Government receiving advice on potential fuel demand restraint, but would look at sourcing first

The Government is receiving advice over potentially rationing fuel demand, should the situation in the Middle East deteriorate further. While the Government would first look at fuel sourcing, other options are on the table as fuel prices climb.

As a member of the International Energy Agency (IEA), New Zealand was part of the unanimous agreement that 400 million barrels of oil from emergency reserves would be made available to address disruptions in oil markets stemming from the war in the Middle East.

Associate Energy Minister Shane Jones said on Thursday the Ministerial Economic Security and Supply Chains Group which met Wednesday night, also agreed to take; "a proactive set of steps to ensure we've done the policy work in the event that the Crown needs to take any further decisions should this level of hostility become hopelessly protracted".

Jones said the IEA expected its members to explore all options, including demand restraint. He said the Government was getting advice on that, "and Kiwis should expect us to be proactive".

Those options would "only kick in in the event that this situation deteriorates further, because we do have up to 50 days worth of fuel, either on the water or here in country".

Government has the power to impose demand restraint regulations including the restriction or use of cars, rationing schemes, prohibiting the storage or sale of petroleum products, if it is likely to be in short supply.

Asked how many days' worth of fuel it would take to see measures implemented such as car free days, Jones said, "that's the level of analysis that we're getting done by MBIE and obviously Treasury have undertaken to lead a lot of the policy work, I don't want to jump to any sort of indiscriminate day figure".

"I'm just telling Kiwis that we've got 28 to 50 days worth of fuel on the water or in the country, but we're doing the proactive work to identify when would we kick in, and share with the public, the next steps," he said.

"Feeding any sense of alarmism is unhelpful. We are going to take a measured but thorough approach, so that when the committee does refer back to Cabinet, it's on the basis of high quality information and good work undertaken by our officials."

Finance Minister Nicola Willis said there were a number of policy steps that would be taken prior to considering rationing.

On how many demand measures the Government was considering, Willis said at this point there was “no need… but there is provision in New Zealand law that should we need to take those steps”. 

“The first thing is to understand whether there is any disruption that would warrant that, we don't have information that suggests that is the case yet.

“The second thing to consider is whether we would have options for expanding where we could get supplies of fuel from. That's actually the first thing that we would do - to look at, are there better options for where we could source fuel, alternative options from where we normally get it?

“That may require, for example, us considering, do we need to look at the fuel specifications we currently have to widen the set of options that we have.”