2026 Fuel Prices & Security of Supply

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#3485718 30-Apr-2026 09:45

fastbike:

Just reading through the MBIE pages to try to figure out why we have had such a vapid response to the biggest energy crisis any of us are going to live through. I'm not sure whether it reflects a lack of expertise - do they actually have any oil industry analysis expertise in house, or are they relying on what the oil importers tell them ? Have they contracted any independent energy analysts ?

This bit here makes me very concerned

New Zealand is a member country of the International Energy Agency (IEA). Membership of the IEA acts as “insurance” against disruption to international energy supplies.

"the biggest energy crisis any of us are going to live through" - that is not just incorrect. It is hysterical, scaremongering nonsense.

The oil shocks of 1973 and 1979 were far, far worse. Even in the 2022 peak WTI hit $123.

As of today NZ has not suffered any disruption to fuel supply. As of today none is expected by the authorities but if it becomes expected there is a Levels system to manage it.

Oil price has been up about 30% at its peak in the current so-called crisis. High prices are suppressing demand and boosting adoption of alternative renewables.

An extra 90 million litres or about 600,000 bbl of diesel storage is being added as we speak.

Singapore has agreed in writing that we are the only country to which they may not restrict fuel exports in an actual crisis. Note that Singapore consumes about 110,000 bbl diesel per day and exports 1.3 million bbd per day. New Zealand consumes approximately 65,000bbl diesel per day.

As to "vapid response"... what would you expect the government to do?

The sky has not fallen and is not expected to. No need to stockpile and no need to go hide in a bunker.

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#3485728 30-Apr-2026 10:20

johno1234:

The sky has not fallen and is not expected to. No need to stockpile and no need to go hide in a bunker.

I don't know about the sky falling but there will be higher prices for sure, and possibly shortages of other things even if not fuel. It simply isn't physically possible to make up the difference in the short term. Some (not all) ships that were waiting to get into the Strait have diverted to the US and other countries. But the US can't physically load a lot more than they already were (because nobody keeps that much capacity built and idle) and even if they could the round trip to Asia is more than twice as far, which means that for the same number of tankers you can't only carry less than half as much, and not all the ships that were used are available because a bunch are still stuck on the wrong side of the Strait. And that's just oil - it doesn't touch on all the byproducts like sulfur, synthetic fertiliser or helium.

I think they did a good job on the deal with Singapore so it's probable that we won't experience a real physical crunch. But just because Singapore guarantees not to stop exporting to us as long as they are exporting to anyone else doesn't mean prices won't continue to climb. Even just this morning they shot up again as Trump now says he'll keep up the blockade for "months".

Things might adjust back down again over a couple of years as a combination of demand falling (acceleration of decarbonisation projects, who'd have thought reliance on oil might be a single point of failure?), cross-Saudi pipelines, increased output in other exporting nations, and probably more tankers to make up for the increased distances all kick in. But none of those will happen in the short term.

There is certainly a lot of economic pain ahead. Whether it crosses the threshold to the sky falling is still up for debate, I think.

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pdh

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#3485748 30-Apr-2026 11:06

gzt:
pdh: Living in the Albany area, owning Diesel vehicles this past 15 years, I've been very aware of the huge range in price-at-the-pump.

Since Costco opened, it's been mostly a no-brainer - it is rare that they are not cheaper and they can easily be 20% cheaper than some of the north-shore name-brand stations with a bit of isolation.

I'd guess there are a large number of people using fuel card account type schemes in your area and not paying retail. That must be substantial to justify a 10 minutes drive each way to Costco. There is a PakNSave fuel in your area.

Yes and PaknSav was my go-to before Costco opened. Being retired, a tank now lasts me some time and I'm out West frequently enough that Costco is never a 'special trip'. My wife only needs to go in to work (physically) one or two days a week - and coming back from the city via Westgate is not a big detour (and may even be faster).

My point was that Costco has no attached retail (their actual store is 300m away from the fuel) so they are not making a killing on candy bars to prop up their fuel sales. Their fuel dispensing gear is top-flight and both automated (pay at the pump) and manned (honk if you're having trouble). So, assuming they are not loss-leading their fuel just for S&G - any discrepancy in price is this so-called razor thin profit margin. I don't regard 10-20% as razor-thin.

fastbike

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#3485760 30-Apr-2026 12:31

johno1234:

"the biggest energy crisis any of us are going to live through" - that is not just incorrect. It is hysterical, scaremongering nonsense.

The oil shocks of 1973 and 1979 were far, far worse. Even in the 2022 peak WTI hit $123.

As of today NZ has not suffered any disruption to fuel supply. As of today none is expected by the authorities but if it becomes expected there is a Levels system to manage it.

Oil price has been up about 30% at its peak in the current so-called crisis. High prices are suppressing demand and boosting adoption of alternative renewables.

