A paper I presented at the Oil & Gas Symposium, Hastings District Council, 11 October 2013.
A paper I presented at the Oil & Gas Symposium, Hastings District Council, 11 October 2013.
When it comes to mining, Australia has many lessons for us. A 2009 report from the Queensland Government and Centre for Social Responsibility in Mining (CSRM) at University of Queensland showed that housing affordability often declines for people in mining towns who aren’t working in the industry.
Stats from the Real Estate Institute of Queensland (REIQ) show a close correlation between Queensland resources and property booms — median house prices in one suburb soared 65 percent in a year. Great if you’re a property investor, but if you just want an affordable home for your family you might be out of luck.
CSRM studies have documented the “two-speed economy” that follows mining “boom towns”, where people who aren’t working in the industry get a sharp shock when they realise that normal life is suddenly a lot more expensive.
A US Department of Agriculture study published last year found that in three states experiencing petroleum booms, a large increase in production caused only modest increases in local jobs and median household income and employment rose 1.5 percent on pre-boom levels.
There is a range of other peer-reviewed empirical studies on the subject (a few listed below), and I’m happy to look at evidence to the contrary.
So while some incomes will rise during an oil boom, the cost of living for everyone is likely to increase as well — meaning those on a fixed income are in fact worse off. We know that most of the high-paying jobs that go with the territory go to specialists who are brought in.
While this may not on its own be reason enough to say “no” to oil and gas exploration here, it’s important to understand the real opportunities and risks before rolling out the red carpet.
And communities aren’t the only ones thinking hard about the pros and cons. Two months ago Rabobank Group said it would no longer provide finance to anyone involved in extracting unconventional fossil fuels such as oil shales through fracking (see their Oil & Gas policy).
One of the world’s largest lenders, Rabobank is worried about the impact oil and gas production is having on people, productive agricultural land, wildlife and the climate — as well as the release of greenhouse gases and their warming of the planet.
As we are seeing in Taranaki now, there is increasing conflict in the communities affected by the expansion of oil and gas there and a perceived risk to the rural sector from residents near new developments.
A letter to Tiniroto resident John Brodie from the FMG Service Centre says:
“Our Underwriters have confirmed we exclude cover of Fracking and anything related to this activity. Fracking is outside of FMG’s preferred risk profile and is not something we would be willing to cover as we do not insure any risks relating to the mining industry.”
I agree that Gisborne refusing to welcome fossil fuels production here won’t make a serious dent in global greenhouse gas emissions. But global agreements don’t happen out of thin air — they tend to come from grassroots movements that influence local government, national legislation and eventually international diplomacy.
The people of Gisborne taking a stand would help the industry and government to think twice and take notice. But that’s a decision for our community to make, and soon. Last year 2000 locals asked for public notification of any mining resource consent yet Gisborne District Council has chosen not to do so. I think now more than ever we need a forum for the community, our government, iwi and industry to sit down and talk about what the pros and cons really mean for Tairawhiti.
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Weber, J. G. (2012). The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming. Energy Economics, 34(5), 1580-1588. doi: http://dx.doi.org/10.1016/j.eneco.2011.11.013
Jacquet, J. 2009. Energy Boomtowns & Natural Gas: Implications for Marcellus Shale Local Governments & Rural Communities, NERCD Rural Development Paper No. 43, January 2009, 63 pp., University Park, Pennsylvania: The Northeast Regional Centre for Rural Development, The Pennsylvania State University. http://www.sciencedirect.com/science/article/pii/S0301421512006702
Always a voice for sensible decision-making, Brian Wilson’s Opinion Piece on local petroleum exploration was no exception. Brian succinctly outlined some of the fundamental challenges we have as a community if the oil industry gets established in Gisborne and questioned any benefits the industry might bring.
The greatest challenge of course is a moral one: why would we welcome an industry that is, probably more than any other, responsible for causing catastrophic changes in our climate? What are we going to tell our grandchildren when they ask why didn’t we make the transition to renewable energy faster?
