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Summarised by Centrist
New Zealand is preparing for possible fuel disruption and higher prices as the Middle East conflict drags on, with ministers planning for the worst while insisting the country is not yet facing a prolonged shortage.
Prime Minister Christopher Luxon says the government is preparing for a “worst-case scenario” in which the conflict continues and fuel supplies come under greater pressure. He warned the situation could “get worse before it gets better” and said ministers, officials and industry were focused on the coming weeks rather than assuming the market would quickly stabilise.
Currently, New Zealand has roughly 6.5 weeks of petrol and diesel, and 7 weeks of jet fuel, available. Officials say that provides a buffer for now, but the government is looking closely at what happens if disruption to shipping and refining flows continues.
Finance Minister Nicola Willis said ministers were examining “domestic prioritisation measures” and would provide more detail next week. The National Fuel Plan includes options such as designated fuel stations for critical users, special access arrangements and, at more serious levels, purchase limits and restrictions designed to prevent hoarding.
Brent crude rose to US$109 a barrel on Thursday on fresh uncertainty in global energy markets.
Economists are also warning the shock could spread well beyond the pump, lifting the cost of groceries, freight, retail goods and other essentials while raising the risk of another recession if the conflict drags on.
Yet, energy analyst David Keat said he did not expect the country to run out of fuel for long periods, “if at all”. The greater risk, he suggested, is that New Zealanders end up paying much more as buyers compete for available shipments.
Rural Contractors New Zealand said one larger contractor had seen its fuel bill rise by $5000 a day and argued agriculture should be treated as a priority if shortages worsen.
The Treasury had modelled inflation rising to 3.1% to 3.2% by June if the conflict lasts three months, up from its earlier 2.7% forecast.
Treasury strategist Struan Little said, “Every US$10 increase per barrel of oil roughly translates to 10 cents a litre extra for New Zealanders at the petrol pump”. At around US$100 a barrel, he said, that would mean about 40 cents a litre more for motorists here.
Willis made clear that any government support would be aimed at people who have no choice but to drive to work and would likely come through the tax and transfer system. She warned that the government would not be able to “blunt all of the pain” caused by the conflict.
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