Mike Hosking: Oil ban will cause economic engine to seize

The Government rejects estimates of an $8 billion-plus economic hit from ending exploration licences as ropey. Photo / Supplied

COMMENT: What this government is doing to places like Taranaki with its ban on new exploration licences for oil and gas is economic sabotage.

The MBIE figures this week show an economic hit of anywhere between eight and 23 billion dollars.

The government's defence is that the numbers are ropey.

They are guess work, they are not to be trusted, which does raise the question I would've thought, as to why you employ people to advise you of stuff you don't trust and exactly how much does that advice cost?

It is of course classic politics, when the numbers suit, you bang people over the head with them, when they don't, you rubbish them as witchcraft.

What we can say without a shadow of a doubt, is currently we give out licences and there is revenue and jobs as a result, when we stop that, the revenue and jobs will stop too.

Now whether that's $8 billion of damage or 23 or anywhere in between we can scrap about if you want, but the reality remains there is an economic hit.

All of this is based on the ideological fascination that the world is moving away from fossil fuels, which it isn't, it's wanting to, it might well do sometime in the future but right here right now the world still runs on oil and gas.

Malcolm Turnbull learnt this to his dismay and downfall.

He was obsessed with the Paris Agreement, so much so, that his energy policy became a national laughing stock, South Australia kept running out of power and having blackouts, the cost of the average Australian power bill was going up, while they dug up coal, sent it to India, who burnt it.

This government also defends their oil decision by waxing lyrical about all the new jobs and opportunities that will come Taranaki's way ... like what ?

So far the regional fund has kicked in a bit of money. In making the announcement and offering it up as an example, they forget, perhaps conveniently, that the regional fund is a job scheme funding by tax, the very tax they got from the jobs they just killed.

There would appear, I hope, some respite.

They have announced very late in the piece after some very intense lobbying ... that they will look on a case by case basis at the industry's desire to be a little bit more flexible on current licences.

They call it drill or drop.

Licences have an expiry date as to when you have to start work, many drop them because they know they will pick up another licence, but now the licence business is closed, they want more time to explore their options.

The government looks like it has acquiesced. That at least is something.

Because as sure as night follows day, if they hadn't, there would be more dropping going on than drilling, as companies not surprisingly would've given up on us and moved to where the approach is more amenable.

The barque prospect is a good example, NZ Oil & Gas have on their hands something that potentially could literally transform the economies of the east coast of the south island, there could be billions in wealth out there.

But, and this is the oil industry for you, it's a 1-in-5 shot, a 20 per cent chance of striking the bullseye ... so what to do?

And that is why oil is still so vitally important, yes it's a risk, yes it's a punt, but name me one green initiative this lot have come up with that will literally do what a barque strike can do for Timaru, Oamaru, Ashburton and Christchurch.

As the Prime Minister stood in New York this week handing out yet more money to the Pacific for climate change ideas, the ideology that drives all that is fine, but the cold, hard economic truth is you need real work and real industry to write those cheques.

You can't put a bomb under them, and then still expect the fairy dust to be funded by enterprises you've just destroyed.