Christopher Luxon
Minister, Ministerial Services
Minister, National Security and Intelligence
Prime Minister
Permanent linkWell, kia ora, good afternoon, everyone. Today I’m joined by Finance Minister Nicola Willis and also Associate Energy Minister Shane Jones to outline the details of changes to our fuel response plan following extensive consultation with business and industry. We’ve developed a clear plan that keeps our economy running and it ensures that everyone has access to fuel. We’re taking every possible step to make sure we have enough supply in New Zealand, minimising the impact on our businesses and the wider economy. If necessary, we are ready with a contingency plan to prioritise fuel as a very last resort.
While the disruption to the global fuel market is serious, I am pleased to report that it has not impacted New Zealand’s ability to secure sufficient fuel supply. As you will have seen from today’s fuel stocks update, New Zealand continues to have good levels of fuel in the country and on the way, with 51 days of petrol, 44 days of diesel, and 54 days of jet fuel. Fuel importers have now provided confidence of confirmed orders through July, with planned orders into August. The update shows that our fuel stocks remain within normal fluctuations, and well above the minimum stock holding obligations. This is a testament to the resilience of our supply chain and the proactive measures our Government has taken.
The biggest impact on New Zealand so far has been with regard to prices. New Zealanders are feeling that every time they fill up the car and that’s why we’re providing timely and targeted support, targeted to those who need it most, with an extra $50 per week for low and middle-income workers with kids and increases to mileage rates for community support workers, relief teachers and veterans needing to travel to medical appointments. While the higher fuel prices are putting pressure on households and businesses, it would be significantly worse if we had a supply problem. It has also been helpful to all Kiwis that diesel has come down 50 cents per litre and petrol 25 cents per litre since the highs of three to four weeks ago.
The importance of fuel to our economy and the risk that disruptions in supply can cause has required us to be proactive and decisive. That is why we established the Ministerial Oversight Group back in March, and this group has been very effective in providing a coordinated response to the global fuel crisis across Government and driving the proactive measures we’ve taken so far. Those measures of course include aligning our fuel specifications with Australia to maximise the availability of our fuel imports, investing $21.6 million to accelerate additional diesel storage capacity at Marsden Point and securing a deal with Z Energy to procure an additional 90 million litres of diesel, providing New Zealand with a strategic diesel reserve.
We’ve also deepened our understanding of future fuel supply into New Zealand. By working directly with the fuel companies and oil traders in Singapore, and visiting refineries in Singapore and also in South Korea, we’ve gained valuable insights into the upstream pipeline of crude oil. I am reassured by the continued operation of these refineries and their efforts to diversify crude oil sources. Last week, as you know, I formally signed an essential supplies agreement with Singapore’s Prime Minister Wong, further strengthening our supply chain and ensuring that fuel will continue to flow to New Zealand from Singapore. While the situation in the Middle East remains very uncertain, we are as confident as we can be that New Zealand will continue to see uninterrupted fuel supply in the months ahead.
That said, we’re not standing still. Our approach from the outset has been to stay ahead of the risk, and that will remain our approach for as long as the risk is there. As I mentioned earlier, we secured a deal with Z Energy to procure an additional 90 million litres of diesel. Today we can announce that that deal has been finalised, and we expect the diesel will be in the refurbished tanks at Marsden Point as early as the end of next month. This additional diesel supply will act as a strategic reserve for New Zealand and this reserve represents nine days worth of supply, approximately 40 percent of our current minimum stockholding obligations, and it will provide a critical buffer should we ever face any supply issues.
Today we’re also announcing the details of our revised fuel response plan, following extensive consultation with business and industry. This four-phase plan outlines the measures that would need to be taken to conserve fuel and to protect jobs, livelihoods and the economy in the unlikely event of a prolonged global fuel shortage. With the benefit of experience over the past two months and in consultation with major fuel users and fuel importing companies, we have refined a plan that places emphasis on maintaining supply through all four phases. The plan is designed to be flexible and adaptable, with pragmatic measures at each phase that are proportionate to the situation we encounter. We’ve sought to lay these measures out in a logical way, allowing people to make their own decisions about their fuel, while guiding them to do the right thing and guaranteeing supply to our critical services in the most extreme of circumstances.
Through consultation we heard that fuel prioritisation should be a last resort, and the priority bans outlined in the first iteration of the plan were too complex. Any implementation of priority user bands for fuel has been moved from phase 3 to phase 4. Phase 3 will instead focus more heavily on supply levers such as releasing our strategic diesel reserve, and demand reduction actions such as increasing public transport capacity and working with businesses on voluntary fuel reduction plans.
A move to phase 4 would occur only if there was ever a genuine likelihood of a severe and prolonged disruption, such as the loss of a large share of fuel supply for many months. While this remains highly unlikely, highly unlikely, the Government would set a fuel reduction target and apply a simplified framework of priority users to ensure that fuel goes to where it’s most needed. Modelled scenarios show that it’s highly unlikely we’d ever need to get to phase 3 or 4, but frankly it’s better to have a plan you don’t use than to need one and to be caught short. Soon I’ll pass to Nicola to talk you through more of the detail around that.
Our focus is on extending and shoring up supply, preparing measures to reduce demand if needed, and taking every step to avoid escalation. We’ve already done a lot to shore up supply in phase 1 and that has put us in a good position for the risk that the global situation worsens. The ultimate aim of course is to protect jobs and the wider economy by avoiding a move to phase 4, which we consider to be highly unlikely. I’ll now pass to Nicola and then on to Shane to provide a little bit more detail.