Source: Radio New Zealand
Shane Jones. RNZ / Mark Papalii
The government will be hearing from officials later this week on possible steps towards “demand restraint”, Associate Energy Minister Shane Jones says.
Petrol prices have increased by almost $1 per litre on average in the past month, according to price tracker Gaspy, and diesel even more, as global energy markets react to Iran’s military grip on the Strait of Hormuz following the war launched by the US and Israel.
Around 20 percent of the world’s supply usually transits through the strait.
The government is expected to unveil a support package later on Tuesday which it says will be highly targeted and temporary. Finance Minister Nicola Willis has regularly stated there have been no plans to restrict usage, with stockpiles remaining healthy and supplies still arriving as scheduled.
The latest data from the Ministry of Business, Innovation and Employment showed stocks for about 47 days of fuel, including about 50 days worth of petrol, 46 days of diesel, and 45 of jet fuel.
Jones, speaking to Morning Report on Tuesday morning, said New Zealand consumed 24 million litres a day – nearly half of which was diesel, a third petrol and the rest aviation fuel.
Towards the end of the week… we’re going to be briefed at a granular level by the officials who are in contact with different industry groups as to the steps we would take if we move towards demand restraint.
“I am focused more on enhancing advancing, broadening and simplifying access to greater levels of supply.”
Reports from importers such as Z Energy were coming in daily, he said.
“We have never once been told that they are unable to deliver, or contracts are being terminated. Naturally, we’re watching that with a pair of hawk eyes. The challenge remains… the access of the refineries owned by Exxon and other such global giants to enough feedstock so they can produce the fuel in suitable quantities.”
Channel Infrastructure chief executive Rob Buchanan and Regional Development Minister Shane Jones atop a 30-million-litre jet fuel tank. RNZ / Peter de Graaf
New Zealand no longer refines crude oil, with the Marsden Point facility shutting down a few years ago.
“The fuel import companies are operating exactly within their statutory envelopes. They are observing what they promised to bring to New Zealand.
“If we are to increase and store more diesel fuel in New Zealand, we need to increase the storage. And I keep saying, the reason we can’t do that at scale is because they closed down the refinery, and I don’t care if you get annoyed with me saying that. I want New Zealanders to bear that in mind. This is the consequence of closing down the refinery.”
Jones has falsely claimed the Labour government closed the refinery down, repeating that claim again on Morning Report. Refining NZ (now Channel Infrastructure), a private company, made the call to end refining at the Marsden Point site and transition to being an import-only hub. The government considered stepping in, but decided against it, with advice to ministers being that risks to fuel security were “very low”, because any event that cut off the supply of refined oil would likely cut off crude as well.
Jones said the government was working with Channel to “enhance” how much product could be stored at Marsden.
“That will give us additional diesel storage. However, I don’t want any Kiwi this morning to doubt whether there’s diesel in the country on its way. There certainly is.”
Speaking to Morning Report after Jones, Labour leader Chris Hipkins said it was a “private decision made by the fuel industry” that would not have hindered New Zealand’s fuel security.
“Marsden Point was refining crude oil that was imported from overseas, so the same supply constraints would be hitting us now whether MarsdenPoint was operating or not.”
He suggested it was ironic that coalition MPs were criticising Labour for having spent “too much money” during the Covid response, yet were now saying “we should have kept a refinery that was going out of business because it was obsolete technology and because it wasn’t economic”.
Asked whether the crisis had shifted his thinking on electrification and moving away from fossil fuels, Jones said it was a “fair point” to stay open-minded.
“There is a source of hydrogen energy in New Zealand. It’s called white hydrogen. It’s called natural occurring hydrogen. I met last week with the Auckland University who are doing extraordinary work in Wairarapa, and they believe they’ve tapped into a vein of infinite power of a hydrogen character, of all places in the hills and the valleys of the Wairarapa coast.
“So I think it’s a fair point that you’re making that we need to be open-minded. And then I say to Kiwis, OK, how do you imagine we’re going to pay for it? To do that, certain things, if we are to underwrite this electrification journey, will have to go by the way.
“And that’s why we have an election. No doubt people will be contesting all of those ideas.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
