Editorial: Backfiring over the price of oil

Opinion

Import restrictions on used cars? Petrol rationing? Carless days? Some of the noises out of Wellington this week suggest the place is passing through a time warp. Several of these echoes of the 1970s came from a report prepared for Jim Anderton's Economic Development Ministry, others from musings of the Transport Minister, Pete Hodgson, who has asked his officials to study options for reducing motor fuel consumption. Why? The ministry exercise is billed as a precaution against an unspecified disruption of western oil supplies but it looks very much like a reaction to the latest rise in oil prices and designed to reinforce the Government's newfound electoral interest in the Greens.

The Green Party looks forward to the day that oil and other carbon fuels are no longer economic. It would very much like to hasten that day by using any and every regulatory tool available to discourage carbon emissions and add to the costs of oil-burning vehicles. It rejoices in the recent notion that the planet's supply of readily available oil reserves cannot keep pace with burgeoning demand, especially from China, and that oil prices are therefore on a permanent path to the stratosphere. That prediction, too, is an echo of the 1970s. It was accepted wisdom then that the world was running out of oil, and we endured rationing in the form of carless days while the Government gambled a fortune on alternative energy schemes. Within a few years the higher prices had brought vast new oilfields into production and induced the manufacture of more fuel-efficient vehicles. Prices fell back to previous levels and doomsday was postponed.

The doomcasters seem to have decided that 30 years is a decent enough interval and now again they say the end is nigh. This time they do not claim the world is running out of oil, merely that it is running out of "cheap oil". If they are right they could look forward with confidence that in another 30 years wind farms will have replaced thermal power generation and vehicles will be running on renewable "biomass". They could let the rising price of oil wreak the change they desire. But, as ever, they prefer to urge panic. The Association for the Study of Peak Oil reckons we have less than 10 years, maybe less than five, to force change before the oil price becomes too much for society to bear.

So what to do? The instinct of officials is to look back to the 1970s and even further. Consultants to Mr Anderton's ministry contemplate the use of ration books as used in World War II. And Mr Hodgson wonders aloud whether an age limit imposed on used car imports would result in better fuel efficiency overall. Memory should remind him that import restrictions do not reduce the average age of vehicles on the nation's roads. Quite the reverse, import restrictions simply raise the price of vehicles and ensure that they remain in use for longer than they would if they could be more cheaply replaced. New Zealand traffic of 20 years ago was testament to that.

Asked to suggest adaptations to "peak oil" Government thinkers have simply revived the hoary responses of yesteryear. Such is the imagination of those who hold that social planning is preferable to the haphazard consequences of the market. Left alone, the industries that provide motor vehicles and their fuels are likely to adapt to rising oil prices in far more inventive and practical ways. And they will produce change only if and when it becomes economic to do so. In the meantime, political proposals are better ignored.