Mike Hosking: Bad for business - Government's gas, oil exploration ban a pig of an idea

Energy Minister Megan Woods gave Taranaki a visit yesterday, under what really can be only described as trying circumstances.

Taranaki, being the home of oil and gas, is the most affected region as a result of the Government's madcap scheme to end all off-shore oil exploration. Taranaki thrives on energy and dairy, so one imagines the old Labour-Green support base these days is fairly limited.

And it's where the rubber hits the road on the theory vs reality. Does Taranaki simply "transition out of dairy and energy" and into something more green, just like that?

Because that's how easily it's explained by the theorists who have spent too much time in a lecture theatre in front of a whiteboard, and not enough time in the real world.

She was defensive going in as well. And in that defensiveness, is the exposure of the madness of the thinking. She said don't worry, it's not like we're turning the lights out today - current licences will not be cancelled, there will be drilling for years to come.

Which is true, the decision is for future contracts not current ones. But in saying that, and expecting us all to breathe a sigh of relief, fails the basic test on Business 101 - and how investment intention is conducted.

Business plans ahead. It likes certainty, it likes to know where it is at. They like a plan. When they have those things, they gain confidence, when you're confident you spend money.

You look to grow and expand, you look to take advantage of the investment already in place and leverage off it. That's why regions grow the way they grow. One bloke plants a grape vine, the rest follow, you've got a wine industry.

Business springs up around the original operator, once it's seen there is a future. Why would you invest in a region whose main income drivers are being curtailed? Does

Megan honestly think through her comments that life will simply go on as it has, until every licence is used up and at that point we turn out the lights? Businesses' intention will have dried up years beforehand. People looking to move to the region won't, because what's the future?

The future is uncertain, spending decisions will be delayed if not dropped. As the consequences of those very specific decisions get felt, the rot sets in, the jobs market contracts and shrinks, business stalls then falters - slowly things start to freeze up and go backwards.

Remembering there is an end point, when the licences are finished, so is oil and gas. It goes from an industry of potential and exploration to a sunset one - where the end is coming and it has a date. Whether that date is today, next year or 10 years doesn't matter, the same drivers apply.

And the result of those drivers doesn't change. If you don't think it's true, look at any small town in this country where the main industry has disappeared, and ask yourself whether what's replaced it has done so in the same size and revenue ? The mayor said it's a kick in the guts of the region, he is right.

A pig dressed up is still a pig, Megan is fooling no one.