Fuel, Physics, and What Comes Next | Webinar Recording

With Nathan Surendran

Nathan is an energy engineer and Chair of the Wise Response Society who has been writing extensively about the current energy crisis and its implications (see below)

NZ will probably hit its climate targets. Not because of good policy, but because the economy is being forced into contraction by an energy crisis that mainstream institutions didn’t see coming - or chose not to. Nathan Surendran connects the immediate fuel emergency to the biophysical economics that conventional policy ignores: declining energy returns, thermodynamic constraints on transition, and a coming wave of insolvency and default that may cause more damage than fuel shortages themselves. He presents practical tools for community resilience, from mutual aid frameworks to fair rationing mechanisms, and argues that the response must start at the community level because government is not going to lead it.

Here is the webinar recording:

During the webinar, Jack Santa Barbara asked Nathan for a reliable source to understand the bigger picture of the oil supply predicament. Nathan now recommends this video from Chris Martenson:

OUTLINE: Be Prepared for a Lively Discussion

1. The good news on climate (that nobody wants to hear)

NZ is likely to meet its climate targets. Not because of policy. Because the economy is falling off a cliff. Energy price-driven demand destruction is cutting emissions faster than any government programme. Diesel above $4/litre, petrol not far behind. Businesses are closing, freight is contracting, discretionary travel has collapsed. When you can’t afford to burn fuel, you don’t burn fuel. Emissions fall. This is the climate trajectory nobody modelled - involuntary degrowth driven by energy supply disruption and price shock.

2. Why this is happening - the energy supply picture

The Strait of Hormuz closure and the wider Middle East conflict have taken out a significant share of global crude and LNG supply. NZ imports 100% of its refined fuel. 81% comes from refineries processing Middle Eastern crude. We have roughly 18 days of diesel physically onshore. The government’s fuel plan has no volumetric allocations. Force Majeure declarations have cascaded across every link in our supply chain. I’ve been tracking this in detail:
- “The Limits to the Energy Transition” (white paper):

The Limits to the Energy Transition: What Physics Means for New Zealand’s Economy - Whitepaper

- “Hoping the Ship Arrives Isn’t a Strategy”:

Hoping the Ship Arrives Isn’t a Strategy

- “Every Country in Our Supply Chain Has Declared an Emergency”:

Every Country in Our Supply Chain Has Declared an Emergency. NZ just launched an Ad Campaign.

3. The default tsunami - the crisis before the shortage

Everyone is watching fuel gauges. But the more immediate shock may be financial. NZ insolvencies were at a 15-year high before Hormuz. Mortgage arrears at an 8-year peak. IRD tax debt past $9 billion. Household debt at 165-170% of disposable income. There was no buffer. When diesel costs flow through to freight, food, fertiliser, and farm input costs, the wave of business failures and mortgage defaults will hit before physical fuel shortages do. I’m publishing a piece on this shortly - “The Default Tsunami” - arguing we’re watching the wrong metric.

4. The deeper structure - biophysical economics

This isn’t a one-off geopolitical shock. It’s the predictable consequence of building a civilisation on a depleting energy resource. EROI decline means we spend more energy to get energy. The economy is an energy system using money, not a financial system using energy. The “seamless transition” narrative assumes the global supply chains, fossil fuel inputs, and critical minerals needed for transition will keep flowing. They are not flowing. Drawing on Hall, Keen, Smil, Hagens, Garrett, Delannoy.
- White paper covers this in depth:

The Limits to the Energy Transition: What Physics Means for New Zealand’s Economy - Whitepaper

5. What we can do - community resilience and policy

- Wise Response open letter: quantified essential use fuel allocation plan (with Mike Hodgkinson, Laloli Research)
- Tradable Energy Quotas (TEQs) as fair rationing:

Fair Shares: Why Tradable Energy Quotas Are New Zealand’s Best Option for the Crisis Ahead

- “When the Trucks Stop” mutual aid guide

What can I do in response to the Fuel Supply Crisis in Aotearoa New Zealand?

- “No Fuel, Still Fed” regional food security framework

No Fuel, Still Fed

- Local action: council deputations, community preparedness networks
- Demand reduction, negawatts, fuel-free pathways

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This webinar was organized by Our Climate Declaration, and co-sponsored by:

Degrowth Aotearoa New Zealand https://www.degrowth.nz/

The Wise Response Society https://wiseresponse.org.nz/

Engineers for Social Responsibility https://esr.org.nz/

The Nelson Tasman Climate Forum https://www.nelsontasmanclimateforum.nz/