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The coalition government has worked with business and industry to refine the Fuel Response Plan for petrol and diesel to ensure in the event of a prolonged global fuel shortage the country is well-placed to act to protect the economy and livelihoods.
Finance Minister Nicola Willis and Associate Energy Minister Shane Jones today provided details of changes to the plan following extensive consultation and engagement with business and industry, and other stakeholders.
“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,” Willis says.
“The government developed the Fuel Response Plan to give New Zealanders assurance about measures that would need to be taken to protect jobs, livelihoods and the economy should it become difficult to maintain sufficient fuel supply.
“Our priority is to ensure New Zealand continues to have sufficient fuel supply so we never need to implement restrictive fuel savings measures.
“That’s why we are focused on shoring up supply now and providing a buffer should the global situation worsen.”
Willis says the government has aligned fuel specifications with Australia to maximise the availability of fuel imports, invested $21.6 million to accelerate additional diesel storage capacity at Marsden Point, and secured a deal with Z Energy to procure an additional 90 million litres of diesel.
“Today we have announced that we have finalised the Z Energy deal and the additional diesel – equivalent to nine days’ of supply – will be in the Marsden Point tanks by the end of June, providing New Zealand with a strategic diesel reserve.
“Modelled scenarios indicate it is highly unlikely we would ever get to phase three or four of the Fuel Response Plan, but as a prudent government we are ensuring New Zealand is prepared for whatever the global environment brings.
“It is better to have a plan you don’t use, than to need one and be caught short.
“In the unlikely event we ever need to move to phase four, it is critical business and industry have a clear understanding of the objectives and measures and can put them into action.
“That is why we have taken the time to consult, and the feedback we received has shaped the revised plan.
“We heard the earlier proposed approach, particularly around the priority bands, was too complex and needed simplifying.”
Any implementation of priority users for fuel has been moved from phase three to phase four.
Phase three will instead focus more heavily on supply levers such as releasing fuel reserves, and demand reduction actions such as working with businesses on voluntary plans to reduce their fuel use.
A move to phase four would occur only if there was 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 is “highly unlikely”, the government would set a fuel reduction target and apply a simplified framework of priority users to ensure fuel goes where it’s needed most.
Fuel access under phase four:
- Critical users – priority and uncapped access. This includes emergency services, health, schools, courts, money services and lifeline utilities
- Food and freight – uncapped access to fuel, subject to demand reduction requirements based on fuel‑saving plans. The government would monitor adherence to fuel-saving plans through spot checks
- Commercial and community users – same access as food and freight, but higher savings targets in their fuel-saving plans. This includes businesses and organisations other than food and freight
- General public – transaction limits at the pump aimed at reducing overall fuel use by an amount greater than what is expected for other groups
The levels of fuel reduction for food and freight, other commercial and community users, and the general public would depend on the fuel reduction target set by the government, which itself would depend on the scale of disruption at the time.
A plan for jet fuel has been developed alongside the aviation industry, recognising the types of users and demand for jet fuel are different to those for petrol and diesel.
“The key to the Fuel Response Plan is to be flexible and adaptable to any given scenario,” Willis says.
“We intend for this plan to guide government, business and industry and the public through any scenario, with actionable and proportionate measures that can be tailored to the situation and adjusted if they aren’t working as expected.”
During Ministers’ and officials’ recent travel to Singapore and South Korea, trading houses of the major fuel companies that supply New Zealand gave confidence about continued supply to New Zealand and assurance they’ll continue to share information about forward orders and any significant disruptions.
Jones says the plan requires industry co-operation for it to work as intended.
“Our suppliers continue to ship fuel to New Zealand with no disruptions. However, global volatility means it’s important we are prepared for all potential scenarios.
“Given a move to phase four would occur only if we could see a major and ongoing fuel supply disruption, we are confident fuel suppliers and users will co-operate with the Government’s proposed approach to avoid phase four.
“Since entering phase one, the government has strengthened fuel resilience by securing additional diesel supply, aligning fuel specifications with Australia, and working closely with industry and communities on contingency planning.
“The Prime Minister, Ministers and agencies are in close contact with other governments and suppliers of refined products to ensure co-operative relationships at the highest level.
“We are taking active steps to bolster New Zealand’s fuel resilience and will continue to work closely with key stakeholders to respond to whatever the global environment brings.”
