiwi | 16th Aug 12, 8:53am 1345064000

http://www.energybulletin.net/stories/2012-08-13/comments-bp-statistical-review-2012

Better to refrain

And to be thought a fool

than to post such drivel

and remove all doubt.

by steven | 16th Aug 12, 9:28am 1345066139

BP is amazing! we used a lot but we have even more now!!!! no worries we can keep doing that every year....

LOL.

regards..

by powerdownkiwi | 16th Aug 12, 9:54am 1345067675

Be interesting to know if they fund these folk:

http://belfercenter.ksg.harvard.edu/about/policy-impact.html

Which is where thas spin paper that went viral throughout the NZ media, originated.

One wonders at the faculty dyslexia - or is that cognitive dissonance? - given the Climate Change efforts in tandem with the 'oil glut'.

It would be funny if it weren't so tragic.

by Baz | 16th Aug 12, 8:37am 1345063047

Its true Oil is never going to run out,you have built your life around the hope it will run out

I love the stuff makes the world go round

Baz

by steven | 16th Aug 12, 9:13am 1345065232

Who said it will run out? (as the main issue?) It will sort of in about 2050 ~ 2060 mind you...ie so little left it wont be worth getting.

But that isnt the point of peak oil...the point is that at peak oil we have the maximum production rate per day possible. So at that point you cant get any more per day and with a classic supply and demand curve rising demand means the price will go up. Up to the point ppl cant afford it (and neither can the economy sustain it) then you have a recession....we had one in 2008, we are going into one now....

Sure it makes the world go around, so when its gone what will us, our children, grandchidren and our great grandchidren use?

camels? donkeys?

oh dear....

regards

by powerdownkiwi | 16th Aug 12, 10:44am 1345070694

No, Mist, you're upside down.

The money paid (your precious 'price') needs to be based on something real, therefore on energy being expended.

Don't continue to make the mistake that money somehow overrides real resources. Yes, the players will do as you say (they probably think no further, and even if they did, have no room to change given their obligations to shareholders) but they have to hit the wall of lack of underwrite globally. What they are 'paid', can't be worth anything (ex backing by energy-expenditure, it has to be debt) when they come to on-spend it.

So not only do we not get real growth, we get inflation-driving bidding for dwindling resources.

Biofuels are clutched-at straws - they displace existing land-uses in all but algae cases, and don't scale.

The more you push the current production rate of a finite resource, the steeper the fall-off. The area under a graph is the area under a graph, regardless of 'value'.

by powerdownkiwi | 16th Aug 12, 11:52am 1345074778

Do I understand how?

Keeping social conscience out of it (I happen to have one which includes me and mine, friends, and the Nation, but pretty much excludes everyone else) the aim is to be debt free, and as capable of self-support as possible. I just go for back-ups of everything - having got to the point where we have most things in place.

Can't do a thing about wars, or maurauding local hordes, So I don't. Doesn't stop me being proactive in all else, though.

One of the big conscience issues is that when you withdraw for global-impact reasons, your formal comtribution to society (taxes) tend to be less. It's an interesting trip, looking for ways to contribute without resource/climate impact. There's probably a book in it sometime.

Maybe if it rains for another week solid....

by powerdownkiwi | 17th Aug 12, 9:51am 1345153882

Short trading in a market, is a zero-sum game, as is hedging. You may 'make more money' but only at the expense of others.

Both parties are in trouble if they turn up at the gas station, and the tanks are empty.

Money, meet real world. You could buy bits of it, until you couldn't. It always had to happen, time was the only variable in the equation.

Future-proofing and sustainability, are long games, and the only games in town

by JackJill | 17th Aug 12, 10:21am 1345155696

money is a proxy for energy/work. it is the real world via proxy. ppp adjust its real 'energy usage'.

by JackJill | 17th Aug 12, 11:49am 1345160957

money is only a human endeavor. i.e. a tree or animal or rock or oil does not use money

by JackJill | 17th Aug 12, 12:12pm 1345162360

the variable is how those are used. walnut tree is more valuable for its nuts than as firewood.

by Stephen Hulme | 16th Aug 12, 10:00am 1345068056

Sure it makes the world go around, so when its gone what will us, our children, grandchidren and our great grandchidren use?

camels? donkeys?

oh dear....

