Government did no cost-benefit analysis on oil and gas ban

The decision to ban future oil and gas exploration was made without a cost benefit analysis to back it up, Newshub can reveal.

It's one of a number of admissions revealed in parliamentary written questions pointing to a lack of evidence behind the decision.

"I am not aware of a cost-benefit analysis using the Treasury's CBAx tool being undertaken in relation to the decision to grant no further offshore oil and gas exploration permits," Megan Woods said.

Dr Megan Woods.
Dr Megan Woods. Photo credit: Newshub.

Treasury developed the CBAx tool as a common way to assess the pros and cons of policies across government agencies.

Dr Woods' office told Newshub officials did not think it was appropriate to use the Treasury tool in this case as there were too many unknowns about how much gas and oil was actually out there.

"Searching for petroleum offshore is a low probability of success event but high impact if found, so trying to model the costs and benefits in a traditional option analysis spreadsheet would have required substantial assumptions to be made," a spokesperson for the minister said.

But Act leader David Seymour thinks that's rubbish.

"If Treasury is seriously saying they can't anticipate how much investment will go into discovering oil and gas reserves, then they should all be fired," he said.

"Regulatory impact analysis requires that before any policy is done, the Government works out if it's going to benefits that outweigh the costs. If the costs are greater than the benefits it should not continue. This Government is ignoring this whole process for what sounds good rather than what works."

ACT leader David Seymour.
ACT leader David Seymour. Photo credit: Getty

The Energy Minister has also admitted no formal consultation with the Petroleum Exploration and Production Association of New Zealand (PEPANZ) took place.

"No formal consultation was undertaken with PEPANZ in relation to the decision to grant no further offshore oil and gas exploration permits. However, I have spoken publicly about the Government's direction to transition away from fossil fuels and my office has had open dialogue with PEPANZ before this announcement."

There's also been no estimates on whether global greenhouse gas emissions will fall as a result of the decision.

"No specific estimate has been provided to me. I have been advised by officials that the effect on global emissions depends on the response of New Zealand's large gas users."

Seymour says that's the most damning revelation.

"The worst part of this policy announcement is they haven't even figured out if it will achieve its intentions," he said.

"They don't know how much substitution of coal should occur, and if the net result is people moving to coal, net emissions will be even worse than they are now. I've seen some own goals in my time in politics. This Government is an expert."

Advice or estimates on increases or decreases to gas prices are also missing from the background work on the policy.

"No specific estimate has been provided to me on the price impact on gas of the decision to grant no further offshore oil and gas exploration permits. Officials have advised that gas prices have risen in the past when the supply of gas has been constrained," Dr Woods said.