Monthly Archives: June 2015

Submission to Venture Southland’s ‘Draft Business Plan’ 2015.

I made a submission again this year on the ‘big picture’ issues relating to the draft Venture Southland business plan. The full submission is available below, and under this para, my presentation to the committee which tries to summarise the main theme, which in itself can be summarised as follows: A probable future is one of much lower economic activity, particularly in export industries and tourism, and this will come about as a direct result of declining ‘net energy’ available to us as a result of global trends that have a root in bio-physical limits that we’re hitting.

The future we face is ‘not the future we ordered’…

Spoken Submission to VS Draft Business Plan 2015 consultation:

Nathan Surendran: 08/06/15

Submission to VS Draft Business Plan 2015 consultation:

Nathan Surendran: 22/05/15

I would like to speak to my submission.

I strongly support the CEO’s statement’s as follows:

International influences such as global oils prices, US dairy exports, international competition for our exports, international debt in Europe, and the growing economies in South East Asia will affect our economy. Continual awareness is critical to ensure that we capture all the opportunities, and proactively manage challenges, and any threats that are ahead of us.”

Our region, our resources and our environment offer the “X” factor many people are seeking domestically and internationally. This is our point of difference – this is our future – and together with our stakeholders, business, and the Southland people we aim to achieve and facilitate projects and initiatives that will enhance the prosperity and quality of life of Southland communities.”

Questions regarding these statements:

  1. What specific work is Venture undertaking to maintain ‘continual awareness’ (other than my submissions regarding limits), particularly of the threats to the growth agenda?
  2. In line with the ‘X factor’ of the region, what specific planning is being done to ensure that future migrants to the region have good quality, resource and energy efficient housing, resilient infrastructure, etc? As I stated at the time of its release, I believe that the thinking behind the “Southland Region Labour Market Assessment” is flawed, being modelled using assumptions regarding the future being a continuation of ‘business as usual’ that are not aligned with bio-physical reality. My full thoughts on this are appended as Appendix 1 and available online here:
  3. Did you receive the follow up to my oral presentation last year? I sent for circulation following comments made in the discussion following the presentation a blog post that I created outlining that the ‘Limits to Growth’ modelling I referenced in my submission which was challenged by Mayor Shadbolt is in fact not ‘disproved’. Specifically, the ‘world3’ model predicting overshoot and collapse is in fact correlating well with real world data accourding to updated research in recent years. The full post is available as Appendix 2 and is also online here: I never received any acknowledgement that this information had been circulated.

Suggested changes to the wording of the Priority Projects that VS must report upon, including reasoning for the changes suggested:

  • Increase in regional Gross Domestic Product. Remove this priority.I recently ‘discovered’ via the Southland Times, the ‘Regional Development Strategy’ workstream from the ‘Mayoral Forum’. In correspondance with the chairman Graham Cooney, the terms of reference for this particular strategy appear to be focused wholly towards maintaining ‘growth in GDP‘. I continue to disagree with this approach for the reasons I stated in this and my other recent submissions on an economic, energy and environmental basis. These physical constraints will ‘overrule’ your attempts to continue growth, and will untimately waste time and effort that would be far better directed towards adaption to, and mitigation of future challenges.

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Why EIA, IEA, and BP Oil Forecasts are Too High

“The amount of available future oil is likely to be much lower if real-world price constraints are considered. There are at least two reasons why oil prices can’t rise indefinitely:

Any time oil prices rise, economies that use a high proportion of oil in their energy mix experience financial problems. For example, countries that get a lot of their revenue from tourism seem to be vulnerable to high oil prices, because high oil prices raise the cost of airline travel. Also, if any oil is used for making electricity, its high cost makes it expensive to manufacture goods for export.
When oil prices rise, workers find that the cost of food tends to rise, as does the cost of commuting. To offset these rising expenses, workers cut back on discretionary spending, such as going to restaurants, going on long-distance vacations, and buying more expensive homes. These spending cutbacks adversely affect the economy.
The combination of these two effects tends to lead to recession, and recession tends to bring commodity prices in general down. The result is oil prices that cannot rise indefinitely. The oil extraction limit becomes a price limit related to recessionary impacts.

The cost of oil is currently in the $60 per barrel range. It is not even clear that oil prices can rise back to the $100 per barrel level without causing recession in many counties. In fact, the demand for many things is low, including labor and capital. Why should the price of oil rise, if the overall economy is not generating enough demand for goods of all kinds, including oil?”

Good questions from @gailtheactuary

Our Finite World

When forecasting how much oil will be available in future years, a standard approach seems to be the following:

  1. Figure out how much GDP growth the researcher hopes to have in the future.
  2. “Work backward” to see how much oil is needed, based on how much oil was used for a given level of GDP in the past. Adjust this amount for hoped-for efficiency gains and transfers to other fuel uses.
  3. Verify that there is actually enough oil available to support this level of growth in oil consumption.

In fact, this seems to be the approach used by most forecasting agencies, including EIA, IEA and BP. It seems to me that this approach has a fundamental flaw. It doesn’t consider the possibility of continued low oil prices and the impact that these low oil prices are likely to have on future oil production. Hoped-for future GDP growth may not be possible…

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