Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that the economic impact of the Christchurch earthquake is now expected to be much bigger than the September 4 shock.
JP Morgan Chase has estimated the insurance costs of the quake at more than NZ$16 billion, making it the biggest insurance event in the world in three years.
But it's still too early to accurately measure the likely cost or effect on GDP, but it is clear that an economic recovery expected this year is now likely to be delayed into 2012.
Financial markets are now betting the Official Cash Rate will not be increased until next year and some are speculating on the possibility of an emergency cut in the Official Cash Rate.
See more here in Alex Tarrant's article.
Meanwhile, the New Zealand dollar fell further overnight to 74.4 USc as expectations of flat to falling interest rates made the currency less attractive in the eyes of international investors.
Also overnight, the price of oil rose well over US$100/bbl on fears the worsening violence in Libya will hit oil output.
The combination of a weaker New Zealand dollar and higher oil prices in US dollars is likely to see petrol prices rise significantly here.
See our interactive chart for detail on New Zealand petrol prices.
Oil futures rose over US$110/bbl in late trade as reports filtered through that Libyan output had already been reduced by a quarter.
See more here in this Reuters article.
Libya is the third biggest producer of oil in North Africa and responsible for over 1% of total global output.
Libya appears to have broken into two halves and a civil war is seen as a possibility.
Libya cut gas supplies to Italy overnight, removing 10% of Italy's energy supplies in one hit. See this article at WSJ
No chart with that title exists.
42 Comments
Food and petrol prices - eating up wages.
Well – we all knew about petrol prices – but does the government ? More then $ 100.- for a tank ! It is time for actions again.
The government should make sure the population is covered with decent public transportation in cities.
I also suggest GST free petrol for rural petrol stations passed on to all customers.
International turmoil and climate change make prices, even for basic food for low income Kiwis unaffordable. This need drastic measures by the government to make e.g. direct sales of basic food products by NZfarmers to NZcustomers possible.
We are increasingly in an emergency situation. I just hope the government has a contingency plan.
I just read: Unrest erupts in China.
Kunst - correct.
Christchurch has some lessons for us as to what is coming. Easily-accessed above-ground services being one of them. It's not just earthquakes, it's the energy required to to the digging.
And it increasingly looks like 'the long emergency' is beginning, but we still have someone here reporting the 'effect on GDP'. Not unlike a person having been taught the creationist line, ignoring the lecture about the age of glacial valleys.
Somewhat like reporting how much was won and lost in a poker-game on the Titanic - no relevance to real measures (real depletion, real pollution, chemical/physical/biota counts).
Kunst, PDK - Incorrect
Do some research on 'public transport' and you would be shocked to find out that it is no more energy efficient than private transport in short trip use, in fact buses are less so (the average load of a metro bus in NZ if probably less than 5 pax). The oxymoron is that 'public transport' is most efficient in long haul (which is why a subsidized 6km city bus trip still costs more per K than flying first class to Sydney)
How and why is this myth/mantra perpetuated? a mixture of bureaucrats, belief, socialism and denial
Neven
Neven - no, you're the one not accounting correctly.
Flying first class to sydney is mass transport (cheaper per head) but it doesn't account for itself. Absolutely unsustainable, and will be gone - perhaps within 5 years, certainly within 10. Fails to account for natural capital (finite fossil fuel depletion) and pollution (carbon, and other).
The 'average load' now, is irrelevant. The capability when need ensues, is the only relevant measure.
Don't - and it's a very common mistake - confuse those of us who study energy, with socialism. I, for instance, think the global population will be down to 30-50% of present levels by 2050. Via lack of energy to maintain existing food supply chains, depletion of aquifers, collapse of foodchains (fish for instance - Heatleys efforts re Bluefin Tuna display this kind of ignorance) etc.
The denial is in the ones who think what we have at the moment (look around you, what do you see which would still happen without oil - bugger all) is somehow forever.
Full buses are more energy efficient, and the build energy is light years better (bet you didn't include that).