Yes, if needs must - my living 82 year old father remembers his badly battered WW1 veteran uncle driving a horse and cart delivering coal around Manchester in the 40's.

by notaneconomist | 16th Aug 12, 12:32pm 1345077147

Stephen H - you should be grateful then for some of the minds that created advancements for all of the people. We have gone from carrier pigeons to internet, horse and cart to a fantastic roading networks, chamber-pots and tippy-tin toilets to sewerage schemes, hand-milking the cow to automated dairy sheds, horses for work to horses for pleasure, growing your own annual food supply to the convenience of one-stop supermarkets, people having to go to a work-place to being able to work from home using technology etc. And all in a short space of time.

What makes you think some of the people out there don't have the type of mind that can overcome the problems it will face and create new inventions? You can spend all your time worrying about problems or You can spend your time solving problems.

Cutting back consumption in the commodity of oil because of a perceived shortage now, to lengthen a time-frame of availability of supply only stalls the process of new invention and innovation.

by powerdownkiwi | 16th Aug 12, 1:44pm 1345081463

It's not just an economist you're not. You could add 'intelligent to the list.

That is the old hack about 'we've come so far' (you can't stop us now) followed by the 'There's no limit to the human brain" one.

Why didn't you add Moores Law? That kind mostly do!

All that 'progress', was courtesy of unlimited (until it wasn't) availability of easy energy.

The human brain, sadly, can only make energy-use more efficient. It can't bypass the use of energy, in doing work. Nobody - for all the ranting - has come up with a viable replacement, and we now have more infrastructure, more people, more systems than ever, at the peak-supply point, and every truck, every digger, every combine harvester, every aeroplane, every road, every plastic type, is oilmade or dependent. You have to introduce an equivalent now, with the potential to grow exponentially, and to cover what we're not accounting for already (pollution, degradation).

You might as well have been an economist - the thinking is just as flawed.

by notaneconomist | 16th Aug 12, 5:20pm 1345094433

Powerdownkiwi - The power-stalker of interest.co.nz. I am not remotely interested in your negative banging on about peak-oil and crisis. If the whole world run out of oil tomorrow we will either adapt or die, it is very simple. You give little credit for the energy of the human spirit to overcome adversity. I couldn't care less whether the next step in life takes us to the trusty horse or some other form of energy invention. Adaptation is just part of everyday life.

I do know that human nature being what it is, If oil prices get too high then I think NZ could be fracking. And like taxes and bureaucrats once here they are here to stay.

by iconoclast | 16th Aug 12, 5:35pm 1345095339

In Queensland they are going hell-bent-for-leather on fracking for CSG, and they are having a lot of trouble with land subsidence and contamination of aquifiers.

Fracking

The report pointed out that "even small changes to the land surface due to subsidence may alter overland flow paths initiating new erosion features in susceptible areas." Subsidence can also "change or cause fracturing in aquifers which may alter the hydraulic connectivity."

http://www.abc.net.au/environment/articles/2011/03/22/3169602.htm

Fracking

Fracking (the process often used to fracture coal seams) injects large volumes of toxic chemicals into the coal seams. These chemicals then leak into nearby aquifers and contaminate farmland and waterways. Fracking has also caused land subsidence and earthquakes.

http://www.sixdegrees.org.au/content/csg-facts

by powerdownkiwi | 17th Aug 12, 9:43am 1345153436

Fracking isn't the issue, it's just another 'save the' fight; Forest and Bird vs Big Whatever.

Ulitmately, Big Whatever will encroach, and F&B will retreat.

Big picture, though, fracking, shale, tar-sands, deep-ocean drilling, water-cutting etc, are all indications that the best has gone.

No need to understand more - we've peaked our EROEI.

Those who state "We'll adapt" have to be dismissed at this point; a just-in-time global system which chews up 85 million barrels a day - a billion every 12 days - just maintaining, and a fiscal system requiring growth in activity to underpin it, are goners when you're down to fracking. It's no coincidence global trading activity is trending to zero, and absolutely predictable that it will trend below.

On that basis, 'adapting' is too late, because the work needed to do so, won't be available at the time. So you need to anticipate, and be ready beforehand.

by Gummy Bear Hero | 16th Aug 12, 5:52pm 1345096336

The " right wing " guys who abuse people as much as PDK does , have all be banned by Bernard ......

