Two Canterbury University academics have analysed the impact of fuel restraint (peak oil) on New Zealand's economy.
Their alarming conclusion is that with just 10% less fuel available, New Zealand's economy would shrink by around $115 billion in just five years. If a 10% fuel restraint continued for 20 years, New Zealand economy would shrink by $412 billion compared to a business as usual scenario.
Put simply, New Zealand's economy would "be more than half the size it could have been if no fuel constraints were imposed"
Past oil crisis, such as the Iranian revolution, the Persian Gulf War and the Suez Crisis created a reduction of world oil output of between 7.2% and 10.1%, so a 10% reduction in fuel available to the New Zealand economy has some historical credibility. All of those past oil crisis resulted in worldwide recessions. There is a growing body of analysis that the current global financial crisis was at least partly triggered by a spike in oil prices to $147 US a barrel in 2008.
And there is a flood of reports which all point to a peak of global oil production occurring within five years, and certainly with this decade, with an ongoing, perhaps permanent, decline in the availability of oil on world markets from that point forward. Many credible analysts believe the peak of production has already occurred.
Mainstream economists and politicians get highly agitated when our economy moves even marginally -- say 1% or 2% -- into negative territory (a recession). And we all feel the real life effects on "Main Street".
But when there is a looming threat from global oil depletion which could occur within five years or less, and which could potentially shave over $100 billion from our economy in five years, and halve our economy within 20 years, our economists, mainstream media, and politicians are eerily silent.
Okay there are plenty of assumptions in this academic report which might be challenged. It may be grossly pessimistic. On the other hand it may too paint a rosy picture.
It's time to bring this information out of the closet. Lets have an open and informed debate, and start working out as a nation how we respond.
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