Here's our summary of key economic events over the weekend that affect New Zealand with news the Middle East situation is getting worse, with the Yemen-based Houthis into the fray and the Suez entrance now also threatened with closure.
Diesel and jet fuel markets look to be particularly vulnerable to an extended loss of Middle East production and exports, given limited flexibility elsewhere to increase output. In New Zealand we apparently have 46 days of supply for diesel, 53 days for jet fuel. Both fuels could see another 4 weeks of supply coming in the next 3 weeks. In Australia, they seem to have much lower stock levels, 26 days of diesel storage, 19 days of jet fuel storage, and a massive spike in demand for diesel, as users panic buying is upending forecasts there. Their situation is looking decidedly dodgy.
The next thing for all of us to watch is ship bunker storage and capacity. And both exporters and importers will be sweating the coming surge in "freight surcharges".
Locally in the short pre-Easter week ahead we will not only get an update of the February employment indicators and building permits, we will also get the big end-of-month RBNZ data dump.
In Australia, the main data releases will be around their building permit levels, the Ai Group PMI, and updates of their March housing market activity.
Elsewhere, the week will end with the March non-farm payrolls report in the US where they are expecting a modest +50,00 jobs gain, a partial bounce back after the surprise -96,000 job loss in February. Their March ISM PMI is due out this week too.
In China, there will be March PMIs. From India, February industrial production data. But any recent data from anywhere is now less relevant for guidance about how the rest of 2026 may play out.
Back in the US over the weekend, the updated University of Michigan’s Consumer Sentiment Index fell sharply in March from February. It is now near the record lows at the end of 2025, with declines spanning all age groups and political affiliations. Households with middle and higher incomes, as well as those with stock wealth, experienced the steepest drops in confidence. The US war on Iran and the resulting uncertainty and volatility is driving the bad mood. The short-term economic outlook reported by this respected survey plunged -14%.
US petrol prices are up a third from a month ago, but their diesel prices are up +50% over the same time. Early signs on what this will do to US internal freight costs, before the recent cost bites were not good.
Meanwhile, uncertainty is keeping US oil bosses from investing in new North American oil drilling. They remember the pandemic spike with no fondness, and are trying to avoid the "value destruction" that followed that. They are happy to take the higher profits now without any effort or risk than invest upfront in new drilling and risk a sharp pullback. That view probably applies worldwide.
Uncertainty is suddenly biting consumers harder there, with a notable downturn in Las Vegas visitors - except the high-rollers of course.
Across the Pacific, China has reacted over the weekend to new US anti-trade measures aimed at them, starting new probes of its own aimed at the US. None of this augers well for the upcoming Xi/Trump summit, and anyone hoping for an easing of tensions then may need to reassess. The US policy actions all seem designed to provoke, so reactions from the Chinese should be no surprise. This is not a path to calmer trade tensions.
Profits at China’s industrial firms rose +15.2% in February from a year ago and the best start to the calendar year since 2022. A lot of this was driven by private enterprises (+37.2%), although listed companies saw only weak growth, and some foreign companies suffered retreats. SOE profits rose a modest +5.3%.
Taiwanese consumer sentiment has taken a hit, like everywhere else, now its lowest since January 2023.
Singapore and Malaysia released February producer price data over the weekend and both retreated, for Singapore its fifth straight decline, for Malaysia its 13th. But in both cases, March is unlikely to show the same direction.
India bank loan growth is remaining high, up +13.8% from a year ago in their March 29, 2026 report.
India has rolled back petrol taxes to ease local strains on households. Vietnam has done the same. So have Spain, Portugal, Brazil, and Sweden, so far.
In Melbourne, public transport will be free throughout April as part of a state government effort to encourage motorists to drive less and ease the growing fuel crisis. They follow Tasmania.