...... the DUKE , the MAN , WESTMINSTER ...... long gone .....

Why isn't PDK given his marching orders too , Bernard ? ....... how much personal abuse do we have to take from this blogger ?

by steven | 16th Aug 12, 6:34pm 1345098892

funny as....

Whats up GBH, fear getting to you? Just what will you eat when the share market is 10% of what it now is? Maybe the locals will eye you up as long pig.....can you run fast?

regards

by Gummy Bear Hero | 16th Aug 12, 8:42pm 1345106563

Just because you write " regards " at the bottom of every posting does not absolve you from having hurled abuse and fabrications at your fellow bloggers .

by steven | 16th Aug 12, 6:29pm 1345098564

Adaption, well the other side is extinction. We can and are ignoring it, so many will die....or mitigate and less ppl die.

regards

by Andrew R | 16th Aug 12, 8:40pm 1345106409

A point that you are missing notaneconomist is that if we burn/use more than about 20% of proven oil/coal/gas reserves then it is almost certain that world average temperatures will increase by more than 2 degrees C. Which will be a disaster.

It is suicidal maddness to continue with oil exploration etc.

See http://www.rollingstone.com/politics/news/global-warmings-terrifying-ne…

by steven | 17th Aug 12, 11:18am 1345159138

"This number is the scariest of all – one that, for the first time, meshes the political and scientific dimensions of our dilemma. It was highlighted last summer by the Carbon Tracker Initiative, a team of London financial analysts and environmentalists who published a report in an effort to educate investors about the possible risks that climate change poses to their stock portfolios. The number describes the amount of carbon already contained in the proven coal and oil and gas reserves of the fossil-fuel companies, and the countries (think Venezuela or Kuwait) that act like fossil-fuel companies. In short, it's the fossil fuel we're currently planning to burn. And the key point is that this new number – 2,795 – is higher than 565. Five times higher."

So the link to business, investors is pretty clear, carry on and your investments are at risk...so I expect the reply will be "thats OK, we'll sell to some other sucker"....

ho hum.

or,

"You want a big number? In the course of this month, a quadrillion kernels of corn need to pollinate across the grain belt, something they can't do if temperatures remain off the charts. Just like us, our crops are adapted to the Holocene, the 11,000-year period of climatic stability we're now leaving... in the dust."

So much for more CO2 being great for plant growth....no pollination....bee's seem scarce as well. Starting to look ugly and the lag is measured in decades so what we pump out today wont be felt for years.....or what we are feeling today was caused by us years ago....

regards

by notaneconomist | 17th Aug 12, 4:30pm 1345177811

Andrew R - Are you familiar with Climategate? There is a plethora of information surfacing in regards to the shoddy science behind CO2 emissions.

http://www.paulmacrae.com/ This site offers some pretty good information and a quick google search will show many others. There is an enormous list of scientists in the USA who are now challenging the whole C02 emissions science.

Firstly CO2 is just another tax placed on business. If the Govt can get $15 t/CO2 off all industry emissions it would receive hundreds of millions per year. Which by the way the final consumer ends up paying.

I know that we all have been fed a diet of carbon emissions damaging the planet but the scientists far from understood everything that was happening. Many people have profited from CO2 scare-mongering tactics and I hope they are all brought to account for some have falsified information as you will find if you google climategate.

http://www.dailymail.co.uk/news/article-1254660/Climategate-professor-Phil-Jones-admits-sending-pretty-awful-emails.html

http://www.dailymail.co.uk/news/article-1250872/Climategate-U-turn-Astonishment-scientist-centre-global-warming-email-row-admits-data-organised.html

http://www.youtube.com/watch?v=zfafW_3oJ3Q

You could look at some of the information Lod Monckton has also presented on the topic and he shows quite clearly how the hockey stick graph used by the ICPP was not credible. David Bellamy has long ago stated that Global warming is a myth.

Maybe you view Al Gore get a gruelling by a US Senator over Global warming. Ironically it was Al Gore along with Enron who dreamed up the whole Global Warming phenomena.

