Labour’s billion dollar gas bill

Roger Partridge writes:

The LNG terminal is not the Government’s preferred energy policy. It is the consequence of its predecessor’s.

In October 2018, I wrote about the gulf between virtue signalling and virtue. The occasion was the release of MBIE’s Regulatory Impact Statement on the Ardern Government’s ban on offshore oil and gas exploration.

MBIE’s advice was sobering. Rather than reducing emissions, the Ministry warned the ban would likely increase global greenhouse gas emissions, as production shifted to less efficient plants overseas. And far from making New Zealanders more prosperous, it would make them poorer. The mid-point estimate of losses to the Crown alone was $16.6 billion.

I warned then that the Government would be judged not by the virtues it signalled, but by those it delivered. The verdict is now in.

The exploration ban did not reduce emissions. It capped New Zealand’s offshore gas reserves at a stroke, scaring off for the foreseeable future the investment needed to discover and develop new fields and extend the existing ones.

So the impact of Labour’s gas ban was known and predicted seven years ago. Today we are paying the price.

As domestic gas became harder to secure, generators leaned on the only fuel that was stockpilable, dispatchable and available at scale: coal. A policy designed to hasten decarbonisation made New Zealand more dependent on its dirtiest fuel.

Labour’s ban was an economic, environmental and energy disaster.

The result was the electricity crisis of 2024. Wholesale prices spiked. Winstone Pulp International closed, costing 230 jobs. Transpower came perilously close to ordering rolling blackouts. This was not a market failure. It was the predictable consequence of regulatory choices that had stripped the market of the tools it needed to function.

Rarely has such a high price been paid for virtue signalling.

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