The UST 10yr yield is now just on 4.44%, unchanged from Saturday, up +5 bps from a week ago. The key 2-10 yield curve is marginally steeper at +52 bps (+1 bp). Their 1-5 curve is also marginally steeper at +30 bps (+1 bp) and the 3 mth-10yr curve is now at +75 bps (+1 bp). The China 10 year bond rate is unchanged at 1.82%. The Japanese 10 year bond yield is also unchanged at 2.38% and still at a 29 year high. The Australian 10 year bond yield starts today at 5.11%, down -2 bps from Saturday. And the NZ Government 10 year bond rate starts today at 4.80%, unchanged from Saturday and which is its highest in nearly two years.
The price of gold will start today down -US$18 from Saturday, now at US$4493/oz, and down -US$80/oz from a week ago. Silver has dipped -50 USc to US$69.50/oz, little-changed for the week.
American oil prices are up another +US$1 at just over US$99.50/bbl, while the international Brent price is up the same at just on US$112.50/bbl. Ship transit traffic in the Strait of Hormuz, already low, has dried up again. Even Chinese ships can't pass now, even empty ones.
The Kiwi dollar is holding lower against the USD from Saturday, now at 57.5 USc, but down -90 bps for the week. Against the Aussie we are unchanged at 83.6 AUc. We are little-changed against the yen. Against the euro we are still at just on 49.9 euro cents. That all means our TWI-5 starts today holding at just on 61.4, but down -70 bps for the week.
The bitcoin price starts today at US$66,456 and up +0.4% from this time Saturday, down -4.5% for the week. Volatility over the past 24 hours has been low at just under +/- 0.7%.
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86 Comments
Do the Aussies not have a refinery either?
Just two, and both apparently rely on imported crude, but only supply 20% of the national need.
Long term complacency. Helen Clark's ideological mantra about diplomacy solving all was a common theme through the 70's onwards. Denial of geo politics based on an assumption that the then, sort of, stable world order would endure. Creeping corruption in democracies (all of them) has seen the exposure of that ideology as being the fraud it was and and it's demise.
So having refineries doesn't help much if they are in a worse situation than us.
That will depend....if refined fuels shipments stop then they will at least be able to refine the oil they currently produce and continue to run critical infrastructure....we wont have that option.
True, but the flip side is that they are more likely to run out of refined fuel in the first place. Maybe we negotiated better supply contracts due to necessity? I guess we will see who ends up better off.
Of course the best option would be electrification.
Electrification is a short-term vaccine, but not a long-term health.
Because none of it has/can be supplied/maintained ex fossil energy.
And it doesn't do food, as that system is constructed, easily.
Their problem appears to be that some of their fuel was ex China which has cancelled exports, which means they are looking for fuel from new sources...especially the ones that supply us....just as with our labour they could well outbid us.
We didn't have their 20% option regardless. We either had to be all in on Marsden Point (meaning more expensive fuel) or shut it down. It wouldn't make economic sense to have it producing 20%.
The 'more expensive' fuel would have equated to a couple of cents a litre....well within the day to day variation that nobody bothered about. A pretty cheap insurance premium while we developed alternatives....but we did/do neither.
Also as with the frozen veges the profits drop by a few cents. Ooops no sorry they're sacrosanct aren't they.
Reality is all these major companies simply hollow out the Aotearoa based asset by refusing to update and maintain until they are forced to shift to their newer plants overseas. They are profitable, just not as profitable if run as a long term operation. Therefore kill it off.
NZ energy policy saw to it they weren't making a profit. Why hang around to pay for woke politics? At the least the workers will be able to switch planting pine trees in the pea paddocks.
"Wattie’s New Zealand business paid out more to its suppliers and employees than it received in customer payments in its last financial year, filings to the New Zealand Companies Office show."
https://www.nzherald.co.nz/business/companies/agribusiness/watties-fina…
"McCain Foods New Zealand will close its Hastings vegetable processing plant by January 31, 2027, following three loss-making financial years out of the last five. The firm reported a $16.9 million loss to June 30, 2025, driven by rising administrative/finance costs and falling revenue, alongside a 2024 loss of $2.14m and a 2022 loss of $4.48m, citing high supply chain and energy costs."
https://www.nzherald.co.nz/business/companies/retail/mccain-plant-closu…
The cost of keeping NZ frozen vegies would probably have been the entire food/dairy export market. The only way frozen vegies could have been saved (other than by consumers choosing to pay the premium) was either by subsidy or banning foreign imports. And its hard to negotiate with other countries in that scenario: "can you please buy our milk instead of producing your own, but we won't buy any of your essential food products"
Not a question of not buying. Rather, judicious application of tariffs to offset subsidies foreign producers receive.