An extra 90 million litres or about 600,000 bbl of diesel storage is being added as we speak.

Singapore has agreed in writing that we are the only country to which they may not restrict fuel exports in an actual crisis. Note that Singapore consumes about 110,000 bbl diesel per day and exports 1.3 million bbd per day. New Zealand consumes approximately 65,000bbl diesel per day.

As to "vapid response"... what would you expect the government to do?

The sky has not fallen and is not expected to. No need to stockpile and no need to go hide in a bunker.

Well, many analysts beg to differ. Here's a summary from NYT

The 1973 embargoed oil accounted for about 7 percent of global oil consumption, and targeted only a handful of nations. This time, closer to 20 percent of the world’s supply is threatened (and 40% of globally traded oil), and the disruption is caused by a war that has no end in sight. The United States, Israel and Iran are all dug in, and daily threats to oil production, refining and storage mean that even when ships can sail again the supply will not come back quickly.

The conflict has the potential to cause a lasting inflationary cycle, as rising prices for everything from diesel to fertilizer are passed on.

In the 1970s no critical energy infrastructure was damaged, this time around there is serious damage to oil, LNG and other industrial infrastructure in the gulf - especially related to urea and sulphur.

And this time around the supply crisis is impacting particularly heavily on our Asian trade partners - in the 1970s we had little trade with Singapore and Korea - this time around we are much more entwined.

We have not seen the worst of it yet. Prices bouncing around are the least of our worries.

Who suggested anything about a bunker ? What a strange response to my questioning of the level of expertise available to MBIE ? The only ones I know building bunkers are the tech bros that have been gifted NZ citizenship.

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wellygary

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#3485777 30-Apr-2026 13:31

pdh:

My point was that Costco has no attached retail (their actual store is 300m away from the fuel) so they are not making a killing on candy bars to prop up their fuel sales. Their fuel dispensing gear is top-flight and both automated (pay at the pump) and manned (honk if you're having trouble). So, assuming they are not loss-leading their fuel just for S&G - any discrepancy in price is this so-called razor thin profit margin. I don't regard 10-20% as razor-thin.

That's true if anyone could buy fuel,

But Costco operate a membership model, not open access,

So, No, they don't have an attached retail store next door to tempt you and boost turnover, But to buy fuel they do require you to fork over $60 to become a member, and that action is quite likely to "tempt" you ( at some point in time) to likely venture into the retail store...

So they're using the "cheap" fuel as a hook to get you to join,

The membership requirement also means they have total visibility over what members are purchasing, so they will know the "conversion" rate of what they might call "fuel customers" into visitors to their retail warehouse... I suspect its fairly high...

deepred

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#3485820 30-Apr-2026 16:49

johno1234:

As to "vapid response"... what would you expect the government to do?

The sky has not fallen and is not expected to. No need to stockpile and no need to go hide in a bunker.

Short term: actively secure alternative oil suppliers like Brunei and South America, as Australia has been doing; more working from home where practical; boost rail freight & rooftop/balcony solar panels.

Medium-long term: resume the Clean Car Discount & bring back a gas-guzzler tax; add a Clean Truck/Tractor Discount to gradually replace diesel trucks & tractors; more used Japanese hybrids & EVs; pray & hope OpenStar succeeds in its quest for practical fusion energy.

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wellygary

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#3485826 30-Apr-2026 17:07

deepred:

rooftop/balcony solar panels.

In the current hydrological situation additional solar has 0 impact on our diesel demand...

mudguard

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#3485828 30-Apr-2026 17:14

wellygary:

deepred:

rooftop/balcony solar panels.

In the current hydrological situation additional solar has 0 impact on our diesel demand...

To be fair if things like frost fans can be electrified instead of run on diesel it helps ever so slightly.

PolicyGuy

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#3485831 30-Apr-2026 17:26

deepred:

johno1234:

As to "vapid response"... what would you expect the government to do?

The sky has not fallen and is not expected to. No need to stockpile and no need to go hide in a bunker.

Short term: actively secure alternative oil suppliers like Brunei and South America, as Australia has been doing; more working from home where practical; boost rail freight & rooftop/balcony solar panels.

Medium-long term: resume the Clean Car Discount & bring back a gas-guzzler tax; add a Clean Truck/Tractor Discount to gradually replace diesel trucks & tractors; more used Japanese hybrids & EVs; pray & hope OpenStar succeeds in its quest for practical fusion energy.

