The Government yesterday held a private webinar briefing for top business CEOs on the fuel crisis.
The CEOs were briefed by Ministry of Business Innovation and Employment (MBIE) officials, the head of the Department of Prime Minister and Cabinet, Ben King and the deputy CEO of the Ministry of Foreign Affairs and Trade, Taha McPherson.
MBIE itself yesterday, in its regular fuel outlook, said that while there are only two tankers scheduled to arrive over the next fortnight, “fuel companies have told us that there are a healthy number of ships on water or planned for later in April.”
However, a website run by a BNZ Financial Markets project manager is challenging MBIE’s figures.
Using a host of publicly available data, extending beyond the oil companies MBIE is talking to, NZOilWatch says that the most critical looming fuel shortage is with diesel.
MBIE says last Sunday, New Zealand had enough diesel to cover 18 days consumption, but that there was another 28 days supply on the water.
NZOilWatch says that the 18-day figure is now down to 15 days and that there are only confirmed supplies for seven days on the water.
The site uses ships’ Automatic Identification data (AID) to verify that the tankers are actually headed for New Zealand.
Its calculations suggest we could run out of diesel in three weeks.
Its biggest variation with MBIE is over how much fuel is actually on the water coming here.
Whereas MBIE says there is enough petrol on its way for 24.2 days of consumption, NZOilWatch claims there is only enough for 5.7 days, and similarly, whereas MBIE claims there is sufficient jet fuel for 23.4 days, NZOilWatch says there is only enough for 13.6 days.
It is, therefore, little wonder that MBIE didn’t want media at its briefing.
Meanwhile, the Prime Minister yesterday gave a clear hint that the Government is worried and is moving towards implementing Level Two of the National Fuel Plan, which allows for fuel rationing and, at worst, the declaration of a state of emergency.
He said an announcement would be made on Friday.
“We are making sure that we are doing it appropriately and with industry on board, and we will deliver that on Friday, as we foreshadowed last week,” he said, answering questions from Opposition Leader Chris Hipkins in Parliament yesterday.
What was also evident last night was that even if the oil companies can locate supplies, prices are going to continue to rise.
The Wall Street Journal reported last night that at the centre of the supply squeeze in the Middle East, traders were paying an eye-watering $US160 a barrel for the Emirati oil that can dodge the Strait of Hormuz, far above global benchmarks.
“Those sky-high prices, traders say, are a harbinger of where the rest of the market could be heading if the Persian Gulf isn’t reopened soon. That is because Asian customers are scouring the world for similar varieties of crude to keep churning out diesel and jet fuel,” the Journal said.
Regardless of whether there are sufficient supplies of fuel, the crisis will have an impact on the economy.
Westpac yesterday reduced its forecast for GDP growth over 2026 from 2.8 per cent to 1.9 per cent.
“In the very near term, we’ve pencilled in a fall in quarterly GDP of 0.4% in the June quarter,” the bank’s economics team said.
“That’s mainly due to an expected drop in household spending in response to increases in living costs and related falls in consumer confidence.
“Those headwinds will not be significantly offset by the Government’s support package targeting lower-income households.
“We also expect weakness in investment spending over the coming year, with some businesses likely to delay major capital spending in response to the increased uncertainty about the outlook for economic growth and the near-term downturn in demand that may be experienced in some industries.”
The bank is forecasting a one per cent drop in house prices because, in the wake of the Middle East conflict, recent weeks have seen a lift in global bond rates, along with related upward pressure on local mortgage rates.
“Combined with a downturn in economic growth and a weaker labour market, that’s likely to see buyers stepping back from the market,” Westpac said.
They are now forecasting unemployment to rise to 5.6 per cent this year. That contrasts with the Reserve Bank’s February pre-war forecasts, which had unemployment steadily falling through the year to 5.0 per cent by year’s end.
And whereas the bank forecast inflation to peak in the current quarter at 2.7 per cent, Westpac sees it going to 4.1 per cent by mid-year and staying above three per cent into next year.
The government’s political strategy seems to be “keep calm and carry on”.
“We’re reassuring you that we don’t have a supply problem,” Prime Minister Christopher Luxon said on Monday.
“But we are right to make sure our system and our government are thinking about what possible future scenarios could emerge that we are planning for.”
All the incoming data suggests that those “future scenarios” are soon going to get ugly; that the Government will come under pressure not only to ration fuel but also to mandate conservation measures.
It is abundantly clear that it is also trying to avoid whatever it does looking like a repeat of the Covid lockdowns and restrictions.
That is even down to the trivial level of holding briefings anywhere in the Beehive other than the Theatrette, which Prime Minister Jacinda Ardern used for her daily updates.
But, as much as it obviously frustrates him, Luxon has to deal with the crisis as it is.
“We wish this conflict would go away,” he said on Tuesday.
“We wish there were less volatility and uncertainty in the world.
“We want New Zealanders who’ve gone through COVID, through a country economy in recession with high inflation, who’ve dealt with tariffs last year and are now dealing with the fuel crisis this year. We want that all to go away.”
But it won’t. Ultimately the facts will have to come out.
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