And yes, anyone suggesting we need to change and still using fossil fuels is compromised, but that’s a bit like saying Gandhi and Mandela should not have spoken English during their struggle against colonisation.
The transition to renewables will take time – it took petroleum a few decades in the early 20th Century to supersede coal as the primary fuel – but the longer we allow cheap access to fossil fuels, the longer the transition takes.
Humans have already discovered five times more oil and gas than we can consume without pushing planetary warming above the critical two degrees increase. We don’t need to find any more.
I was at a meeting with a representative from Z Energy recently where they talked about the concept of ‘permitted oil’ as opposed to ‘peak oil’. Last month Z Energy partnered with Norske Skog and others to invest over $13 million in a biomass development project in the Bay of Plenty using woodchips and sawdust to create biofuels. That kind of money is not just green-washing, they are serious about using our existing resources to reduce New Zealand’s $6 billlion/year addiction to fossil fuels and our community should be talking to them.
Scion, the forestry research institute has estimated that eight biomass plants around the country could replace ten percent of our crude oil requirements using just the current waste from the wood industry.
A recent Auckland University and Vivid Economics report commissioned a group New Zealand’s most influential business leaders, suggested that green growth may not out perform the dirty alternatives if the goal is short-term profit but a different way of measuring growth and wealth may be required.
“The benefits of green growth policies do not always show up rapidly as higher growth, and higher short-run growth should not be a necessary criterion for a good green growth policy. This is because conventional measures of growth do not measure the state of the economy’s stocks of wealth, and many valuable environmental outcomes are not traded in markets, so improvements do not appear as growth. A green account addresses these deficiencies.”
Renewable energy industries do however have a much higher job creation result for the same investment in fossil fuels, and Tairawhiti is well placed to take advantage of any shifts in the allocation of resources around the national economy during the transition period.
Gisborne District Council has committed to reviewing our policies and plans as they apply to petroleum exploration and production. As a result of public concern, our Council reportedly has the most robust process for assessing resource consent applications from this industry.
As a community we are still waiting to have a well-informed, rationale discussion on the issues and while central government has indicated a willingness to resource this, they are still rolling out more exploration permits and changing laws to reduce opportunities for public input in the decision-making process.
The local body elections will not provide the best opportunity to have this discussion but candidates should all be able to clarify their understanding of the issues.
A Gisborne District Councillor says the government is picking winners and industries other than oil and gas would grow the regional economy if similar public funds were committed to other parts of the economy.
Manu Caddie would prefer to see government support for developing industries on the East Coast such as renewable biofuels and biochemicals, internet-based small businesses, high tech food production with the associated intellectual property and what he terms ‘lifestyle relocators’.
“We could wait for a new mill to be built and employ a few hundred on minimum wage or we could get on with attracting a hundred innovative, high earning business owners that want to live in places that are vibrant and well connected but out of the rat race of the sprawling metropolitan areas. Compared to the larger centres we have very cheap commercial and residential property prices, a compact city, relaxed lifestyles and relatively unspoiled environment.”
Mr Caddie says the Government has a fundamentally flawed policy of prioritising petroleum development without any plan to reduce greenhouse gas emissions let alone transition the country away from fossil fuels.
“There may well be some short-term economic gain for some members of the community if a significant amount of hydrocarbons can be extracted, but the evidence from overseas is that in mining boomtowns the economic benefits accrue to a certain part of the population while others are worse off and inequalities increase.”
“The region has not had a properly informed debate on the costs and benefits of mining here. There has been no independent analysis and advice on our situation and what the alternatives could be that would deliver more sustainable employment and environmental benefits. If the Government wants to pick winners then at least make it evidence-based instead of ideological. Environmentally sustainable mining is an oxymoron and given the scientific evidence on the impacts of fossil fuel consumption, the issue really is a moral question more than anything else.”
