Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Energy – The Outlook For 2005

9 February 2005

Energy – The Outlook For 2005

The Government and industry have long under-invested in the energy sector and are now faced with an expensive catch up.

Chris Stone, an energy expert writing in Outlook: 2005, says that since 1985 the ‘corporatised, privatised market economy’ has coasted on a buffer of earlier infrastructure investment.

Outlook: 2005 is an overview of the year ahead published by the Trans Tasman political newsletter.

“With the buffer now worn thin, we are facing an expensive catch-up phase. Market forces now guide the energy markets (and indeed the economy), matching supply with demand principally through price – excess demand (or inadequate supply) will drive prices up, and vice versa. Yet, while energy prices (oil, gas and electricity) have recently soared, this has yet to stimulate adequate investment in new supply,” Stone writes.

He calls on government to set a clear policy framework, and address the roadblocks to investment (not least of all the risk arising from its interference in the markets).

Under-investment in electricity generation has a parallel in gas supply. Stone says the past 30 years have been marked by under-investment in oil and gas exploration, and consequently inadequate gas reserves to meet current demand (let alone growth).

He says the lack of gas has stalled downstream capital investment by industry, with clear consequences for economic growth and employment.

“Our economic growth has depended on greater oil-powered mobility and flexibility – planes, trains, trucks and cars. We import 75% of our needs (and rising) and simply pay the price set on tightening global markets.

“Weaning ourselves off oil will come at a personal and economic cost. Meanwhile, coal offers New Zealand huge potential for low cost, enduring energy supply, yet despite the promise new technologies will address greenhouse gas concerns, Government policy remains opposed to its use.”

Meanwhile, Outlook believes it is unlikely that 2005 will herald any supply crisis, as long as hydro lakes remain charged.

But it will be a year of the economy adjusting to higher energy prices – at the petrol pumps, and in monthly electricity and gas bills.

“For business and industry, greater investment in energy efficiency may become justified. But conservation comes at a price, and may adversely impact economic activity,” Outlook says.

Trans Tasman Publishing Group is headed by Christchurch businessman Max Bowden. In its specialised information services stable are The Main Report, Trans Tasman, Executive Health & Wealth; and New Zealand Energy & Environment Business Week. The publishing group has been operating since 1968 and has subscribers worldwide, with particularly strong readership in Australia, the UK and U.S.

* Chris Stone is an executive director with Wellington-based investment and sharebroking firm McDouall Stuart. He has 20 years background in the energy sector.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>



Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news