Ministers are getting advice on how low fuel supplies have to go before the Government should introduce demand measures such as reducing the amount of petrol people can buy and only allowing fuel outlets to open on alternate days.
Ministers said today New Zealand has 50 days’ stock of key fuels, including stock in the country or on its way here. The war in Iran has effectively closed the Strait of Hormuz, blocking one of the main sources of oil and fertiliser. This has led to fuel price hikes and concerns rationing measures may need to be implemented.
Associate Energy Minister Shane Jones said the advice from agencies would include things such as how low New Zealand’s stocks could go before emergency measures were triggered.
Jones said current stock levels were high enough that people should not be alarmed.
“We’re getting advice from Treasury and the other relevant agencies. New Zealanders expect us to be proactive,” Jones said.
“Feeding any sense of alarmism is unhelpful.
“We’re taking a proactive set of steps to make sure we’ve done the proactive work in the event the Crown needs to take further decisions should this level of hostility become hopelessly protracted.”
Finance Minister Nicola Willis last night chaired the first meeting of the Ministerial Economic Security and Supply Chains Group set up this week to respond to the economic consequences of the war in Iran.
This morning, the Government announced that as part of the International Energy Agency (IEA) response, it had agreed to release some of the stocks it holds to help calm markets.
This decision, as well as the G7 group of large economies deciding to release stocks, has led to oil prices falling in recent days, but they are expected to rise again if the Strait of Hormuz remains closed to traffic.
The stock being released by New Zealand is separate from the 50 days of stock for domestic supply.
Willis said the Government was monitoring whether the orders fuel companies had beyond the current 50 days’ supply were being fulfilled.
“At the point that we are seeing disruption in any of that, that’s when we’d have to see whether the measures were necessary,” she said.
“The key thing is whether or not we are still able to fulfil current orders into the future and so fuel companies are working very closely with the people they are getting their fuel supplies from to see whether there are going to be reductions in supply.”
“There have been questions about whether governments themselves in some countries will restrict what exports can happen.”
There have been unconfirmed reports that South Korea, which is the source of about 47% of New Zealand’s refined fuel, might block exports in the interest of its own energy security.
Willis said the Ministry of Foreign Affairs and Trade was “working on” this issue but had received “no confirmation” from the South Korean Government.
“I’d just note that South Korea, as a member of the international community, would recognise that any action of that sort would have significant implications for their customer relationships,” Willis said.
She said that in the event of a supply disruption, the Government would first look at alternative places where the country could source fuel.
This could mean New Zealand changing its fuel specifications to increase the options it has in the event of a crisis.
“There are a number of steps we could take before we turn to rationing,” she said.
Asked whether she was considering car-less days, she said “we don’t need to consider those steps right now”.
“Those steps would only be necessary if we were seeing genuine disruption to our ability to get fuel in beyond 50 days of storage beyond what we currently have,” she said.
She said car-less days were “not on the table” at present.
Willis said the Government was considering what the “trigger” for considering demand measures would be.
The Petroleum Demand Restraint Act, Muldoon-era legislation that allows the Government to set regulations to curb demand, including prohibiting people from driving vehicles on certain days, is still on the statute books.
However, the more recent 2024 National Fuel Plan envisages less onerous restrictions.
These begin with voluntary measures such as encouraging people to conserve fuel and relaxing regulations on what types of fuel can be imported.
These then escalate to compulsory demand-side measures, including reducing the hours on which petrol stations can open or only allowing them to open on certain days.
The amount of fuel that can be purchased could be curtailed and banning the sale of fuel into containers is an option.
Critical customers, such as emergency services, would be prioritised.