Mr Caddie says he agrees with Steven Joyce and Meng Foon that education needs even more attention.
“This is as much about families and students getting the support they need and taking responsibility as it is about the quality of teaching and approaches to formal learning. More sophiscated understanding of and flexibility around the relationships between schooling, family dynamics, employment and lifestyle choices is critical.”
“Only one in four Gisborne school leavers have NCEA Level 3 or above, nearly ten percent lower than the national average. Between half and three quarters of young people say they do not plan to continue with any form tertiary training after leaving school. A higher proportion of Gisborne young people work in agriculture, fishing, forestry and manufacturing than the national average.”
Gisborne has about 150 young offenders under 17 years. Based on 2001 estimates from PriceWaterhouseCoopers, each year offences committed by young people in Gisborne cost around $2.5 million in Police, court and sentencing costs.
“There is a significant underclass emerging that are extremely disconnected from mainstream society, community leaders, public institutions, employers and community organisations need to get a whole lot smarter about how we think about this part of the population and just focusing on economic development will not be sufficient.”
It has been an exciting week for the oil and gas industry. Todd Energy published a 180 page ‘no worries’ fracking tract and the Government announced plans to open up a large area across the flats and into the hills between Te Karaka, Tiniroto and Frasertown for petroleum exploration.
Todd acknowledges in its submission to the Parliamentary Commissioner for the Environment’s inquiry that “many of the environmental risks raised as concerns relating to hydraulic fracturing apply to all exploration and production drilling.” That’s been my concern for some time and I agree to a point with industry suggestions that most of these risks can be managed with ‘best practice’ and strong regulation.
The claim that opposition to fracking in New Zealand is being based not on evidence, but on misinformation and emotion really is ironic. Are the professors at Duke University, Cornell University, Penn State or the University of Alberta misinforming us with their peer-reviewed, published empirically evidenced papers? Which regulators that have concluded fracking was the cause of water contamination, earthquakes and/or air pollution were being too emotional in their reports?
We hear claims that there has ‘never been a major incident in Taranaki’, yet a recent oil spill that reached the Kapiti Coast took 265 days to ‘clean up’ and in one year alone three workers were killed on Taranaki wells. Taranaki Regional Council reports reveal chemical contamination of ground water near the Kapuni well so bad that it should not even be used for irrigation, let alone stock or human consumption.
No one is suggesting that every injected well results in drinking water pollution or dangerous earthquakes, but the evidence from independent scientists all over the world confirming contamination makes it clear that fracking is causing serious issues. The Todd submission acknowledges that there are real problems to deal with. Common concerns relate to water pollution through fugitive emissions from well casings, air pollution from flaring and spray disposal, soil pollution from spills, leaks and dispersal, significant earthquakes caused by the pressurised reinjection of fracking waste, radioactive material to be disposed of as part of the fracking process and the list goes on.
Todd Energy says a moratorium on fracking until we sort out the regulations would scare off overseas oil companies. These are the companies that spend well over $100million every year lobbying US politicians and threatening all sorts of calamity if profits are not prioritised over other considerations.
There will be stronger measures on climate change from the US after Hurricane Sandy and Obama’s reelection, but New Zealand politicians are still not prepared to commit the country to a realistic transition plan away from fossil fuels. Todd Energy argues that natural gas is a better option than coal, but conveniently overlooks recent research including a study from Cornell University that found the greenhouse gas footprint of natural gas could be at least 20 percent higher than that of coal (Howarth, R. W., R. Santoro, and A. Ingraffea, 2011).
Putting aside any moral obligation to future generations who will be the victims of a lack of climate justice in our time, we should be clear about the local risks and benefits of the industry. Three studies due before Christmas will help with that assessment and Gisborne District Council will consider them all carefully.
In the meantime interested members of the public might like to check out the maps of the proposed exploration permit areas, find out some more about what is planned and give feedback to local councilors, iwi leaders and/or the Minister of Energy and Resources by the end of January.