Source: Radio New Zealand
Waitomo fuel chief executive Simon Parham. Supplied / Waitomo
Fuel industry leaders are welcoming the government’s moves to increase fuel capacity, but say while it will help with long-term concerns price spikes are a bigger worry.
With the fuel crisis in its fifth week, the government is moving to shore up storage as an insurance policy in case of supply line failures by announcing plans to access more supply as well as getting more storage tanks into service.
“While fuel importers do continue to indicate confidence in near-future orders and while they are already exploring alternatives to Asia as a source of fuel supply, we believe that some residual risk remains,” Finance Minister Nicola Willis said.
She said Cabinet had agreed to explore additional options to guard against the risk of disrupted fuel supply, and was now “actively seeking proposals for New Zealand refined fuel imports on arrangements that would support additional purchase of stocks through to June”.
The government was assessing a series of unsolicited proposals from businesses to help increase supply, including to trade New Zealand’s access to fuel types the country was unable to use – like crude oil, which would need to be refined – for types it could.
On the fuel storage front, Associate Energy Minister Shane Jones confirmed officials were exploring two proposals, including to get some of the unused storage capacity at Marsden Point operating again after the former refinery was downsized to an import-only terminal.
Associate Energy Minister Shane Jones (L) and Finance Minister Nicola Willis give an update on the fuel situation on 27 March. RNZ / Samuel Rillstone
Waitomo fuel chief executive Simon Parham told RNZ more storage would help in the long-term, but would not bring prices down.
“Through the April, May and even into the June window, stock seems to be on the water, there’s been no cargoes cancelled and no ships turned around, so supply looks like it’s steady but it seems to me they want that little extra insurance.
“Looking at extra storage options in New Zealand is also the right thing to do but we’ve just all got to be realistic that that will come at a cost and someone’s got to pay for it.
“Extra storage here, it won’t help with the cost, it just gives us that little bit more resilience in the long term should these supply shocks happen again.”
Automobile Association fuel spokesperson Terry Collins said more capacity would take time and money to build, and ensuring consistent supply needed to be the priority, with the main risks closely linked to what happens in Iran.
“Channel infrastructure, which was a part of the old refinery, has got additional storage, they’ve offered it to the government, but there’s a lag between getting it ready and the immediacy of what’s happening internationally.
“What we could see, possibly, is in a very short period of time spikes and pressure on fuel [prices] coming in here that we do not have time to address by building or refurbishing storage.
“Really it’s about can we get enough to keep what we’ve got going, now.”
He said the threat of further escalation was making markets nervous.
Automobile Association fuel spokesperson Terry Collins said more capacity would take time and money to build. RNZ / Paris Ibell
Hoarding leading to shortages
The government again repeated its warning that “minor hoarding” was leading to shortages at service stations in some regions, including Ōpōtiki, Southland and Nelson.
AA’s Terry Collins said fear of losing out was part of the problem.
“Because of their fear, they think about ‘oh, I’m in an area this could happen’ and by their actions it makes it a self-perpetuating action.”
Waitomo’s Simon Parham said suppliers were doing their best.
“We’re always managing our forecasts, one month, two months, even six months out … that’s what we do day in, day out to make sure products get to service stations,” he said.
“We have seen that increase in demand, admittedly it’s starting to taper off a bit now because that demand has been pulled forward and we’re starting to see a lag – and also prices doing what price does when it gets too high, it causes demand destruction.
“There’s plenty of product there, but it’s not always in the places where you need it.”
He said the most useful regulations for the government to cut would be around heavy-vehicle permits.
“You have to apply on an individual truck and an individual route basis, and what that means is it’s admin-heavy, it takes two to three weeks to get this all approved, and so it really reduces your flexibility in the system.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
