• Jim Rose is an economic consultant in Wellington

Thank Greenpeace for cheap petrol prices. If Greenpeace really wants to slow carbon emissions, they should quit their activism now because of a green paradox arising from their calls to leave fossil fuels in the ground.

If investors feel insecure in their property rights over oil or gas fields or coal deposits, they are drifting into a use it or lose it situation. If they think higher taxes or bans are on the horizon, they will pump oil and gas faster and dig out the coal quicker.

Insecurity in property rights has been the main driver of trends in oil prices since at least 1950. You do not have to be a geopolitical genius to see the rise of Arab nationalism and with it the prospect of nationalisation of oil fields. In anticipation of these nationalisations, the oil companies were pumping as much oil as they could. This depressed oil prices prior to these nationalisations for as far back as the mid-50s. After these nationalisations, oil prices went up in the 1970s because the host countries had longer investment horizons than an oil company expecting to be nationalised soon.

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Since the rise of the environmental movement in the 1980s and its concerns about global warming, a new force arose to keep petrol prices down. Once again, threats of bans or carbon taxes put resource owners, government and private, again in a use it or lose it situation. Faster rates of depletion kept energy prices low despite strong growth in demand including from the rise of China.

As an example, Germany mines 17 per cent of the world's brown coal despite having only 2 per cent of global brown coal deposits. German coal miners are running their deposits down as quickly as they can in anticipation of the German Greens getting into government, which they might just do in the next few weeks. The German Greens will push for bans on coal mining and nuclear power.

When activists call for fossil fuels to be left in the ground, investors are smart enough to realise they might be left with stranded assets unless they move in anticipation of these bans by running down their oil, gas and coal deposits faster. That means lower energy prices and more carbon emissions today rather than in the future. The same logic applies to threats of a carbon tax. That risk encourages more oil, gas and coal depletion today to sell at the untaxed rate. This will increase greenhouse gas emissions because oil, gas and coal prices will be lower and fossil fuel production higher in anticipation of a carbon tax.

It is not easy being Green. Sometimes you must embrace what you previously hated if you are to save the planet. I know many environmental activists would prefer to fall on their bicycle pumps rather than speak well of nuclear energy.

There are less galling choices such as remembering that natural gas emits far less carbon than does oil or coal. Fracking companies should be heroes to Greenpeace because they are making natural gas so cheap, that is, they are making a far more environmentally friendly energy source cheaper.

We start from here, from the status quo as it is, warts and all. That includes investors anticipating regulatory and tax changes in both how quickly they run down non-renewable resources and how and where they look for new oil and gas fields and coal deposits.

Greenpeace and the Green parties around the world talk of smart, green policies and a low carbon economy. Paradoxes about how fossil fuel depletion rates increase in anticipation of regulatory and tax changes means they really do have to have smart, green policies.

Rather than wasting their time on solar and wind power, which will never work as baseload energy, they should be lobbying for more gas exploration and more fracking. Those are the smart green policies that will deliver a low carbon economy in the world that we live in now. Natural gas and especially natural gas from fracking is the clean green energy source of the 21st century.

Right now, calls to leave it in the ground encourage fossil fuel companies to flood the market which, in turn through lower prices, discourages investment in renewable energy technologies.