Seems Kiwis are deluded into believing that farmers that produce product that is exported to NZ receive near zero subsidies like NZ farmers. Wrong. NZ is the outlier regarding subsidies to farmers
That "couple of cents a litre" compounds onto everything. Just like health and safety probably only adds a few cents, and high Labour costs, and high land prices. Then we complain that our fuel is so expensive (when really its mainly the tax component just like food).
Gull was cheaper than the big brands as they imported refined fuel, I didn't see Kiwis avoiding Gull to keep the refinery going. If the government had forced Gull to use NZ refined and be more expensive, would we have been grateful?
They are down to two - both Govt subsidised; Geelong and Brisbane.
The big one at Kurnell - fondly remembered from a large portion of my youth spend in the sand-dunes - is gone.
The big change globally is that when you are half-way through an extraction, you have enough capacity for the remaining half. Indeed, you'll be retiring refineries on a least-useful basis.
Edit - no, Murray. Existentially we have to move away from FF for two reasons. One is that we cannot survive as a species, in a world where all the carbon has been added to the atmosphere. We simply weren't evolved to do so. The other is that we have to have built whatever comes next, before we tap it all out.
That's not ideology; that's science-based logic.
You're missing the point a lot today PDK.
But even if we have extracted all the oil, the carbon from it will not be in the atmosphere. Data shows forests increasing across Europe, and they will be else where too. We just need to cut back on the level of consumption, on virtually everything.
I was referring to the globalisation of markets. The BS economic ideological mantra coming out of the US. It is an interesting contradiction that Helen Clark, a purported and self proclaimed Socialist, couldn't see through it to it being the capitalist tool that it was. Perhaps her own greed and ambition got in the way?
For every two mature trees we cut down globally, we plant one tiny seedling.
That contrasts with claims that forests are somehow containing more carbon, but your posit is wrong because of feed-back loops. That carbon, as the world warms, will end up in the atmosphere - as the trees burn or die. You have a better brain than that, surely?
As to HC, sorry if I misunderstood what you meant by ideology. Her ilk are indeed part of the problem (I have crossed swords - actually, they didn't respond :) with the HCF); the academic/professor echelon are rapidly moving in the direction of 'away' (per Milligan) too. Indeed, I group Trotter in with that lot. They all wanted to virtue-signal their way through a period where their own consumption was the problem. The fact that they latched on to 'renewables' makes them a notch more useful than the Bishop/Watts/Luxon dinosaurs, but not the whole answer.
Deforestation is continuing, but has slowed, not stopped. But you ignored my following comment about consumption. that is the true issue and it doesn't matter the resource being consumed. The core to that is too many people.
There isn't enough land area on the planet to grow enough trees to absorb our CO2 pollution. Atmospheric concentration is increasing by record amounts annually.
"Growth rates of CO2 have tripled since the 1960s, accelerating from an annual average increase of 0.8 ppm per year to 2.4 ppm per year in the decade from 2011 to 2020. From 2023 to 2024, the global average concentration of CO2 surged by 3.5 ppm, the largest increase since modern measurements started in 1957."
https://wmo.int/news/media-centre/carbon-dioxide-levels-increase-record….
The Keeling curve, the longest running atmospheric CO2 concentration database, is called a curve because the rate of pollution is increasing. Otherwise it would be called the Keeling line.
Millions of years worth of biologically stored carbon is being released over decades. We need to STOP!
Don't fret, plants have an app for this current CO2 starvation period.
"The decline of atmospheric carbon dioxide over the last 65 million years (Ma) resulted in the ‘carbon dioxide–starvation’ of terrestrial ecosystems and led to the widespread distribution of C4 plants, which are less sensitive to carbon dioxide levels than are C3 plants."
https://royalsocietypublishing.org/rstb/article-abstract/353/1365/159/1…
https://earth.org/wp-content/uploads/2020/08/Co2-levels-historic-1.jpg…
Plants are loving the increased CO2 fertilization effect.
