Victor Luca

I write this missive not just as a concerned member of our community but also as the current president of the district Grey Power Association and a member of the Financial Mentoring Service (FMS) board.

The FMS provides financial mentoring and advocacy to vulnerable members in our community that are likely going to find it increasingly difficult to make ends meet as the entire globe weathers the energy/oil crisis resulting from the war on Iran occurring about 15,000 kilometres from where you are sitting reading this paper.

The Grey Power membership is quite heterogeneous and the association estimates that about 30 percent of the membership already live hand-to-mouth on fixed incomes. That section of our membership that is already struggling is, regrettably, probably in for more pain.

The unfolding oil disruption of the energy system is turning into a catastrophe. This was entirely predictable and in fact I warned about it in several communications in this paper starting from several years ago, and in the Long Term Plan expectations document I wrote as the mayor in early 2024 during the development of the plan. I don’t consider this to be any great feat on my part as those that are old enough have seen this movie before, although complacency seems to have gotten the better of many of us.

It is worth reproducing a section of the preamble to that document because it is highly relevant to our present situation.

“In an energy system heavily dependent on fossil fuels, the price of oil is a significant driver of inflation since almost everything we do in a modern society requires energy, especially for transportation. WDC’s own energy costs have risen, especially those with a high energy input such as those that the council purchases in large quantities (e.g. cement and bitumen).

“The oil price, which peaked in June of 2022 at US$114 a barrel, has gradually decreased and has stabilised around US$75 a barrel for now. The large spike in oil price in 2022 was likely driven by the Russia-Ukraine war since Russia accounts for about 13 percent of global oil production.

A new conflict in the Middle East, which accounts for about 31 percent of global oil production, could cause a new energy crisis and propel inflation higher. There is no end in sight to this latest Middle East conflict and there currently exists a high probability that the conflict spreads and escalates significantly.”

While some may say that there is little point in me saying, “I told you so”. I guess I did.

In any case, the real reason I was flagging the subject of our energy vulnerability so vociferously from the time I entered local government in 2019 was in order to get people thinking seriously about energy security and especially the actions that needed to be taken to assure we can get through a future shock. That shock is here now.

In fact, for six years I have been advocating for a warmer embrace of solar energy including on all council properties and especially our airport. I was trying to get us away from the just-in-time and just-enough neoliberal approach and unwavering faith in markets, especially in relation to energy, which is indispensable in a modern society.

This is the type of thinking that our Government seems to remain wedded to. It is the type of thinking that was almost our undoing during the 1970s oil shocks, which are likely to be less severe than today’s unfolding catastrophe. I also argued for the conversion of the council’s large car fleet to electric mobility, something that seemed to fall on deaf ears.

New Zealand’s system for transporting goods around the country is almost entirely dependent on diesel. Regardless of what diesel costs, if there is no diesel, then we are in serious trouble. Farming is the backbone of our export economy, and the two main inputs are diesel and fertilisers like urea. NZ imports 70 percent of the urea it uses. Without these inputs we go back to the farming techniques of the pre-industrial age. These might suffice to feed ourselves, but not to drive an economy heavily reliant on agricultural exports.

I saw the vulnerability of the Labour Government allowing the closure in March 2022 of the Marsden point oil refinery expanded during the Muldoon era and the total short-sightedness of the current lot in killing the clean car transition. To Labour’s credit, they did try to take measures to move us off our dependence on oil. Labour’s wise policies have been largely rolled back by the current lot.

In a country with an electricity grid that is 90 percent renewable and clean, to pull the clean car rebate and force EVs to pay Road User Charges was unbelievably myopic. Personally, I do not think that EVs should pay RUC at all since they produce no tail-pipe emissions and don’t contribute to harmful air pollution, which kills hundreds if not thousands of New Zealanders every year. Moreover, most road damage is caused by heavy transport, not passenger vehicles. The right thing to do would have been to move personal and public transport over to electricity as fast as possible. Instead of that, we put the EV transition into neutral.

So now we really do have to start thinking out of the box and hunker down for what has yet to fully impact us.

For those struggling to get by on what they earn, I would like to remind them that the FMS is there to help. Of course, there are limits to what can be done on fixed incomes and you can’t squeeze blood out of a stone. In this case, Government needs to ditch their pathetic and failed neoliberal thinking and use its power to create money but for the right purposes.

That doesn’t include pumping the housing market as it has done in the past. We need to think big again and think outside the box.