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Tuesday, April 12, 2011

Obama’s Oil Plan Picks Winners – We Can Do That

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Last week President Obama released a new Oil Strategy. Like every President before him since Richard Nixon, Obama's aim is to reduce America’s dependence on imported oil. The plan openly picks winners. The strategy has been widely criticised for failing to address the scale and urgency of the end of cheap and abundant oil. But at least it’s a plan, which is 100 steps ahead of where we are here in New Zealand, -  a nation even more dependent on imported oil than the USA.  The New Zealand government has no plan other than to leave it to the market.

So what does Obama propose and how does New Zealand measure up?

Mission Statement
Obama – “Rising prices at the pump affect everybody – workers and farmers; truck drivers and restaurant owners. Businesses see it impact their bottom line. Families feel the pinch when they fill up their tank. For Americans already struggling to get by, it makes life that much harder. That’s why we need to make ourselves more secure and control our energy future by harnessing all of the resources that we have available and embracing a diverse energy portfolio. With an ultimate goal of reducing our dependence on oil…..”

Have you ever heard Prime Minister John Key or any NZ government Minister articulate the economic imperative to reduce our dependence on oil?

We could do that, but we haven’t.

Target to Reduce Oil Imports
Obama has set a target to reduce US imports of oil by one third by 2025.

We could do that but we haven’t.

Jeff Rubin points out that meeting that target will require the US to have an on-going recession. Nevertheless it’s an aspirational target which is totally absent from NZ’s just-released Energy Strategy. The International Energy Agency has strongly criticised the New Zealand Strategy for its lack of milestone targets.

Fuel Economy Standards for Cars and Trucks
Obama’s Plan.. “Standards for model years 2012-16 will raise average fuel economy to 35.5 miles per gallon by 2016, and save 1.8 billion barrels of oil over the lifetime of the vehicles covered. National fuel economy for commercial trucks, vans and buses built in 2014 – 2018 will be introduced.”

We could do that but we haven’t.

Government Incentives for Electric vehicles
Obama has set a goal of putting 1 million electric vehicles on the road by 2015, with a $US7500 tax credit for consumers, competitive grants for communities that encourage the adoption of electric vehicles, and funding for R&D to drive innovation in advanced battery technology.OK the target is less that .5% of the USA's 250 million vehicles but its a start.

We could do that but we haven’t.

What have we actually done? Woop de do ... we have exempted electric vehicle from road user charges until 2012 ! WWF estimate the NZ government revenue foregone is just $105,000 for the entire duration of the scheme! That’s it !

Central and Local Government Vehicle Fleet
Obama has directed Federal agencies to ensure that by 2015, all new vehicles they purchase will be alternative-fuel vehicles, including hybrid and electric vehicles.

We could do that but we haven’t.

The mantra from government is that they will not “pick winners” and will leave it to the market to determine our energy direction and future. – see these answers – 11 March 2011 here  16 March 2011 here and 7 April 2011 here from Finance Minister Bill English to questions asked in Parliament recently.

Yet in the USA – the bastion of the free market, their President is proposing a raft of direct government interventions to lower dependence on oil. Granted these measures will only scratch the surface of the oil dependence crisis, but at least the threat has been acknowledged and some planning has begun. As I suggested in earlier posts, the NZ approach has all the hallmarks of ideology trumping common sense and turning a blind eye to credible  reports, such as this one from the NZ Transport Agency which has a blueprint on how New Zealand could lower its dependence on oil.


Anonymous said...

Should we focus on preparing personally for peak oil, or changing our countries nonchalant stance? What can we do to change it?

Kevthefarmer said...

Prepare personally.- The governments stance is no accident. they are well aware of the enormity of the situation, but are persuing a "them and us" agenda designed to catch ordinary New Zealanders with their trousers around their ankles so to speak. In short- the government is waging economic war against its own people.

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