Oil Shock Horror blog -- the story thus far

9 months after a tentative start last September, and with 45 posts clocked up here at Oil Shock Horror Probe, I thought it was time to re-cap. What are the trends and themes that have emerged so far?

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High oil prices cause "large" effect on inflation - NZ Report

A 2005 study by New Zealand Reserve Bank economist Felix Delbruck ("Oil prices and the New Zealand economy" - Reserve Bank of New Zealand: Bulletin, Vol. 68, No. 4) has found that the inflationary effects of higher oil prices were "quite large". Specifically that :-

• the direct impact of a $.10c a litre increase in petrol price lead to an immediate increase in the average household's living cost of about 0.3%
• the indirect effect (of higher bus, taxi, train and air travel, and firms passing on higher transport costs which raised the cost of food etc) added another 0.3% onto the direct effect -- a total 0.6% increase in the CPI for every $.10c a litre increase in fuel. 

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2007-08 oil shock caused "substantial" decline in New Zealand's GDP say Reserve Bank economists

In a recent report, two New Zealand Reserve Bank economists have estimated the real effects of oil price shocks on New Zealand’s GDP. The economists conclude --

1. a 5% permanent increase in retail fuel prices implies a decline in NZ's GDP of 0.3%
2. a succession of oil price shocks such as those in 2007-08 had "a substantial effect on real GDP in New Zealand"
3. New Zealand's oil use is different, leaving us more vulnerable to oil shocks. Faced with oil shocks New Zealand households and firms have only one third of the ability to lower the amount of oil they consume, compared with the United States.
4. real wages decline in response to an oil shock, as they are eroded by inflation.

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UK Ignores Peak Oil Warnings - NZ Pretends It's Not An Issue

It has long been suspected that Western governments have been investigating peak oil and its impacts on the economy, but keeping the information hidden from the public. In the case of the UK government we now have definitive proof that this has been happening. The Guardian has reported (15 June) that UK ministers have ignored peak oil warnings.

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New Zealand's oil security. How dependent are we on oil imports?

New Zealand imports 97% of its oil. Oil is the lifeblood of our economy. So a vital question must be -- how vulnerable is New Zealand to oil supply shocks? -- Whether from short term disruption, or due to an on-going and perhaps permanent decline in world oil exports?

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New Zealand Government's Oil Price Projections - A Bad Joke?

The Ministry of Economic Developments oil price estimates are a very bad joke. It is a joke on all of us however, as their grossly optimistic projections underpin government policy not just for energy but for the broader economy.

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UK Government to Develop Oil Shock Response Plan - When Will NZ ?

UK Energy and Climate Change Secretary Chris Huhne has agreed to develop an 'Oil Shock Response Plan', following a meeting with the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES).

Specifically, Huhne agreed that the UK government and ITPOES would work together on peak oil threat assessment and contingency planning.

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