Carbon Trading is just a newly invented platform to get more money out of working people.

by SimonP | 17th Aug 12, 4:52pm 1345179166

The "Climategate" East Anglia email server hacking showed scientists reluctant to respond to time-intensive data requests and discussing deleting emails but it did not show any evidence of fraud or manipulation of data.

NZ has signed the Kyoto Protocol so if we do not meet our targets then the taxpayer will pay rather than polluters.

The original hockey stick graph had some data flaws which did not affect the overall result. The shape of the curve has been verified several times by independent researchers. I can supply references to peer-reviewed scientific papers if you want.

Interesting theory you have there about Enron and Al Gore. I wouldn't have thought they had much in common.

by notaneconomist | 18th Aug 12, 12:01am 1345204919

Simon P - Mr Mann's hockey stick graph appears not to have been the best tool for the ICPP to have used in their case for CO2 emissions being the cause of global warming - oh sorry I mean change. Is the ICPP still using the Hockey stick graph? Hasn't the UN removed it from their literaturef?

Phil Jones refused to supply the information under the Official Information requests - why?

http://junkscience.com/2012/03/09/science-undermines-hockey-stick-graph/

http://wattsupwiththat.com/2009/10/05/united-nations-pulls-hockey-stick-from-climate-report/

http://www.americanthinker.com/2010/02/climategates_phil_jones_confes.html

http://blogs.telegraph.co.uk/news/jamesdelingpole/100119087/uh-oh-global-warming-loons-here-comes-climategate-ii/

Maybe you should read the link below and I draw your attention to Forestry planted Pre 1990. The Govt is on to right winner here, it is certainly not the forestry owners that created the carbon credits that gets any benefit.

http://www.mfe.govt.nz/publications/climate/treatment-pre-1990-forest-nz-ets-dec07/treatment-pre-1990-forest-nz-ets-dec07.html

Why was the term global-warming adjusted to climate-change? Is the science all of a sudden not to sure of what the effects are, so made a name change just in case?

None of us can afford to ignore the peer reviewed papers that have cover this topic.

http://www.c3headlines.com/peer-reviewed-studies/

by steven | 17th Aug 12, 5:17pm 1345180629

yet more lies for ever repeated by the latest canon fodder. Like I said notathinker so we can add notasceptic as well....Funny but you seem to fit nicely into the far right, non-science camp of it will be how I want it to be and not how it is.....or voodoo everything.

LOL

regards

by JackJill | 17th Aug 12, 6:35pm 1345185318

geeze i hear this a lot but my experience is that every scientist i know knows that data can be presented in so many ways that you can infer anything you want from it, it is the lay public that says 'it is certain' and they are the ones who can least apply rigor to it. Ive never heard a scientist be sure of something unless they check the primary data themselves. they are always sceptical. its a healthy way to live, they mainly do this because of having experienced, first hand the amount of bad science that is out there.

by powerdownkiwi | 17th Aug 12, 6:48pm 1345186106

Notaneconomist is clearly the whole package.

I have sat through two lectures this week, one by Gareth Morgan, the other by a scientist/Prof with 41 years of lecturing behind him.

Their comments, backed by data, about the rate of ocean acidification and CO2 uptake, far outweigh that old shyte above, hawked by folk who start arguing from what they want, not from a blank-sheet 'what is'.

That's old stuff, well put to bed. In the same category as the Maugeri offering - consider the source, and consider the believers on-passing it.

by steven | 16th Aug 12, 6:24pm 1345098245

Not only notaneconomist but not a mathematician, or a scientist, or an engineer or a project manager and clearly not a thinker. What you are ignoring or have not considered is we need time to a) find solutions (we have none at present) 5 years, say. b) Develope them to a point that they can be commercialised, say 2~5 years and c) build and scale them up at 4 to 5mbpd equiv per year. Realistically thats a 10 to 20 year time frame. So just like the US Govn throws money at the armaments industry to make new bombs and fighters, Govns need to throw money at this....The scale is really like the ramp up to WW2....huge.

Meanwhile, peak was 2006...6 years later we have not even started a) in any serious way. We have been on a flat plateau for about 6 years, it might last another 5 but 2 or 3 is most likely....then we drop at 4 to 8%, possibly 14% per annum. the lowest numer 4% will cause a 10% contraction in GDP....it will throw us into a Greater Depression

.....this is the failing of "market forces" too short term....cant see ahead.