PDK
The socialism comment was pointed at the watermelons (Green outside, Pink inside) like Fitzsimmons who bemoaned that it was impossible to catch a bus to the airport from anywhere...I mean what is the point in environmental terms
And I'd refute your arguement on "Full buses are more energy efficient", than what? for one a full bus is a myth (they only exist one way in an 'express' service) at best they can be only 50% full
The published data is also on my side, If you read the reports they will 'prove' the superiority of public transport by bringing in the healthcare cost of accidents, because unless they do this it compares badly.
I think the build energy argument is also nebulous, other forms of private transport can have low build energies (simply keep your car for more time), and you must also consider the roadway cost (since a vehicle damages a roadway proportional to fourth order of its axel weight).
Actually i think public transport is an easy political sell, it seems enviromental and is a warm fuzzy public service, my point is that the enviromental benfits are simply not there
The answer is simple "consume less"
Neven
Neven - fair point about the airport - but JF was bigger-minded than that, she was trying to get to the ignorant with a message. And gave up - I reckon she knows it's too late.
Full PT is still more efficient, in bodies A to B terms.
Build energy - yes, keep the old by all means.
Actually, transport is the least of our worries, as you obviously know. Food production and delivery are the ones to consider.
And you're dead right - consume less.
:)
The answer is simple "consume less" add in have less ppl consuming.........that's coming.....
"I think the build energy argument is also nebulous (not sure on your point here? pls explain?), other forms of private transport can have low build energies (simply keep your car for more time)" indeed or get a push bike.....no car can beat that in total life cost or per km....
Totally agree with the latter (keep the car for more time), and yes to me the Prius makes little sense at $46k v $24k for the equiv conventional car which also looks to last twice as long.....$12k is a lot of petrol.....
Love to see your URLs justifying your stance on Mass transport, certianly its does not agree with what I have read....Conventionally full buses are cheaper for commuting even with the return empty than private cars and especially SUVs, so lets see some justification pls. Same for goods transport, the cheapest is by sea canal, then train then lorry.....this would seem to be very well establidhed research.
I do agree with getting a bus from anywhere in terms of driving empty buses around during the day to pick up the occasional OAP who gets a free ride achieves little if not it actually costs its simply silly. Many Green's also dont see that this doesnt work, but thats a function on part on how we have laid out our cities...ie to suit cheap petrol in personal transport....well bikes are cheapest of all of course.
The water Melon context is really one of extremist right wingers / libertarians labeling anybody who isnt of their ilk....but shock horror justifies their stance with real science....but wow that might mean some regulation....if you want to use it, sure, but for me when I see that it usually signals a non-existant counter argument....its name calling..."those damn commies" etc etc......
regards
pdk
Here is one from the herald, <a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10492996">Bus six times greaner!</a>, how did it get back to its source, magic!, why did they compare a full bus with a single occupant car? point is the car can be 4x more efficient and the bus is min 200% overstated, where is the govt sponsered carpooling website? Whole budget has gone on silly ads for the EECA
Neven
Steven
Here one for you total pseudo scientific BS used to justify transport policy
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VP6-4HVW8RK-…
Neven
"How and why is this myth/mantra perpetuated? a mixture of bureaucrats, belief, socialism and denial"
LOL.......No actually its Math......
Mass transport is most efficient when carting large numbers ie the likes of commuting...so buses and electric trians in the rush hour are by far the cheapest way to move ppl....Outside of this its on your bike.....Yes moving an empty bus makes no sense, indeed that will be figured out in the not to distant future...its not sustainable.
What has happened is we have got lazy because fossil fuled transportation is so cheap...this is now over the next 3 decades going to change, it has to no choice....this is survival and not "socialism"...the denial is the far right and left whingers.....whos ideology survived only because of cheap energy......