All this and in the short to medium term:

Incentivise (tax breaks, no interest loans, outright partial cost grants) home solar and home batteries. Also, make Kainga Ora install PV panels, batteries and heat pump hot water on every new or refurbished KO property.
Recommission and/or build additional fuel storage capacity so that we're not in immediate peril when there's another supply interruption: not all in one place (Marsden point), we need geographical resilience; and first priority diesel, second priority jet fuel, third priority all the rest. 90 million litres is nice, we need at least five, preferably ten, times more
Electrify rail between Auckland and Hamilton, then on to Tauranga. Work out how to electrify the rail from Palmerston North to Waikanae and to handle the fact that the Wellington electric rail is completely different (1.5kV DC) to the rest (25 kV AC)

Handle9

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#3485837 30-Apr-2026 17:48

PolicyGuy:

deepred:

Short term: actively secure alternative oil suppliers like Brunei and South America, as Australia has been doing; more working from home where practical; boost rail freight & rooftop/balcony solar panels.

Medium-long term: resume the Clean Car Discount & bring back a gas-guzzler tax; add a Clean Truck/Tractor Discount to gradually replace diesel trucks & tractors; more used Japanese hybrids & EVs; pray & hope OpenStar succeeds in its quest for practical fusion energy.

All this and in the short to medium term:

Incentivise (tax breaks, no interest loans, outright partial cost grants) home solar and home batteries. Also, make Kainga Ora install PV panels, batteries and heat pump hot water on every new or refurbished KO property.
Recommission and/or build additional fuel storage capacity so that we're not in immediate peril when there's another supply interruption: not all in one place (Marsden point), we need geographical resilience; and first priority diesel, second priority jet fuel, third priority all the rest. 90 million litres is nice, we need at least five, preferably ten, times more
Electrify rail between Auckland and Hamilton, then on to Tauranga. Work out how to electrify the rail from Palmerston North to Waikanae and to handle the fact that the Wellington electric rail is completely different (1.5kV DC) to the rest (25 kV AC)

This is exactly the kind of knee jerk response that isn’t needed for what is most likely a short term supply shock. There is no global shortage of oil, there’s a problem with accessing some of it at the moment.

This is most likely a six month supply problem with some products taking a bit longer to get back on stream. The changes in OPEC could end up making oil considerably cheaper if the UAE releases the supply it has historically held back under OPEC quotas

None of the proposed measures are bad things but are they more worthwhile than building new hospitals or schools? Long term investments should have proper business cases and be properly scoped. Running projects without doing this is exactly how New Zealand ended up with the ferry mess. Repeating that sort of project would be total folly.

Scott3

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#3485973 1-May-2026 02:37

Wednesdays Release:

Now is when my mental picture had the supply crunch starting to hit. Seeing a significant uptick above means my mental picture was wide of the mark.

Combined with the news of an extra 90 ML of diesel arriving to fill our soon to be repurposed tanks in early June, it seems like the prospect of shortages & rationing is unlikely in the next few months (short of the the Bab al Mandab Straight also being closed).

Seems like the market is sorting out allocation of the reduced quantity of oil in the market. Rich countries like NZ and Austrailia, can simply bid high enough to get the fuel we need.

IEA has released something like 20% of it's emergency reserves. So still have 80% remaining. At the same burn rate this is 10 or so months. I would expect the burn rate to decline, as other oil producers ramp up production to make the most of high prices. Hopefully the war is done in 10 months. If not I would expect a reduction in oil consumption as a result of high prices, and increased production will find a market equilibrium.

In this light, I would expect the dramas from this oil shock to me more about managing the economic impact of high prices, than actual rationing. And it seems the IEA releasees will shield us from too much of that for an extended period.

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cddt

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#3485975 1-May-2026 05:51

Interesting that all those breathless press releases a few weeks ago about the fall in VKT (they were saying -10% for heavy and -20% for light vehicles) have disappeared.

As I suggested earlier in this thread, that was either based on bad data, or a misinterpretation of data.

SaltyNZ

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#3486012 1-May-2026 08:00

wellygary:

deepred:

rooftop/balcony solar panels.

In the current hydrological situation additional solar has 0 impact on our diesel demand...

It will probably have more impact on gas than diesel but there are some diesel peaker units. Additional solar might allow use to phase those out completely leaving only the gas ones, which emit fewer nasties on top of the CO2 itself.

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SaltyNZ

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#3486017 1-May-2026 08:11

Handle9:

None of the proposed measures are bad things but are they more worthwhile than building new hospitals or schools? Long term investments should have proper business cases and be properly scoped. Running projects without doing this is exactly how New Zealand ended up with the ferry mess. Repeating that sort of project would be total folly.

We aren't doing those things either right now - ask Dunedin. Perhaps if we spent less on new 6-lane motorways we could afford to do some of the other things, including hospitals and schools. You're absolutely right that they need to be planned but then again it's difficult to see how you even could have a knee-jerk "electrify the entire north island trunk line". It's not like you can get one at an impulse stop at McDonalds.

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Batman

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#3486020 1-May-2026 08:19

anyone remember the month when oil went negative? they literally paid whoever had capacity to take oil.

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