What you are saying is as the supply drops we will have to fight for the oil.....and the US has all of those big toys....if it can even keep the lid on the arab springs that are coming.

Fail to plan, plan to fail as the saying goes.

regards

by notaneconomist | 17th Aug 12, 1:10pm 1345165825

Steven - Really I may not be an economist, scientist, engineer blah blah but maybe you don't understand how the world has evolved. Perhaps the link below will assist you.

http://www.thedailybeast.com/articles/2012/06/09/jack-hitt-examines-why-amateurs-are-the-job-creators.html

Your quote: "What you are saying is as the supply drops we will have to fight for the oil" make it clear in your head right now - I did not say that - you made that assumption on your own.

"Fail to plan, plan to fail as the saying goes" - Yes well - One mans loss, is another mans gain and this is where the likely capital injection for the future will come.

by steven | 17th Aug 12, 5:24pm 1345181083

The USA invaded Iraq for oil, it wants to invade iran, for oil. When it comes down to it as Presidents say the American way of life is not up for negoitiation. What conclusions can be made except the USA has killed and will continue kill for oil....and it will use its poor for canon fodder.....

Capital injection...there is a time and science element that no quantity of capital can address...

NB Capital will want a return....but we as ppl simply wont be able to afford that bill......

regards

by powerdownkiwi | 17th Aug 12, 9:55am 1345154113

It's not 'afford', is the problem. You ALWAYS relate it to money.

It's the energy in the system - the work do-able.

Amish vs 10-ton loader.

But the Amish approach is sustainable, energy-wise. It's nothing to do with 'afford'.

When you 'get' the difference, you'll 'get' it.

Money can't buy anything, if there's nothing to buy.

by JackJill | 17th Aug 12, 10:07am 1345154847

there's always something to buy. that is the purchasing power of money. its a proxy for things like work/energy.

by notaneconomist | 17th Aug 12, 11:44am 1345160654

Mist42nz - Politicians, Bureaucrats, taxes, levies, RMA and other legislative compliance etc all add to the unaffordability. The honest value cost plus profit of product or service is distorted by all the other created add on costs is my quick answer. Efficiency in completing any job or task is undermined and variables frequently not considered.

We all work approximately the first 6 months of the year to pay all the taxes imposed and then what you make after that is yours. However if your in a business you can lose at least one day a week quite easily in administrative/compliance requirements. Whether you are doing the work yourself or paying others to do it doesn't matter it is still a cost burdon.

Business is up against large well funded Government agencies who have legislative clout and the cost of taking on these agencies through the courts would not be worth it in most cases.

Part of the 'culture' now is that you pay these taxes and these are the services that I get in return (health,education, policing, etc) few people actually cost out whether they could get a similar service for cheaper. Some people know there is a failure in supply of the Government services and affectively end up paying twice once in their taxes and also for a private entity to provision them. Health insurance, private schooling, security, etc would be a few expamples. Private enterprise "generally" has its finger on the button and questions the costs. The public system has become so large in the last decade that the number of people working in this system threatens to overtake(may have already overtaken) the numbers working in the private sector.

If you watch people who are on very restrained budgets they will cost out every grocery item they purchase to ensure they get the cheapest item to stick within their budget. They might know the price of apples everywhere for the week yet they never give consideration to Govt services and the costs.

I was amused when a farmer quibbled for two months over the cost of a battery (the difference he was arguing over was $5), Everyday for two months he had to get another vehicle out to jump-start his farm ute. Obviously he didn't rate the time and costs highly of his inefficiency.

There are so many variables of culture within the framework of the whole culture that affordability to maintain the advantages and benefits is eroded.

by notaneconomist | 17th Aug 12, 1:43pm 1345167821

MIst42nz - I know what your talking about on the farm, it is well over 1 day a week it is more like 3 if all compliance issues are taken into consideration.

The farmer I mentioned was the worst one I have ever come across, the example is not indicative of the industry as a whole and only used him as an example of human behaviour (culture) The hell-bent attitude to save $5 on a battery probably cost him many times that amount. So it is what I term as a false saving. He could have looked at the bigger picture of ensuring that his stock were shifted when they needed to be to obtain better pasture management and production.

by Your Landlord | 17th Aug 12, 10:19am 1345155544

Hello PDK, steven and co. Something to brighten your days.

