The Government has finalised the rules for what would happen if the Middle East fuel crisis forces New Zealand into the deepest level of its national rationing plan, with critical services, food and freight kept on uncapped supply while ordinary motorists face per-transaction pump limits.
Finance Minister Nicola Willis and Associate Energy Minister Shane Jones released the revised Phase 4 of the National Fuel Response Plan on Monday. Phase 4 would only be triggered if diesel reached $5 a litre or more and a severe, prolonged supply disruption reduced imports by 30 percent for six months or longer, according to officials.
Willis said in the announcement that while New Zealand continues to have sufficient levels of fuel in the country, with more on the way, the situation in the Middle East is unpredictable and has already had a widespread impact on the global fuel market. She said the Government’s priority was to ensure New Zealand continues to have sufficient fuel supply so that restrictive fuel savings measures never had to be implemented. When asked about the likelihood of reaching the top phase, she said it was very hard to imagine a scenario in which phase four is needed.
Under the revised plan, fuel users would be sorted into four groups. Critical users include emergency services, health providers, schools, courts, public transport operators, banks, media organisations and lifeline utilities, all of whom would keep uncapped access. Food and freight operators would also keep uncapped access but would be expected to submit fuel saving plans and meet reduction targets set by the Government. Commercial and community users, including retailers, tradespeople and universities, would face higher savings targets. The general public would face per-transaction caps at the pump, with multiple fills allowed each week but capped per visit, and exceptions for rural workers and others with documented needs.
The National Road Carriers Association said the changes were a step forward for freight operators. NRC chief executive Justin Tighe-Umbers said the Government had done a great job on the Singapore fuel deal and that the update represented prudent planning in the unlikely event New Zealand faces a significant, prolonged supply constraint on fuel. He said the NRC was working alongside the Energy Efficiency and Conservation Authority on guidance for members about fuel saving initiatives.
The revised plan replaces an earlier version that the Government heard was too complex from the more than 320 organisations and 1,200 individual submitters who took part in the consultation. Eleven webinars were held during the process, attended by nearly 6,000 people. Willis said the feedback was that the earlier proposed approach, particularly around the priority bands, was too complex and needed simplifying. Prime Minister Christopher Luxon said the Government was not interested in doing Covid 2.0 with overly complex rules.
Enforcement of the Phase 4 rules would sit under the Petroleum Demand Restraint Act 1981, with penalties available where compliance broke down. The Government said it preferred a high trust regime relying on fuel companies, large users and community awareness rather than heavy-handed enforcement, with spot checks focused on the heaviest users and on regions missing their reduction targets. Carless days, which were used during the 1979 oil shock, have been ruled out.
Alongside the policy update, the Government confirmed it has now finalised an additional supply deal with Z Energy. Jones said an extra 90 million litres of diesel, equivalent to about nine days of national supply, would be in the Marsden Point storage tanks by the end of June. The Government has also committed $21.6 million for accelerated diesel storage upgrades at Marsden Point.
Channel Infrastructure, which owns Marsden Point, lifted its full year profit guidance to as much as $105 million last week as the global fuel crisis pushed customers to fill its tanks. New Zealand currently holds only 38 days of fuel onshore, with offshore reserves now making up 58 percent of the national stockpile.
The Reserve Bank said in its Financial Stability Report this week that the Middle East conflict had already slowed the recovery in New Zealand and was likely to keep weighing on growth even though the banking system itself remained resilient. The Commerce Commission also cleared the merger between Gull and NPD last weekend, creating a 240 station challenger to Z Energy and BP at the retail end of the market.
Jones said the Government was confident fuel suppliers and users will co-operate with the proposed approach to avoid Phase 4. He said the Government was taking active steps to bolster New Zealand’s fuel resilience and would continue to work closely with key stakeholders to respond to whatever the global environment brings.
For most New Zealand businesses, the practical question is whether they would be classified as food and freight, commercial and community, or general public. The Government said it would publish detailed guidance and reduction percentages before any move to Phase 4 was triggered. Officials have said freight operators in particular should expect to be asked to submit fuel saving plans even though their access would remain uncapped.
Has your business already started planning for what Phase 4 would mean for its fuel use, and do you think the four-group split lands the priorities in the right places? Let us know in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job π
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