Air travel is the next yellow pages, its time is done....if the Govn had any sense it would sell Air NZ now while its worth a few bob.
regards
Steven
The point I was trying to make is that the methematiics is not universal, your statement "Mass transport is most efficient when carting large numbers ie the likes of commuting" leaves out "over large distances", this is the oxymoron, you cannot conserve by efficiently consuming...Jevon
Neven
Of course you can "conserve by efficiently consuming".....sure you save more by not consuming but for some things you have to consume, so our consumer economy is in effect a dodo. Retail as we see it cant survive expensive primary needs....and indeed what I see at present is we are using mass transport for effectively 1 or 2 ppl outside peak hours with a few OAPs on it for free, well thats nuts...and this is at the insistance of the regional councils I believe? ...ie my understanding is for a bus operator to have a route the buses have to operate when it makes no sense....so yes in this instance beaurocracy gone mad.
regards
Steven
Prove that public transport is energy efficient over short distances (less than 20K for example), Its not
Its known as the long emergency........this was predicted...
You cant give GST free petrol to some parts of NZ and not others there are low income urban dwellers as well....and it wont matter, all you do is delay the shift to a smaller car and then to walking/biking if they have a job to go to....something like a prius where its $70 a tank and last 3 months... might be a good time to stock up on bike tyres.
regards
FYI Key left open the possibility of an earthquake levy to help pay for the rebuild in yesterday's comments reported here by Alex Tarrant
http://www.interest.co.nz/news/75-confirmed-dead-hundreds-missing-key-p…
Asked whether government might consider an extra tax on New Zealanders outside Christchurch to help pay for the costs of the quake, like the levy seen in Australia after the devastating floods there, Key said Cabinet had not had discussions on that.
“Our hope would be to not to have to do that, in that the one thing that helps us in New Zealand is because we have EQC, in a way we pay through that levy process, and Australia hasn’t had that," Key said.
"So in a sense, we’ve preserved for this, if you like, or preconditioned for this. But we’ll have to take some advice on that in due course." he said.
Key is meeting CEOs of top 40 companies today also. Alex to report shortly in a separate story.
Kunst - From an environmental perspective, subsidising food, energy and fuel is the wrong thing to do. It is unsustainable economically and environmentally.
Over the past 60 years, the price of food and energy has been underpriced. The prices have not reflected the true cost of producing them because they do not factor in the environmental costs or the depletion of non-renewable resources. This has encouraged consumers into wastage, over-consumption and most importantly to having more children than they can afford to support. Remember that up until the mid 2000's, food prices have undergone a long period of declining in real terms.
Whichever way you look at it, food and energy prices are going up. Subsidising them may be popular in the very short term but it is unsustainable.
If the Government is serious, it would susidise food and energy in the short term at the same time as it imposes population control measures (i.e. providing free contraception and removing DPB for children born after 9 mths from now, removing child birth subsidises such as WFF and those families who chose to have more children than the 2 replacement level, must pay a tax on each additional child),
GG - quite right. The problem is that if a political party told this (rather obvious) truth, they'd be voted out of existence.
Trying to get the message out, you seem to run into a brick wall - a media based in business, reports what business wants you to know, and perhaps, what business genuinely believes. It's like punching a pillow.
Interestingly, the genie out of the bottle is the same one as in Egypt - the internet and social networking.
Guys I wouldn’t make such comments – but it is time to realise that the nation is in an emergency situation .
Well I will make such a comment again for the obviously cluelees or self-denialists. This isnt a National emergency...its a global one....
Such comments are appropriate...ie you blather on about facing up to "facts" but you ignore the biggest ones a) We are over-populated on this planet by a factor of about 3, maybe 4, ie the World's sustainable population is 1.5 to 2 billion ppl..........we have only got to 6.5billion by using fossil fuels to do so and b) we are at or about at or just past peak production....ergo the population will decline....you cannot prop up the un-propable....I listened to an idiot economist the other day saying farmers must produce more....yeah right...an idiot.
We have only reached this level of sophistication and job specialisation as we have had a one off bounty of excess energy to do so....
So running around in softtop jags while running art gallerys etc is dead....
regards
Steven don’t mix up subjects and don’t accuse people you don’t know. It shows again bloggers often do comment (stupid) not understanding and reading in context what other people are commenting.
Of course and I’m a profound believer - we are overpopulated and need drastic measures against using our natural resources. I didn’t have a car until 43 of age/ do not have children/ bike a lot- twice a day./ etc.
Modesty and respect are philosophical principles we all have do understand, learn and apply in our daily life.