An expert has just said the world will probably be facing an oil glut in the next few years.

No need for you guys to worry as much as you do I think.

by steven | 17th Aug 12, 11:04am 1345158254

Hey, I think your houses values will triple inside 6 months!!!!

Hows that for good news!!!!!

congrats!!!!!

regards

your loving local realestate agent.

get the idea?

by Your Landlord | 17th Aug 12, 2:28pm 1345170497

steven, the future of the world's resources are much too important to be mocking the opinions of experts.

We have heard all of this "the end is nigh" stuff for centuries from the whacky extreme of the human existance. Everything will be OK. Spread the word. A glut is coming.

I've been thinking of up-grading my car to a bigger one...

by steven | 17th Aug 12, 3:23pm 1345173820

One dubious "expert" with a paid for report from the oil industry...try reading the copious crtiques of his cwap....and especially ASPO who have a lot of real experts, oil geologists like Campbell....maybe look up robert Hirsch 2005.....great links on youtube...as a sample of the other side.

Bigger car, yep get a nice big v8 holden ute, get it on HP as well....you know it makes sense. Just like being a landlord with lots of leverage when facing a Greater Depression.....its great when ppl like you do this, helps me pay down debt a little more and longer.....just remember how canon fodder fairs...

regards

by powerdownkiwi | 17th Aug 12, 12:56pm 1345164998

I just onsent all the versions of that, which hit the NZ media, to RNZ's 'Media Watch".

Because there is a classic example of what happens. Conveniently behind the Harvard name, one person (ex-industry, but peer-outnumbered in his appraisal by about 100:1) put out a 'report'.

Very quickly, it is rebutted, and the foaw is revealed - his rate-of-depletion of existing fields is about 1.6% pa, the actual is between 4 and 5% pa.

But look at who swallowed it.

http://powerdownkiwi.wordpress.com/2012/08/12/otago-daily-times-rnz-news-interest-co-and-swallowing-the-spin/

The question is, who pushed it onto the NZ media, and the supplementary question is - why did they swallow it?

by steven | 17th Aug 12, 1:19pm 1345166361

Hi,

Never described a specific sweet spot on the slope.....thats just it its unknown. Anyway really if you are a bastard then humility on our part makes no odds especially if you want ammo...

More and more locally, and co-operate, yes as we have said...which is counter to "you" and "take".

Maybe you should try moving away from peak stupidity and into peak thinking....

"take", sure you can try....

regards

by powerdownkiwi | 17th Aug 12, 6:52pm 1345186379

AL - if you get our point, then maybe you can help move on to the next stage; do something about it.

The societal debate is clearly better had, well before anarchy set in.

Which is why I'm here.

by goNZ | 17th Aug 12, 1:21pm 1345166472

News - Maui gas field good for another 10 years using the existing wells !! another rotten news day for the doomists

by powerdownkiwi | 17th Aug 12, 6:49pm 1345186190

You have rates-of-supply y.o.y. for that?

by Plutocracy | 17th Aug 12, 6:55pm 1345186529

Take a look at the production graph, looks like a classic gaussian to me! :)

http://upload.wikimedia.org/wikipedia/commons/b/b0/Mauigasfield.svg

Also from the article GONZ's is crooning over:

When it was discovered in 1969, Maui was one of the biggest offshore gas fields in the world. At its peak in the 1990s it met 90 per cent of New Zealand's natural gas demand.

Now in its twilight years it still meets about 20 per cent of demand.

Peak and decline, doesn't reality suck sometimes!

by powerdownkiwi | 17th Aug 12, 7:10pm 1345187422

I didn't bother looking (good on you for that) but they all conform, that's why they need spinners like the wee muppet.

Ain't reality a bugger!

Have a good weekend, Plutocracy, whoever you are. Getting at the truth is about the best aim a debate can have.

by Baz | 17th Aug 12, 10:33pm 1345199598

Thats good news alright 10 more years of gas ,that will be at least 10 years.More gas

will most likely gome up out of the earth to replenish it.anyway if we ever get a bit low

we can go down to Plonkerupkiwis forestry block mow it down burn it in our open fires

and set up a fracking platform there .

Baz