New Zealanders would face limits on how much fuel they could buy at the pump, while businesses would be subject to spot checks under the Government's revised worst-case plan for a severe national fuel shortage.
Prime Minister Christopher Luxon has cautioned phase four remained "highly, highly unlikely" but the revised plan was important as earlier ones were "too complex".
Luxon said the Government was "not interested in doing Covid 2.0" with overly complex rules and wanted simpler categories.
New Zealand was currently at phase one of the national fuel response plan.
Alongside Luxon, Finance Minister Nicola Willis and Associate Energy Minister Shane Jones today released a revised fuel response plan for petrol and diesel, moving the introduction of mandatory restrictions out of phase three, where it began previously.
1News' Mei Heron explains what New Zealand's "fuel-for-food" agreement will mean for the two countries, as the war in the Middle East threatens supply. (Source: 1News)
Possible fuel rationing measures would instead be pushed to phase four — the most extreme tier of the fuel crisis framework — when Treasury modelling suggested diesel could reach $5 a litre or more.
"Modelled scenarios indicate that it is highly unlikely we would ever get to phase three or four of the fuel response plan, but, as a prudent Government, we are ensuring that New Zealand is prepared for whatever the global environment brings," Willis said.
"It is better to have a plan you don’t use than to need one and be caught short."
Highly, highly unlikely for NZ to ever need rationing - PM
Luxon said: "The kind of scenario you're looking at when you get to phase four is, you know, you can imagine a scenario where you've lost 30% of your diesel import for the month ... and actually there's a disrupted supply for six months."
A move to phase four would occur only "if there was a genuine likelihood of a severe and prolonged disruption, such as the loss of a large share of fuel supply for many months".
"While this is highly unlikely, the Government would set a fuel reduction target and apply a simplified framework of priority users to ensure fuel goes where it’s needed most."
Willis said: "It's very hard to imagine a scenario in which phase four is needed."
New Zealand entered phase one of the plan on March 27, which entailed close monitoring of fuel supply.
The Finance Minister said supply remained sufficient, but the Middle East situation was unpredictable and had already disrupted the global fuel market.
Sales have plummeted and business confidence has slumped as the Iran blockades continue. (Source: 1News)
She said engagements with refiners in Singapore and Korea had provided reassurance, with refiners reporting crude oil already locked in through to July and August.
Willis said refiners had diversified their sources away from the Gulf and into markets including the United States, Mexico, Oman, Latin America and Canada.
"Suppliers have committed to proactively sharing information on any disruptions to future crude oil feedstock orders," Willis said.
"This effectively provides New Zealand an early warning system."
New phases unveiled
New Zealand was currently at phase one.
Under the revised plan, phase two would apply to a short-term supply disruption and focus on shoring up additional supply and encouraging people to reduce fuel use.
Public awareness campaigns would shift to focus on fuel conservation in the national interest. Officials would also no longer be advising people to continue purchasing fuel as normal.
There would be no mandatory restrictions on buying or using fuel under phase two.
Phase three would instead focus more heavily on supply levers, such as releasing fuel reserves, and demand reduction actions, such as voluntary plans to reduce their fuel use.
People would be advised to fill up their vehicles only as needed. Government measures could also include increasing capacity on public transport.
There would still be no mandatory restrictions under phrase three.
Phase four includes prioritisation framework
Phase four would sort fuel users into four groups — critical users, food and freight, commercial and community users, and the general public.
Critical users, including emergency services, health, schools, courts, public transport, banks, media, and lifeline utilities, would get priority and uncapped access.
Food and freight operators would also get uncapped access, but would need to submit fuel-saving plans and meet reduction targets set by the Government.
The Prime Minister is in Singapore to formalise a fuel‑for‑food arrangement aimed at safeguarding New Zealand in times of crisis. (Source: Breakfast)
The Government would conduct spot checks to verify compliance, focusing on the heaviest users and areas where savings targets were not being met. Penalties for non-compliance are available under the Petroleum Demand Restraint Act 1981.
Other commercial and community users, such as retailers, tradespeople and universities, would face the same requirements but with higher savings targets.
The general public would be able to purchase up to a specified amount of fuel weekly.
Those with legitimate needs for more — such as rural workers or people travelling long distances for a funeral — would be able to access additional fuel.
'We're not having a police officer on every corner'
Willis said everyday New Zealanders would still be able to buy fuel at the pump under phase four, but would face per-transaction purchase limits. She said those who needed to fill up several times a week could do so, but there would be a cap each time.
"If there was someone who was running around being a boy racer, racing up and down the country using excess fuel, and that became obvious to the community, you'd be able to clock their fuel use with their fuel card.
"But, equally, [someone might say] 'oh, I've noticed that person's filling up a lot,' and it actually became clear it was because they were a nurse having to travel long distances.
"We're not cracking down on that. We need to have common sense. We need to be practical. This is not about having a police officer on every corner."
Operators would make little or no return on harvests due to the cost of running heavy machinery. (Source: 1News)
The Government described the system as "a high-trust regime" as "experience shows us that most people will do the right thing and only a few will not comply".
It would work with fuel companies to monitor purchases and follow up with anyone exceeding their limit to understand why.
The Government said carless days would never be considered.
A separate plan for jet fuel had also been developed alongside the aviation industry.
Initial plan 'too complex'
Willis added: "In the unlikely event we ever need to move to phase four, it is critical that business and industry have a clear understanding of the objectives and measures, and can put them into action.
"That is why we have taken the time to consult, and the feedback we received has shaped the revised plan.
"We heard that the earlier proposed approach, particularly around the priority bands, was too complex and needed simplifying."
The Government consulted with more than 320 organisations, held 11 webinars attended by nearly 6000 people, and received more than 1200 submissions.
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