Source: Radio New Zealand
Labour leader Chris Hipkins. RNZ / Marika Khabazi
Labour’s Chris Hipkins has thrown his support behind the government’s moves to explore ‘tickets’ and temporary offshore fuel storage as the Iran conflict deepens.
Associate Energy Minister Shane Jones and Finance Minister Nicola Willis on Monday said there had been an “unsolicited proposal” from a commercial operator to “do a swap” which would give New Zealand access to more refined fuel.
But there was concern that fuel – though voluminous – would not be suitable for New Zealand’s needs, and could take a long time to get here, possibly 45 days.
“We consume 24 million litres a day – about 50 percent is diesel, about 30 percent is petrol, and the remainder is aviation fuel,” Jones told Morning Report on Tuesday.
“And we believe – subject to the right deal – the tickets, as you put it, the virtual fuel, the put options we have, would equate to about 960 million litres of fuel. So if you do the mathematics, it’s quite a long period of time.”
Shane Jones. RNZ / Samuel Rillstone
Jones would not name the operator that made the suggestion.
“The challenge is we hold the options in America, Japan, and I think the UK, and that feedstock has to be compatible with how the refineries in Southeast Asia work because that’s the closest site in terms of bringing fuel here.
“So it would be a transfer, it would be a trade, it would be refined, and obviously the successful party or perhaps one of the existing fuel companies would continue to bring the fuel into New Zealand.”
Jones said the government had also received an unsolicited proposal to set up a “floating terminal off Marsden Point”.
“A large vessel, we’re told, is capable of 120 million litres, and then they call the other vessels slightly smaller milk-run vessels, and they’re up for 40, 50, 60 million, and those vessels are capable of going into some of our smaller ports, and they could pull up there as well.”
The Labour leader said prioritising supply over demand was the right thing to do “at the moment”.
“Doing everything that they can to avoid there being a supply shock is the right focus for them. So that should include looking at tickets and whether we should be exchanging tickets that we currently hold for crude oil, for refined oil, for example – that’s the right thing for them to focus on.”
That included a potential temporary storage facility.
“Anything they can do to smooth supply – that includes storing more fuel here. It means securing more fuel from further afield. Bearing in mind that cashing in those tickets will often involve buying fuel that comes from further afield than we normally buy our fuel from, so it’ll take longer to get to New Zealand.
“So those are all difficult balances for the government to make in terms of when the right time is to pull those particular levers. But they’ll have much better information than we publicly can see. And so, you know, we have to, I guess, place our trust in them to make the right calls.”
Marsden Point. RNZ / Peter de Graaf
But they should also be planning “for the worst” too, Hipkins added.
“Aim for the best and certainly do everything we can to achieve the best outcome, which is not having a supply shock, but plan for the worst in the event that it happens anyway.”
Rationing difficulties
Hipkins questioned how easily a rationing regime could be put in place, as the higher levels of the government’s national fuel plan prescribe.
“If we get to a point where we are having to actively ration the fuel that we have available, we need to know now what that’s going to look like. So who’s going to have access? Who’s not going to have access? And the sooner people know that, the sooner they can make their own contingency plans.”
He said the Covid-19 experience showed the importance of detail when it came to defining who was in what group, for example essential workers.
“This is a different scenario, very different to Covid, but how will people access the fuel? So do they just show up to any petrol station? Is it the forecourt attendant who’s going to determine whether they’re eligible or not? How is that actually going to work in practice?”
Chris Hipkins in 2022 during his time as minister of health with Sir Ashley Bloomfield. Pool / Stuff / Robert Kitchin
Aside from supply, Hipkins said both the government and private sector could reduce demand by encouraging working from home where possible.
“I acknowledge there’s a downside to that, particularly for hospitality businesses and the CBDs, some upside for hospitality businesses out in the suburbs. But there will be an impact on that. But being flexible now and allowing people to make pragmatic choices now will make a difference.”
He accused the government of raising public transport prices. A subsidy allowing half-price public transport subsidy was put in place by Labour in response to price spikes following the Russian invasion of Ukraine and falling use following Covid-19, to expire.
The subsidy for people 25 and over was allowed to expire in 2023, while Labour was still in power, and for everyone else in 2024, following the coalition taking over.
“Anything we can do to encourage people onto public transport is welcome,” Hipkins said.
“The government cut the reductions in public transport that we had put in place. So we made it much cheaper to use public transport and they increased the fares again.
“I’d like to see a focus on making public transport more widely available and cheaper for people, because, regardless of just this crisis, generally speaking, public transport is a good cost of living option.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
