THE PRESS WEDNESDAY, APRIL 18, 1979. Fellows in oil adversity

Press, 18 April 1979, Page 20

THE PRESS WEDNESDAY, APRIL 18, 1979. Fellows in oil adversity

Not much comfort for New Zealanders is to be gained from the fact that the Irish, the Greeks, and the Yugoslavs have become fellows in adversity over the supply of oil. All four countries are planning restraints on the consumption of petrol for private use: in Ireland the difficulties appear most severe and the Government has taken ox er supply and distribution from the oil companies. The success of this move will be studied with interest by a* number of countries. Governments do not want to be seen to be at the mercy of the oil companies, but whether the companies withheld information from the Irish Government to which the Government could have reasonably expected to have access is difficult to judge from one "Source.

New Zealand. Ireland, Greece, and Yugoslavia have in common their problems over balance of payments. They illustrate aptly the principle that, in a scramble for oil, the weakest go to the wall. Probably there would have been oil for all had they all been willing to pay the prices which were being asked on the spot market. In Ireland it was suspected that oil intended for that country was being diverted elsewhere to those who would pay more. To the extent that some customers are able to pa.y more, and supplies are moved outside an orderly apportionment of oil, the suspicion is no doubt well founded.

Because Iran’s production of oil is now' increasing, the shortage on world markets, which caused the higher prices, may be less than it was. But though the critical shortage will pass the higher prices appear to be here to stay. Because of the drain on foreign reserves caused by the higher prices, the restraints imposed by Governments are also likely to stay.

New Zealand in the past has considered itself to belong to a richer grouping of countries than that of Ireland, Greece, and Yugoslavia. The living standards of the broad mass of New Zealanders are much higher than the people of those countries. Ireland and New Zealand have broad similarities in their dependence on agriculture. In Ireland’s instance some 45 per cent of the export income comes from agricultural products, compared with about 80 per cent for New Zealand's case. Irish farmers have benefited greatly from Ireland’s entry to the European Economic Community and the Irish are among the most adamant that New Zealand should have as little access as possible to the markets of the E.E.C-,

Where New Zealand differs is that, until recently, it was a reasonably prosperous country: falls in the prices of agricultural goods could affect the country badly: but rises could be counted upon to make recovery possible. Now all that is changed. New Zealand has had high prices for its agricultural products recently and still they are not high enough to pay for the increased cost of imports on accustomed levels. Few good things have come out of the increased oil prices for New Zealand, but they have probably brought home to many New Zealanders how precarious a position the country is in in its overseas transactions. That may be a gain. If New Zealanders want something other than a backward economy, there will have to be keen resolve in the national will to export at competitive prices, to moderate demand for what the country cannot pay for, and to accept that, in the meantime, the national cake is smaller than it once was. The price of oil is one reason for the shrinkage.