In the current situation the NZpublic is financially stressed and the government and the public have to take measures to make sure unrest will not take over – that’s my concern. Therefore keeping national stability need temporary compromises at least.
We all will be forced to save, drive less, smaller more economical cars, use public transports, bikes etc. Same applies for power – actually most sectors of our life’s – a positive development - consumption has to stop.
I’m actually quite surprised you didn’t get that from my many previous articles – hmm! I recommend you type in the search NZeconomy to read a little bit more about my approach to life and business.
..and believe me creating art is very inspiring with a mind, which never stand still – working for the future. Steven do you know, who I’m – obviously not – then don’t comment that way.
I notice you use the term context wuite often, maybe its your poor msg communication...
regards
Its time for the international community to pledge support to New Zealand. $16bn is too much to do it alone.
How many times in the past decades, have New Zealanders and the Gov't donated to international events, wars, conflicts, famines, earthquakes, tsunamis, fires etc?
How many times have we used our small defence forces in conflict?
We need Cameron, Obama etc to pledge billions to New Zealand, we can not and should not have to do this alone.
How about because we are stupid enough to live in a quake zone?
If its gets to 16billion a lot of that is insured....this time.
regards
http://www.telegraph.co.uk/finance/financetopics/oilprices/8344133/Oil-…
Nomura's commodity team said oil prices risk vaulting to uncharted highs over coming weeks if chaos hits Algeria as well, reducing global spare capacity to the wafer-thin margins seen just before the first Gulf War.
On Wednesday, Brent crude rose more than 5pc to almost $112 a barrel, threatening levels that could derail the global economy.
"We could see $220 a barrel should both Libya and Algeria halt oil production. We could be underestimating this as speculative activiites were largely not present in 1990-1991," said Michael Lo, the bank's oil strategist.
from a commenter
>>>>
checkmate
7 minutes ago
I don't suppose that Nomura also declared whether or not they are carrying a position in oil?
I really hate this type of reporting. We're all, if active in the markets, aware of the risks here with energy. It serves little purpose though to start to guestimating and projecting those risks other than of course in that it fans the fuel of our current market positions. Arguably this type of reporting is nothing better than helping speculators to front run the market.
Indeed if we put all of this into context. Brent cornered and setting the benchmark for WTI which is in oversupply therby dragging virtually the whole of the energy sector and it's costs upwards ..are we truly mad ,are we ?
Lord knows I speculate simply because if i don't join them I end up paying for it anyway. But, surely we are past the time when it should occur to some goverment bodies that allowing basic essential resources to be leveraged in this way is at best plainly a nonsense that shoots monetary and fiscal policies in the foot ,and at worst it's simply caveman style 'eat your brothers' behaviour.
We're long past the point at which we should act to by way of regulation to put a stop to this kind of idiocy.
But, but, but, but there is no oil shortage! All Saudi has to do is produce that extra 3million barrels per day of spare capacity they always tell us they have and everything will be fine! Or even the extra 2million barrels of spare capacity that the rest of OPEC has! 5 million barrels of spare capacity I tells yer, twill soon make up for Libya's 1.5million offline.
But then again maybe someone's been telling porkies.
Bit of both, methinks. You don't get speculation without predicted or actual shortage, all it does is magnify the split.
It's all at the margins now, demand destruction and all that.
And porkies? Referring to GDP as if it were a meaningful measure of anything meaningful, is porkies.
There's a lot of it about.
Couldn't agree more. It would be interesting to see who took out all the big oil futures contracts and when. In times like this (if not for ever) the futures market should be shut down. It seems to add to gambling behaviour and instability
Nomura has a massive positions in Australian Coal. Look up Cockatoo Coal (ASX:COK) and Bandanna Energy (ASX:BND)
With Christchurch the economic impact should start to become clear next week. I've some business there (but am based in Auckland) and people I work with are sitting at home as they've been told to do by the council....still in the emergency phase. They say they will start to think about work next week and look at the "bigger picture" then. Then we should be able to add up costs, delays, business continuity opportunities etc.
All the best to any Christchurch readers!
Please, Neven read and understand my comment in context. Food and petrol prices are eating up wages.
