New Zealand’s government is holding its fuel response plan at phase one, the lowest of four settings, even as a fragile ceasefire between the United States and Iran starts to pull global oil prices off their highs and ease the pressure that has hung over the country since late February.
The plan, modelled loosely on the old Covid alert levels, runs from phase one through to phase four. At phase one there are no restrictions and the public is simply encouraged to think about how much fuel it uses. Phase two would lift that messaging and ask homes, businesses and the public sector to actively conserve. Phase three would prioritise fuel for life-preserving services, and phase four would see the government step directly into how fuel is shared out. A ministerial oversight group decides when to move between settings, working off triggers that include refinery export restrictions, swings of three days or more in national fuel stocks, companies being unable to fill orders, and breaches of minimum storage rules, as the government set out earlier this year.
For now ministers say none of those triggers amounts to a real threat to supply. The Prime Minister Christopher Luxon has repeatedly framed the approach as deliberately unflustered. “We’re a government that’s very calm, very measured. We’re not panicking,” he said when the detail of the plan was first laid out. He has also made the case for erring towards holding more fuel rather than less, saying he would “rather have the embarrassment of an abundance of fuel than be under-sorted” and pointing to his own years running an airline through earlier fuel shocks.
The Finance Minister Nicola Willis has described the plan as designed “to keep fuel flowing where it matters most”, leaning on the market wherever possible and only stepping in further if supply is genuinely at risk. Willis has also been frank that the real value of acting early is to avoid ever reaching phases three and four, which she has likened to wartime style controls. The Associate Energy Minister Shane Jones has said the plan depends heavily on fuel companies cooperating and working constructively with the government.
The case for staying put has been helped by what is happening offshore. After the United States and Iran signed a framework to end their war in the middle of June, Brent crude fell back towards 78 US dollars a barrel, its lowest in close to three months and well down from the level above 100 dollars it touched in May, as markets welcomed the deal. Washington has granted Iran a sixty day licence to sell oil on international markets, traffic through the Strait of Hormuz has picked up again, and producers in the Gulf have leaned on alternative export routes. Each of those eases the supply fears that drove prices up in the first place.
The politics, though, are not so easily settled, because the damage to the wider economy is already showing up in the figures. The New Zealand Institute of Economic Research this week said the fuel crisis has knocked the recovery off course, trimming its growth and household spending forecasts and warning that inflation will push above four per cent in the June quarter, well outside the Reserve Bank’s one to three per cent target band. Petrol prices climbed by about a third over two months to April and diesel nearly doubled over the same period, feeding straight into the cost of moving freight, running farms and getting to work.
That leaves the government in an awkward spot heading towards the 7 November election. It can point, fairly, to figures showing the economy had its strongest quarter in nearly three years just before the shock arrived, and to a fuel response plan that has so far kept the pumps open without rationing. It has also put money behind the problem, setting aside 150 million dollars for extra strategic fuel reserves and a further 450 million dollars in contingency for targeted support if conditions worsen, alongside higher mileage payments for support and health workers and help for public transport operators, as part of a package the government says will protect the economy.
Against that, the opposition and a number of economists argue the recovery the government wants to campaign on has been blunted, and that holding at phase one for months has been as much about appearances as fuel stocks. The question of whether to move to phase two has already come up once, when two of the plan’s triggers were technically met but officials advised they did not represent a material change to supply. Willis agreed with that reading at the time, a call that critics said showed the bar for escalating was being set high. With a ceasefire now in place and prices falling, the immediate pressure to step up has eased again, but the political argument over how well the country was protected, and who carries the cost of months of higher prices, will run well past polling day.
For voters trying to work out where each party stands on the cost of living, fuel and the wider economy, Newswire’s voting tool lines the policies up side by side.
What do you make of the government’s handling of the fuel crisis, and should it have moved faster to ask the country to conserve? Share your thoughts 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 🙂
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