The Government has a number of levers available to pull if the fuel crisis caused by the war in Iran continues to worsen, leading to shortages of fuel in New Zealand.
One of those available after a special ministerial advisory group was set up this week is Muldoon-era legislation to impose carless days.
Other options are contained in a 2024 document from Civil Defence – ranging from voluntary requests to the public to conserve fuel to mandatory closures of service stations.
Oil crisis: Govt responds as some petrol stations temporarily run dry - Watch on TVNZ+
Prices soar over $3 a litre at many locations and one brand’s a discount day emptied tanks at some sites. (Source: 1News)
Since the war began in late February, concern has mounted over the supply chain, which has become increasingly squeezed with key infrastructure at risk, and the shutdown of the Strait of Hormuz – a key route for global oil trade.
Some impacts of the crisis have already hit home. Demand and prices have increased at fuel stations, Air New Zealand has rethought its schedule and forecast, and the Commerce Commission said it would begin closely watching fuel companies for unfair price increases.
Finance Minister Nicola Willis confirmed during the week that the Government was considering how to respond if the fuel crisis drags on. This included a variety of fuel restriction measures – and options which aimed at reducing sky high prices.
Carless days
Restrictions on motorists were reality back in 1979 during a previous Middle East crisis. (Source: 1News)
Willis said one piece of legislation discussed was one created in the early 1981 under then Prime Minister Robert Muldoon to restrict fuel consumption.
Utilising the Petroleum Demand Restraint Act would allow the Government to impose carless days, fuel purchasing limits, and other rationing measures to forcibly reduce demand.
New Zealand had bans on driving cars on certain days – used under different legislation – from July 1979 to May 1980 in response to the Iranian Revolution and the oil crisis which followed.
The National Fuel Plan
The National Fuel Plan published by Civil Defence in 2024 suggests other options could also be on the table.
According to the document, this includes implementing voluntary demand constraints, which would involve the Government supporting the public to take fuel conservation measures, rather than restricting it entirely.
The document said this would be a "practicable option when managing a long-term supply disruption" where immediate stocks are "not at threat". It noted if this was not done, panic buying "will be a likely result otherwise".
The same document also lists mandatory conservation measures.
These include:
- setting opening hour restrictions at fuel stations, such as reduced hours or only opening on alternate days
- setting maximum purchases at point of sale
- restricting sales into containers
- price limits at unmanned retail outlets
Messaging around the topic would include the reason for the measures and what it requires, and continuing communications on ways to save fuel and reduce car use.
The Minister for Energy, currently Simon Watts, would be responsible for activating authorities under the Petroleum Demand Restraint Act to implement some measures.
Mark Mitchell, the current Minister for Emergency Management and Recovery, would have the power to declare a state of national or local emergency where the National Fuel Plan would be activated.
What would it take for this to happen?
The Ministry of Business, Innovation and Employment reported, as of Thursday, New Zealand had a total of 52 days fuel stock.
This was made up of 30.3 days in the country, and 21.7 days en route.
Willis said fuel reduction measures would be considered if the Government believed the future supply "beyond the 50 days" was "under threat", which they would communicate with the public.
While the options were not on the table for New Zealand's current situation, Willis acknowledged the growing concern and said she could not dismiss these options entirely for future use.
“I can understand people’s feeling of uncertainty, because if we look out at the world, we’ve gone through a really concerning few days," she said.
"And if we look ahead, I’m not in a position to rule out that there may be a day that comes where New Zealand has challenges importing fuel."
Fuel tax changes
While Willis said the Government’s immediate focus is on fuel security and looking at how the crisis is unfolding, she confirmed changes to fuel tax could be another option on the table if the situation continues to deteriorate.
This would have to be carefully considered, and account for potential parameters, cost and an exit strategy.
“The events in the Middle East are having a significant impact, but the Government needs to respond in a responsible way and also a way that we can sustain, because anything we do we need to consider how long we might need to keep doing that for," she said.
“If you overdo it, you’re asking kids to pay it back for many, many years to come.”
On the current fuel price situation, Willis said: "I’m concerned with any number that says an everyday family is having to fork out more for petrol. That concerns me."
Work from home
One other option being floated by the Public Sector Association is for workers to be encouraged to work from home to reduce fuel use.
Willis suggested this could be considered as one of various “demand management tools” but only as “an option down the line”.
It is “not something that is imminently necessary”, she added.
How the situation in the Middle East develops in the next few days and weeks will dictate which measures she and fellow ministers will need to reach for.
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