With the war in Iran – and the resulting oil price shocks – continuing into its fifth week, Governments around the world have responded in many ways to help ease the burden of soaring fuel prices on their citizens.
Iran’s near-blockade of the Strait of Hormuz – the waterway through which about 20% of the world’s oil supply passes – has caused the price of oil to skyrocket to a near four-year high.
The average price of unleaded 91 petrol in New Zealand has increased from $2.49 per litre in early March to $3.44 now.
With a phased national fuel plan, the New Zealand Government has responded with a $50 boost to the In-Work Tax Credit to provide some relief amid increasing fuel prices.
During the announcement of the support package on March 24, Prime Minister Christopher Luxon said about 143,000 families would receive it in what was called a “responsible” decision that avoids hiking inflation.
This week, after public pressure from industry bodies and unions, the Government announced a temporary 30% boost to mileage rates for home and community support workers.
But Timothy Welch, a senior lecturer in urban planning at the University of Auckland, says more needs to be done to address this “unique” fuel crisis – and he believes public transport is the best way to help relieve rising costs, ease congestion and lower demand for fuel.
“The demand in terms of daily life is continuing,” he told the Herald.
“So unlike when we were in Covid or other situations where we already had a lower demand for fuel, we’re still at the highest demand. So all we can really do is find other levers to reduce that demand.
“And one of them, and probably the best and fastest, is public transport. And the best way to get people to use that is to lower the cost, the barriers to using public transport, for those that can and are able to use it.”
Compared with the rest of the world, Welch says, the Government’s response has been “pretty dismal”.
“To be brutally honest, our Government response is pretty dismal. I mean, there hasn’t been much of a response, to be honest. We’ve created a phased system that comes out of the national fuel plan. But you know, we haven’t even entered legitimately that phase where we’re just asking people to check the tyre pressure or reduce the number of trips they take.
“[If] we go just right over to Australia, we have Victoria’s already made public transportation essentially free for the next month, and Tasmania for the next three months.
“Even one of our biggest suppliers of fuel, South Korea, is reducing the cost of public transport, reducing sales of fuel, reducing the amount people can purchase. So you know, there are a number of countries and those that are directly related to us that are taking this very seriously and taking much more decisive action than we are.”
Several Asian countries have also implemented four-day work weeks or mandatory work-from-home days to help limit fuel demand.
“I think anything that reduces the number of car trips is going to be a win for us,” Welch said. “And I think there’s pretty broad support for things like work from home.
“It doesn’t work for everybody, but every car that we can take off the road that may be an unnecessary trip or an avoidable trip means that our roads are that much more efficient, and those that do have to drive will spend less time in congestion and consume less fuel.”
Australia
Two states in Australia have announced free public transport to help with rising costs and “take pressure off the pump”.
Victoria says public transport would be free for one month from March 31 to April 30, while Tasmania plans free buses and ferries for three months until July 1.
The Australian Government also acted by announcing that the country’s fuel excise on petrol and diesel will be halved for three months, reducing the cost of fuel by 26c per litre.
The heavy vehicle road user charge of about 32c per litre has also been cut for three months to “help truckies continue their vital work for our nation”, Prime Minister Anthony Albanese said.
Asia
Countries in Asia – and consequently New Zealand and Australia – are disproportionately affected by the fuel crisis for geographical reasons, with about 90% of oil that goes through the Strait of Hormuz bound for the continent.
The Philippines and Pakistan have introduced four-day work weeks to reduce fuel consumption, while Sri Lanka has made Wednesdays a public holiday for government institutions.
Indonesia has made Fridays a work-from-home day, while also limiting fuel sales to 50 litres per day.
Thailand has implemented measures for civil servants to conserve energy, including limiting air conditioning and wearing short-sleeved shirts instead of suits to combat heat.
India invoked emergency powers to maximise production of liquefied petroleum gas to combat a cooking fuel shortage, Myanmar imposed a fuel rationing system, and Vietnam plans to stop import tariffs on fuels.
Europe
European Union member states were told to prepare for “prolonged disruption” to energy markets, with several announcing fuel tax cuts or similar measures.
Greece has announced €300 million ($605m) in subsidies to its fuel, farming and transport industries, while France injected €70m for similar subsidies.
Spain’s Parliament approved a whopping €5 billion support package, including cuts to fuel and gas taxes, and direct subsidies for specific industries.
Petrol stations in Germany are only allowed to increase fuel prices once a day.
Africa
Several African countries have implemented measures to reduce the impact of oil price shocks.
South Africa has reduced its fuel levy for one month, Ethiopia introduced a special fuel subsidy, while South Sudan and Mauritius have begun to ration electricity use for non-essential use.
South America
Large nations in South America like Brazil have been partly protected from fuel prices because of a large fleet of vehicles that runs on any combination of ethanol and petrol.
Most countries in South America have been slower to adopt measures, but Chile has frozen public transport fares for the rest of the year.