"Greening of the Earth and its drivers
...We show a persistent and widespread increase of growing season integrated LAI (greening) over 25% to 50% of the global vegetated area, whereas less than 4% of the globe shows decreasing LAI (browning). Factorial simulations with multiple global ecosystem models suggest that CO2 fertilization effects explain 70% of the observed greening trend, followed by nitrogen deposition (9%), climate change (8%) and land cover change (LCC) (4%)."
profile,
The earth is undoubtably greening as you show, but that's not the whole story surely. As Liebig's law states, plant growth is determined not by the total amount of available nutrients-including CO2- but by whichever nutrients is scarcest. Thus for example, even if a plant has sufficient water, nitrogen, sunlight and co2, its growth will be constrained if there is insufficient phosphorus. This I believe, now known as the Law of the minimum.
True. Plants are so starved of CO2 that they adapted with C4 to cope. CO2 today is nowhere near historic levels. Perhaps we even owe own existence to CO2 starvation levels of today. "Mammalian evolution in the late Neogene, then, may be related to the carbon dioxide starvation of C3 ecosystems."
"Perhaps we even owe own existence to CO2 starvation levels of today"
Keep that in mind as you contemplate your mammalian existence.
Just keep in mind your "record amounts" are seriously lacking perspective. We not living in an era of high CO2 levels, and no matter how much chicken littles run around we won't be getting back to anywhere near CO2 abundance - especially in an era of population flipping to asymptotic decline.
Humanity doesn't need your "CO2 abunance". Neither does the biosphere in general. The Climate has changed to the point weather is virtually permanant cr@p!
He's a sad wee cherry-picker, eh?
Nature didn't spend hundreds of millions of years converting matter into hydrocarbons, altering the earths atmosphere dramatically, for it to be all sucked out and re-released into the atmosphere in a mere 200years. Yes you can argue that volcanic eruptions do the same, but they aren't man made, or and as impactful short of Krakatoa.
all sucked out and re-released into the atmosphere in a mere 200years. There is nothing to suggest this is happening. Where are you going to get all the hydrocarbons from, how are you going to get them and who is going to burn them? Get some perspective and enjoy the inter-glacial. The earth's climate can change dramatically all on it own - have a read about D-O events.
The climate over the last glacial period was characterised by numerous abrupt climate changes known as Dansgaard–Oeschger (DO) events [1]
DO events in Greenland typically start with a rapid warming of about 8 up to 16 °C within a few decades [9], [10], [11], [12]
https://www.sciencedirect.com/science/article/abs/pii/S0012821X06000392…
Stick to the topic and stick to facts.
We pull out 100 million barrels of oil a day and 2x that in BOE in coal and gas.
Some isn't burned, but most is.
And much of the rest ends up dissipated in the above-ground environment.
Some perspective: All the petroleum produced to date would only fill half of Lake Tahoe.
"BS economic ideological mantra" - people like globalisation when it creates lower prices, but not when something like this happens.
Producing fuel here adds to the price of every litre you buy, producing frozen veg here adds to the price of every pack you buy. We can't criticise fuel companies and supermarkets for charging more than other countries, and then block them from sourcing those cheaper commodities offshore. We need to choose whether we want local products that will be more expensive, or imported that are cheaper.
' We need to choose whether we want local products that will be more expensive, or imported that are cheaper. "
Or we need to work out why (some) local products are uncompetitive and then decide whether it makes sense to import cheaper options if we cannot match the price.
Price is only one consideration within many.
I think we already have a pretty good idea why. Scale, labour costs, labour laws, health and safety, land costs, energy costs, etc.
As many have said, energy costs add to the price of everything, so refining our own fuel adds to the cost of everything. Maybe its worth it, but then you can't compare NZ prices to other countries and complain.
Bollocks.
Accounting is often what makes them unprofitable. Along with lack of accounting for such as local resilience and sustainability ( out to PDK standard).