And if they weren't, then the increased demand would mean that their production would be eating up the environment and natural resources even more quickly than is already the case.
Finally a quality account of what is going on..... http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10708275.......and the takeout....expect more of the same for longer than you had hoped.....much longer.
When is the question going to be asked.....why did the CTV and PGC buildings collapse so badly?
We know about the facade rubbish and the stone piles...but the so called 'modern' stuff?....in this country...post Napier....and all the other events!.....who stuffed up?
I suspect the Police will be wanting to access the councils building records very soon.
Id just like to say a huge thanks to Air New Zealand. My 18 year old daughter has seen things she didnt need at her age,shes very emotional. Today Air newZealand is flying her home for $50 from ChCh. She is going on an international flight and they getting her to Napier tonight. They have pulled out the stops and are doing the most fantastic job. She has just rung me from the airport, its manic but they have just given her a boarding pass. Thats a huge thanks from me and my family and needless to say ahuge amount of loyalty for the future
Wonderful news for you Andrewj. What would we have done without our national carrier acting like the corporate citizen that it truly is. Rob Fyfe should be NZer of the year to my mind. The question arises as to whether - were the carirer not in majority government ownership - the same action would have been taken.
I see no reason to assume not. Plenty of large businesses not in majority government ownership have responded quickly and generously.
Can anybody explain how it is possible simultaneously to hold the view that all public sector employees are inefficient, clueless bureaucrats and that only publicly owned businesses are capable of doing a good job?
I think Kate all kiwi corporates are looking to do what they can to help out - without a profit motive. Fonterra has donated another $1million cash to the Red Cross (they also donated $1mill on Sept 4) and will match dollar for dollar up to another $1million, any donations by shareholders. They are sending up 1million litres of water by rail to the city in the short term and will continue to supply water for as long as it takes. Also they have dairy products to go when and where needed.
Both Fonterra and Federated Farmers have asked any farmers with spare accommodation to contact them. Both of them are working with Civil Defense on this and any other way in which the rural community can help.
I don't know what other corporates will be doing but I am sure others too will be sponsoring/volunteering goods and services.
On a lighter note, just got this release from Harcourts (my emphasis in bold):
Please find below a press release issued by Gregg Toyama, Harcourts International Head of eBusiness, regarding Harcourts earing a website quality certification from the Leading Real Estate Companies of the World.
Perhaps spelling wasn't one of the sub-categories....
What kind of earings would Harcourts wear? Pearl would be too expensive I'd guess.
Big dangly ones!!!
TERRIBLE NEWS 238 missing 76 dead
: 1.31pm: Up to 120 people may be in the rubble of the CTV building and a further 22 bodies inside Cathedral Square, police say.
http://www.stuff.co.nz/
News from Aus on carbon pricing:
Minister for Climate Change Issues Nick Smith today welcomed the announcement by Australian Prime Minister Julia Gillard that Australia is to put a price on carbon from 1 July 2012.
“Today’s announcement confirms Australia will introduce a fixed carbon price under the structure of an emissions trading scheme to reduce greenhouse gases,” Dr Smith said.
“This proposed market-based mechanism will be very similar to New Zealand’s ETS. It will include all six greenhouse gases under the Kyoto Protocol and will apply to the electricity, stationary energy, transport and industrial process sectors of the economy – with the exception of agriculture. It also includes a fixed price transitioning to a market in the future.
“The New Zealand Government will keep a close eye on progress to price carbon across the Tasman. Late last year the New Zealand Government announced the establishment of a panel to review our ETS requiring it to give careful consideration to progress made on climate change by our closest trading partners, including Australia. This development will impact on the review although important details are yet to be finalised with the Australian scheme.
“The New Zealand and Australian economies are closely integrated and it makes good sense for us to work closely together on climate change and carbon emission pricing. Today’s development in Australia reinforces the close working relationship our governments have on this global challenge.”
this is not going down at all well--the knives,s are being unsheathed again--expect the next Australian prime-minister,s surname to be either shorten or combet --word round the traps is done and dusted by Easter--
There's a lot of money behind the denial machine - but I couldn't help thinking they're hoist with their own petard - the Aussies, I mean
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.