The Green Party’s two co-leaders grilled Government officials yesterday about grossly inaccurate forecasts made last October about future oil prices.
The Economic Development Ministry forecast oil would be US$20 a barrel this year, rise to US$25 a barrel by 2020 and be stable thereafter.
The information was based on United States Government and International Energy Agency data.
But Greens co-leader Jeanette Fitzsimons said in questioning ministry officials at the finance and expenditure select committee that within a month of the forecast it had been exceeded and the price was now about US$54 a barrel.
She asked if the ministry was rethinking whether it should broaden the range of sources it used in such forecasts.
Deputy secretary, resources and networks, David Smol, said the ministry was reviewing the assumptions it made in preparing such reports.
It was also considering more frequent updates than once every two or three years – and another may be produced in the first half of 2005.
But he said oil prices were very difficult to predict and it would be a “major undertaking” to independently analyse the market.
Ms Fitzsimons asked if the ministry took sources like the Association for the Study of Peak Oil into account in its forecasting. The association has predicted demand will outstrip supply within 10 years and possibly as early as 2006.
Mr Smol said the ministry looked at a range of sources, and was aware that at one extreme people were arguing the oil peak would be much earlier. “We try to take a broadly mainstream position for our central view of the world and look at variations around that, but it is a very difficult area.”
Ms Fitzsimons said later it was worrying New Zealand had no independent ability to analyse the market and had to rely on the Americans.
Meanwhile, Finance Minister Michael Cullen told the committee he had no “trigger point” at which oil would have to fall to before shelving the proposal he revealed last week to defer a proposed petrol tax rise.
Last week in Parliament he revealed he was considering recommending that the Cabinet defer a rise planned for April 1. Dr Cullen had said if oil prices did not fall from present heights the increases might come later by regulation instead of by a bill now before Parliament.