You're trying to have a bob each way there.
From a standard P and L perspective, the rationale works out along Jimbo's explanation.
If you want to apply more arbitrary lens including non direct costs then that's another argument.
Bollocks.
Accounting can't make labour cheaper, energy cheaper, land cheaper, etc. If we adopt the same accounting as South Korea we won't all of a sudden refine fuel as cheap as they can or build TVs as cheap as they can. Just like they can't do it as cheap as the Chinese can.
But it can choose the cheapest labour.
And does. Then finds someone to undercut that - slave labour is the ultimate destination.
That is the nonsense of 'the market' (that in which you seem steeped).
And how many companies make little to no profit in fact often huge loses and yet hang around draining the country. Meta, Methanex, Visa, Mastercard........
The shit only ever hits the fan when it comes to replace depreciated assets.
"I think we already have a pretty good idea why. Scale, labour costs, labour laws, health and safety, land costs, energy costs, etc. "
Excepting we do not know....the cost structures are opaque as the Com Com discovers regularly.
If we travel overseas to a place with much cheaper labour
The difference is apparent when you go buy a meal for $2
If we removed health and safety, had cheap land and cheap energy, no tax, and very cheap labour, we could probably achieve that too.
I am pleased you are are so confident in the causes of the price imbalance...perhaps you should offer your services to the Commerce Commission in their next investigation...as demonstrated to you the other day, declared labour costs are not as high as you think.
There is far more involved in these pricing arrangements that result in both the ultimate retail price and the competitiveness of onshore production v imported....and thats before considerations such as security, capability and capacity, nevermind the purpose of an economy.
declared labour costs are not as high as you think.
I know what the minimum wage is in NZ as your bare basic starting point. Which ends up being over $30/hr to an employer
And I know what labour costs in many parts of the world. And basics in those economies like animal protein and veges.
And your counter was a comment in a paper by a CEO
There is far more involved in these pricing arrangements that result in both the ultimate retail price and the competitiveness of onshore production v imported
The basic is "it costs way more to do most common industrial tasks in NZ than many other places".
and thats before considerations such as security, capability and capacity, nevermind the purpose of an economy
Again, this is a totally separate way of trying to establish price than a company is going to entertain.
As David suggests below, go run a business using this approach of factoring in externalities outside of your standard inputs vs outputs and let us know how you go.
My counter was the last filed return by the company which showed the direct labour cost of around 15% to your 'assumed' 20-40%
The industry average is 20-40%.
So 15% of direct labour costs, as well as higher prices for any of the other domestic inputs with kiwi hands touching them.
So you can consolidate your operations overseas and knock 10% or more from your costs. Buys a lot of freight.
Does it save enough to pay $9-18,000 per container of frozen vege when that container holds around 20,000 pkts of vege?....and that is shipping cost alone, nevermind the additional landed fees and specific packaging requirements for market...and thats based on pre Iran costs.
The McCains grower recently cited a $1.70 selling price (including margin) required locally.....something outside the freight is doing a lot of heavy lifting.
Could be the huge margin supermarkets are charging for locally grown veg?
If the margins are huge and 'unjustified', there is nothing to stop others from jumping in and selling at [much] lower prices. The demand would be there. But why is that not happening? Why don't you do it? And for those that try, why don't they last? Could it be that without a 'reasonable' return for the risks involved, it just isn't sustainable? Selling veg (anything fresh) involves not only meeting reasonable consumer expectations, but without tight supply-chain controls for freshness, then you get substantial wastage. You really want to get into that business? Risks are high. Fruit World and the like are trying, but why have they not taken over? Answer these questions and you have a great business ahead of you.
No, you don't 'have a great business ahead of you'.
You actually begin understand the predicament approaching humankind.
Because profit-taking can have, eventually, no place in a sustainable system.
The real meaning of sustainability, I mean, not the cherry-picked short-window just-here-and-now that business chooses to be.
