NZ fuel market to become more resilient and competitive

Te Whanganui-a-Tara - The government is strengthening New Zealand’s fuel sector through a set of initiatives to increase supply resilience and sustainability, and to encourage more competition. It is imposing:

•            Minimum onshore fuel-holding obligations, with additional government-held diesel reserves

•            Sustainable biofuels obligation are to be postponed till 2024 to give sector more time to prepare, and reduce potential costs to consumers

•            Regulatory option for the Commerce Commission to set fair prices, if needed

The improvements will hopefully pave the way for a more stable, low-emissions fuel supply, greater choices for consumers, and a more competitive wholesale fuel market with the power for the Commerce Commission to regulate prices, if required.

Many households are struggling with the increased cost of living, so the government is pulling back on any potential extra costs on consumers as a result of the biofuels obligation.

Having a sufficient supply of onshore fuel stocks will help shield Aotearoa from major disruptions to international oil and fuel markets, natural disasters and infrastructure failures. And while the risk of a major disruption to the fuel supply is very low, the impacts would be significant and felt across the economy.

Fuel importers and wholesalers with bulk storage facilities will be required to hold minimum levels of onshore stocks of petrol, jet fuel, and diesel. Minimum fuel stockholding levels for them will equate to approximately 28, 24 and 21 days’ worth of petrol, jet fuel and diesel respectively. 

The government will also procure additional onshore storage of reserve diesel stocks of at least 70 million litres of diesel, providing approximately seven days’ cover.

The focus on diesel for additional stockholding reflects the importance of diesel for the operation of critical services, such as emergency services and deliveries of food and essential goods. Transport fuels currently underpin the day-to-day running of the economy.

Fossil fuels will continue to be key to transport for some time, New Zealand is setting in motion other actions to help reach emissions budgets.

Biofuels are renewable, low-emissions fuels derived from biological matter such as plants, animal wastes, forest residues and other organic material. Some biofuels are more sustainable than others.

The fuel resiliency policy package also includes: improved fuel resilience monitoring, dedicating additional resources to update and implement a national fuel plan, amending the statutory purpose of the petroleum or engine fuel monitoring levy fuel resilience initiatives, and streamlining the decision-making process for the release of reserve oil stocks.

In addition to the onshore reserves, the amount of stock in transit to New Zealand at any one time is estimated to be approximately 17 days’ cover for all refined fuels.