New Zealand: from ‘Texas of the South’ to the ‘Green Geyser of the Pacific’
By Reuben Steff
January 24, 2011
Recently there has been speculation that the East Coast of New Zealand, home to potentially billions of barrels of oil,
could be the ‘Texas of the South’.
Response by individuals of different political stripes has been predictable. BusinessNZ and those on the right argue
that these resources must be exploited. They cite Norway as a model of what we could become. And for good reason:
Norway’s oil wealth supports first-class education, welfare and infrastructure services. Norway has also set up the
largest pension fund in the world for future generations.
The Greens and those on the left hold that we need to move away from fossil fuels and even if we do open up these areas
to TAG Oil and other multinationals, profits will go overseas instead of being fed back into the NZ economy.
Meanwhile, much of the public hold valid concerns over the potential environmental risk of accessing these resources,
especially after the massive oil spill in the Gulf of Mexico last year. Some also fear that the government’s renewed
focus on exploiting our fossil fuel resources runs the risk of reducing investments in renewable energy.
These are valid points and legitimate concerns. However dogmatic obedience to any one position is a recipe for strategic
paralysis in energy planning and will not help the long-term prospects of our economy. Our political parties, subject to
a three-year election cycle spend much of their time pursuing short-term political gains at the expense of their rivals.
Consequently, we need to identify important common interests these groups have that create support across the majority
of their members so that a rational energy strategy is effectively pursued irrespective of whatever political party
heads the government. In a small democracy consensus on this issue is critical.
For a start the political right must accept that an economy dependent on fossil fuels cannot exist in perpetuity. It is
a matter of fact that they are a finite resource and that our future economy will need to be sustainable.
The political left must accept that as much as a clean, green, environmentally friendly economy may sound like a great
idea it cannot be willed into existence. The type of quick and rapid transition to a non-carbon economy some desire
would result in horrendous social, political and economical instability. Changing individual lifestyles and improving
energy efficiency is important but by themselves cannot create a green economy. Advanced technologies that do not
currently exist will be required and therefore the transition away from an economy dependent on fossil fuels requires a
Another commonality between the left and right is that neither wants to accept a decline in living-standards.
Therefore all sides have a long-term interest in transforming the New Zealand economy away from one dependent on fossil
fuels to one that is sustainable and guarantees continued economic growth. Capitalism is central to this as there has never been another economic system
that can generate such wealth and there is no viable alternative in sight. As a small trading nation we are dependent on
the continued vitality of this system and we will need to increase and diversify our exports in the years to come.
Summarising the above:
1. A fossil-fuel dependent economy cannot exist in perpetuity;
2. A rapid transition to a post-carbon based economy is undesirable;
3. A long-term transition to a post-carbon economy is a necessity;
4. New technologies are necessary for this transition;
5. Exports are critical to growing our economy
Operating from the above assumptions, the National government should explain that accessing our offshore resources is
not an end in itself. Rather, it is imperative to harness these resources as a means to transform our economy over the
long-term into one capable of sustaining a clean, green economy. This will require unprecedented investment in science
and technology in order to provide the necessary building-blocks of the future green technologies we will need.
But we should not stop there. It is one thing to create a sustainable economy with first-world services, etc. We need to
be able to sustain it and generate economic growth. Problematically, our oil and gas resources will not last forever. So what happens when
they are gone? If New Zealand pursues an effective energy strategy our offshore resources could transform our future
clean energy system into an industry. That is, from one that consumes energy to one that exports it. Imagine: a clean,
green, technologically advanced New Zealand that exports its clean energy to the rest of the world. As returns from hydrocarbons become increasingly scarce, owing to global fossil-fuel
depletion, sources of clean energy will be increasingly attractive. Many nearby large and growing economies, such as
China and Indonesia, will likely be forced to import clean energy. Those countries – like New Zealand – that have
readily accessible renewable energy resources (hydro/geothermal/wind) will be best placed to provide the critical energy
they need, as long as we have the technological capability to do so. Again, this will require enormous investments in science and technology to ensure we attain a position at the cutting
edge of green energy technologies.
Revenue from the offshore resources TAG oil and other companies have identified will be essential if this is to become a
reality. The concern that National’s renewed focus on exploiting our fossil fuel resources runs the risk of reducing
investments in renewable energy is a valid one. But that simply makes it contingent on the public, opposition parties
and environmental groups to ensure the extraction of our offshore resources is not wasted and a significant part of the
subsequent income generated is invested in creating new green technologies.
In an increasingly competitive world New Zealand needs to delicately blend pragmatism with strategic vision. We need an
energy strategy that different political parties can agree to work towards. In its absence we will remain beset by
ideological intransigence and the resulting pursuit of short-term political gains will lead to long-term economic
stagnation. Our political leaders must explain that utilising our fossil fuels now is necessary in order to open a
pathway to transforming our economy into one that will allow us to harness our immense renewable resources. In other
words, we should be doing everything we can to advertise ourselves as the ‘Texas of the South’ as the first step to
transforming ourselves into the future ‘Green Geyser of the Pacific’.