We will be doing food - as good and fresh as we can manage - locally, and not-for-profit, by the time the FF dust settles.
pdk,
I think you are likely to be right that more, a lot more, will have to be done locally. In as far as i am able to make a judgement on energy related matters, I have come to think that a future where much our energy comes from solar and wind-leaving nuclear aside-will force us to do less with less. This long substack puts the case much better than I could.
https://substack.com/@rogerpielkejr/note/p-192026893?r=30yebv&utm_mediu…
Could we be better placed than many with more pumped hydro and geothermal? I feel pretty sure that the world will not easily give up on ffs including coal if necessary and that we will be using them for longer than many suppose, but they are not infinite.
Welcome back to the discussion :)
Local pumped-hydro I can do here - using wind to push water uphill when it blows, letting it down through my micro-hydro when I need it. That can be done cannibalising derelict cars and whiteware; no need for virgin input. I don't happen to need to do it - but it's easily done.
Geothermal is a bit less local - a bit more national level.
Food-production can be as local as the back yard.
Well, the grocery sector is largely a cartel.
I was more referencing the current "frozen food" industry destruction. Foodstuffs commented the average wholesale cost paid to suppliers was 68%. Figures supplied by McCains say they were paid $1.70/unit frozen peas which retailed for $5.79, or less than 30%! It would be fair to say supermarket greed has KILLED processed vegetalbe production in NZ!
https://www.stuff.co.nz/nz-news/360955814/60c-579-farmer-says-someone-m…
"Why don't you do it?"
I did do it, compete with the big boys, different sector. Nursery. It can be done. Got to work yourself to death and sacrifice a life, but it can be done. Problem is, you can't generate enough income to actually improve your business because the predators know which eyes to pick out to cut you off at the knees.
One thing that became obvious over the years in business, is the mind control blanket advertising achieves. You can offer the lowest prices, best service, but the plebs will still dutifully drive past you and down to the acres of carpark, tilt slab warehouse, shiny lights and racks of imported junk. The Ad campaign told them to.
There are the majority who shop on price. The supermarkets reflect that pressure, making farmers 'price takers'. The result has been economies of scale, plus failure to account (for inputs).
Some salved their consciences by shopping at a premium - I'm thinking university-paid people frequenting farmer's markets. But that 'income' format is being increasingly compromised/stifled (as was always inevitable). Whereas the bottom-end are still the bottom-end.
So the demand for premium, if measured in price, is doomed to reduce.
If measured in want - who knows? As you say there's a lot of unwitting advert-following unwashed out there.
"There are the majority who shop on price."
I can only partially agree with that, the variable being that the "price" is perceived only. The amount of gaslighting in retail is beyond comprehension! The customer received information from a paid advertising (propaganda, same psychological tools) campaign telling them that they would financially benefit from visiting a certain establishment. Repetition, repetition.
I could have taken out a page in the local rag for $1500, but spread over the size of my business, it just couldn't be justified. Then it would rain over the weekend.
If you're turning over a million a week, you can do the page, a mailer, radio, TV, internet.........
David. The only reason I could survive in business was because of vertical integration. I sold what I grew. Doing this I could maintain a great margin on sales 100%+. The problem of course was selling enough product to convert that great margin into a great business.
The Bunnings mark up on wholesale is 30% on their competing product. Say Half is chucked , or marked down. Bunnings don't actually have a nursery business. It ony exists to get people through the door and buying hugely marked up Chinese junk. Same with the Warehouse and Mitre 10. Their margins are pathethic.
If I don't have to go to a hardware store and can wait, I look to Temu and Aliexpress. Some things are junk, but then again there's a wide spread and half the stuff at those stores you mention is indeed junk from the same place.
Of course our local box stores are trying to stay alive by using the direct to customer internet model. Whether or not they succeed is another matter. If they don't, I won't cry.
"Producing fuel here adds to the price of every litre you buy, producing frozen veg here adds to the price of every pack you buy." Maybe.
We have all heard the justification that we pay the international price for products, but which is proven to be BS when those products are cheaper in UK, European or Aussie stores than in NZ. The Canadians employ a Supply Management System to manage the amount of dairy that is produced to meet the local market ONLY. I don't see why a similar system cannot be applied here? I also feel that the public at one end, and farmers at the other are being ripped off.
