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Friday, June 24, 2011

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

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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.

Thursday, June 16, 2011

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

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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.

Sunday, June 12, 2011

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

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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?

Friday, June 3, 2011

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

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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.