Colin James

Colin James

Last week two energy strategies, next week a white paper titled "Our future with Asia". What do these have in common? And is there a place for Europe?

One clue comes from Australia, now heading into a crunch election.

A new study by the Australian Strategic Studies Institute states that we are in "the third energy shock of the post-war [post-1945] era".

This differs from those of 1973 and 1979 in being driven by rapidly rising demand, not constraints by suppliers.

Demand, the report says, has gone on climbing despite a huge rise in oil prices. Neither consumers nor governments have responded as they did in the 1970s shocks.

"The conservation urge has been muted," says author Michael Wesley, director of the Asia Institute at Griffith University. "Nor have states responded with the [same] sense of urgency.

"So far no major international institutional responses to the oil demand squeeze have been championed, no major national initiatives have been launched and no significant international tensions over energy supply and pricing have emerged."

Yet, he continues, "the adequate supply of affordable energy will become increasingly a part of most states' security calculations in the coming decades."

Actually, in one country it already has. George W. Bush is massively subsidising corn farmers to produce ethanol, to lessen dependence on imported oil and to avoid importing ethanol from low-cost Brazil - incidentally, also distorting world food prices. Coal interests have won over a Congress minority to subsidies for coal-to-petrol production.

Why go down that route? Because affordable energy is a core ingredient of Americans' material comfort.

Affordable energy is also critical to economic growth. If Asian countries are to catch up to the North Atlantic countries' material standard of living they need assured energy supplies, which for now means mainly oil and coal.

New Zealand's interest in Asia is principally in its enrichment. Our economic development mantra reflexly intones that as Asians get less poor, then better off, they demand higher-quality food.

So we have a vested interest in Asians having access to affordable energy. The richer they get, the richer we are.