But local production can be used with a strategic goal in mind, employment, but supported to not just supply the local market but also develop to be able to export products too. Yes in the beginning costs will be high, but develop scale and those come down. What is the benefit to NZ as a whole and people as well with the closure of McCains and Watties plants ?
"I don't see why a similar system cannot be applied here"
We are a small market dependent on dairy exports. It would be hard to get good trade agreements with that in place. We are not Canada.
"What is the benefit to NZ as a whole and people as well with the closure of McCains and Watties plants" - nothing IMO. I have been saying for a long time that forcing the supermarkets to lower prices would result in lower quality and more offshore crap. The main reason our food prices are higher than other countries is because we charge GST and they don't. Making the supermarkets super competitive won't fix that, it will just reduce the quality. I've lived off the food in the UK and its rank, I'd much rather pay an extra 1 or 2 percent at the supermarket for decent stuff. But I'm very much the minority, almost every one else wants lower prices over quality.
Re Canada, they still export products. Explain why Kiwis have to pay prices based on international prices when they could be paying prices that reflect actual production and margins? And then explain why our products are cheaper overseas than here? That is what a Supply Management System could address. It doesn't have to stop the export of dairy or other food products, just make sure we Kiwis are not being shafted at the supermarket.
Why is NZ food cheaper in the UK for example - mainly because supermarket food is VAT exempt in the UK, a 15% advantage. You can't expect a supermarket, which is low margin, to absorb a 15% cost like GST, its not possible unless they make a loss. Again we want to have our cake (a simple GST system) and eat it too (low food costs).
Why is NZ food cheaper in the UK for example
Likely the sheer economy of scale. If they buy vast quantities of out meat they will negotiate a better price per kg and factor transportation costs etc into this, then sell for cheaper than here and sill make a profit through quantity. GST is only one factor.
Other than Iran seven nations have shorelines on the Gulf Sea. Two of those the UAE & Oman actually on the Straits of Hormuz the others in a virtual cul de sac further in. However Iran’s claim of control of rights of passage has been left virtually unchallenged except for the conflict with Iraq in the 1980s. Now Iran is apparently intent on running a toll gate on passage. Those other seven nations are critically dependent on the trade route but it would seem entirely impotent to defend those interests from Iran.
Their newest demand, added over the weekend, is that Iran's territorial sovereignty of the strait be recognised. Not part of it, not to the centre line, not to within 12 NM of the other coast (which is half way across) - all of it! That's not going to happen, so where that leads will likely be more open conflict.
Meanwhile the Houthi's have entered the fray in the Red Sea, complicating the issue of tankers coming SE to the Indian Ocean. Knocking the Houthi's back will be easier than Iran though, and Saudi and other Arab states may be prepared to step up there.
God Loves the Marines!
.In 1944 my father flew General Larkin US Marines from Fiji to Samoa. They remained in touch and he visited our farm post war. According to my father he never met a gentler man on one side or tougher on the other. Certain characteristics attract certain characters.
Just remember that when the SA leader went to sign an agreement with the US and Israel, the SA populace - 99+% of them - sided with Palestine.
And MBS backed down. Nobody - no matter how autocratic, ignores that percentage.
So the SA leadership are holding a lid on a near-universal anti-West (and particularly anti-Israel) populace; no mandate for much. They do, however, have internal trans-country pipelines...
Yes that royal family is sitting on a knife edge, on top of a potential powder keg.
I recall that there was a certain level of disdain from many in the west following the 1991 and later ME wars where the Arabs didn't really want to defend themselves, just party. I do note that some Arab military units did earn a high level of respect, but most not. Perhaps that's where Vance's anti-'other people wars' attitude comes from?
When Vance's lips move, it's Thiel pulling the strings. So apocalyptic, authoritarian, technoutopian, Christianity. Not unlike the Irainian Revolutionary Council in many ways. Just a different version of sky fairy mythology.
