Comment From The Capital Plan For Fuel Ministry Shelved

Press, Volume CII, Issue 30219, 26 August 1963, Page 12

Comment From The Capital Plan For Fuel Ministry Shelved

(Parliamentary Reporter) WELLINGTON, August 25. The fuel problems of New Zealand, though admitted by senior Ministers to be serious, will not be tackled by a co-ordin-ating Ministry of Fuel and Power for at least another year. This is apparent from discussions in Parliament over the last week.

During the debate on the Mines Department estimates, the Minister of Mines (Mr Shand) said that, with the development of the oil refinery in the north, the situation had become so serious in the eyes of the Government that steps would have to be taken in the rationalisation of fuels. During the following week, Mr Shand avoided Opposition inquiries as to what he meant; but on Friday he explained, in answer to a question by Mr W. E. Rowling (Opp., Buller), that a former deputy-secre-tary of the Treasury (Mr A. B. Taylor) had been specially appointed, and was actively investigating the problem of reconciling the production of fuel oil with that of coal.

Mr Shand indicated quite clearly that the problem had already been partly dealt with by asking the newlyestablished oil-refining industry to limit its production of commercial-type fuel oils so that these would not cause further disruption to the coal industry.

The attitude of the Government has already caused some alarm among officers of the oil industry, who believe that the restrictions will prevent the enterprise from operating at its economic best. Their view is that most modern industrial plants run on oil, and that there will be a surplus of first-class heavy oil when the plant is in operation.

Even if the plant refines "enriched crude.” as is intended, more of the heavy oils will be produced that can be used in New Zealand at present. The oil interests, which might be expected to campaign for the conversion of as many plants as possible to take this oil, will be forbidden to do so. Divided Control The establishment of a Ministry of Fuel and Power, long advocated by scientists and industrialists, now has some influential political support It is regarded as an essential prerequisite to any attempt to "rationalise” New Zealand’s fuel problems. Delaying the formation of such a Ministry and permitting

the establishment of a refinery restricted in output to protect a competitor (coal) seems to these interests to destroy ainy basis of real rationalisation.

“To describe the problem as merely one between coal and oil is, unfortunately, an oversimplification,” said one fuel authority. “The Government itself, and the services it operates, appear to be under no restriction. North Island railways turned over to oil years ago, and plans are being completed for the South Island to do likewise.” All authorities agree that the fuel question in New Zealand goes much further than an argument between oil and coal. Also to be considered in a full rationalisation programme is the role of hydroelectricity, and the potentialities of natural gas. If Mr Taylor’s investigation takes either of these into account he will, in the opinion of some men who should know, be examining something less than half the complete problem, though the future both

of electric power and natural gas will depend to some extent on what he recommends. All this poses an interesting question: would any New Zealand government be prepared to direct an industry, newly-established or of longstanding, to use a particular form of power in its plant? The probability is that it would hesitate to go beyond offering special incentives, such as low-cost electric power. Ministry Needed A Ministry of Fuel and Power could assess needs and determine potentials on a national basis. Its advocates say it would permit longterm planning instead of the piecemeal restrictions such as are envisaged in the present arrangement. It might be able to assist in more positive ways in areas such as the West Coast. It would be expected to produce a programme for the exploitation of natural gas. As it is, there is no hope of

a return to coal on a scale that would invigorate the industry. The probability grows stronger, as tire time passes, that more mines will be closed. The danger is very real that the Kapuni gas field may be closed down, merely because its presence is an embarrassment. The oil companies, who have already spent £8 million on oil exploitation in New Zealand, are not happy about the prospect that they could spend £lO million more in piping the gas to required areas—and then find their effort restricted because of the protection given to coal. The importance of a Ministry of Fuel and Power was recognised by the Government a year ago. When the Mines Department and State coalmines estimates were discussed recently, it was not even mentioned. The inference is that it has been shelved in favour of smaller, piecemeal measures, at least until after the General Election.