Once the US Marines open the Strait of Trump (SOT) those Persian Gulf locked countries (Qatar, Kuwait etc...) will be asked to pay a US $1.9m freedom contribution per tanker to pay for the defence force needed to protect the SOT form the evil Iranians. US$100k cheaper than Iran's toll so a win-win.
My prediction: if the US launches a ground invasion, the first thing the Iranians will do is direct the Houthis to shut off the Red Sea.
what if the Red Sea is secured first? That has to be on the radar for the planners.
Secured?
You cannot secure in asymmetrical warfare.
Vietnam proved that. We got a glimpse of it towards the end of the Captain Phillips movie; a vast armada to quash a dugout or two. The EROEI is too bad to keep that up.
It depends. Oman in the 1970s was nearly over run by Chinese backed insurgents from Yemen. British SAS & similar present were sufficient to hold that off but only just. There was a regime change with the son deposing the old Sultan and then Saudi and Jordan commenced providing and manning, aircraft, artillery and armour. Oman retained its sovereignty. Arab nations can cross over borders when it suits as such they participated in the first Iraq conflict, Desert Storm 1990. Saudi has also been active in Yemen for quite a while now. Egypt would undoubtedly prefer that it’s revenue from Suez not be choked off.
Would such a battle degenerate into an asymmetric scenario? Perhaps. Can the Houthi's be cut off from Iran? Very likely. As I postulated last week, the US is fighting this all wrong, they haven't shut down Iranian favoured traffic going through the strait. Shut it all down, shut off the Houthi supply lines and they will soon run out of rockets and missiles. Warfare has changed, there is no doubt. the US military has to learn to adapt, fast, or they have another Viet Nam.
They shouldn't have started this war in the first place.
That sounds like some forward thinking nonsense that trump has no time for
And burn all the Gulf State's oil and gas fields. Get ready for $5 a litre people.
It's not the price, it's the supply at all.
But price has another consequence; at some point the Capex cost outstrips the energy-return (which is needed to do the repaying). Hence no oil-co enthusiasm for Venezuela; hence no wild reboot of fracking.
In simple energy terms, western civ can no longer 'afford itself'. So it is tearing itself apart, stratifying (rich vs all else), postponing maintenance and accruing debt.
If the level of disruption and capacity to extract and ship oil and LNG from the gulf continues and keeps prices high enough, eventually Venezuela will seem a worthwhile investment for oil companies. Sure they'll probably need security 24/7 year round, but where there's profit to be made, the oil industry goes historically.
Not if society cannot do enough work with that energy, to pay the price.
That is the point so many miss.
As in the jobs won't be there for workers to have income to afford it?
If a government uses fuel market signals at the pump as its primary behaviour driver... how does a country prepare itself to face an unprecented-yet-foreseeable situation where the information about supply chain damage takes time to trickle across to international and local pricing?
Whose role is it to make the hard calls when the pricing doesn't reflect the physical reality?
Great comment.
Ultimately, ours.
Leadership is always about the status-quo and is therefore always wrong-footed by change. This lot are true believers in the recent religion - Economic Growth forever. Their Darwin moment is well upon us. They will increasingly abhor the science (Shane Jones anyone?) while the rest of us get on constructing the next societal format.
Fresh reporting in The Washington Post suggests he could be right: "The Pentagon is preparing for weeks of ground operations in Iran, U.S. officials said, as thousands of American soldiers and Marines arrive in the Middle East for what could become a dangerous new phase of the war should President Donald Trump choose to escalate," the Saturday night report indicated. WaPo further says the plans have been at least weeks in development, writing "Any potential ground operation would fall short of a full-scale invasion and could instead involve raids by a mixture of Special Operations forces and conventional infantry troops, said the officials. All spoke on the condition of anonymity to discuss highly sensitive military plans that have been in development for weeks."
In the early seventies Iran took control of Abu Musa & a couple of other Islands that were then territory of the UAE that had not yet formed. Guess the old Shah doesn’t get much thanks for that today. Their positioning is strategically very important. Likely these could be attacked and taken back for a start but undoubtedly there will be booby traps large and small galore and if secured plenty of incoming to deal with.
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