Objectives
Increasing diesel reserves is one way of mitigating fuel supply disruption risks. Other mitigation options, such as re-establishing domestic refining capacity, are being investigated as part of the fuel security study but are outside the scope of this consultation.
On this page
There are 2 main objectives for the reserve diesel workstream. They are to:
- Improve diesel resilience in New Zealand by increasing diesel reserves to an average of 28 days’ cover as soon as practicable.
- Provide a cost-effective solution that minimises costs to consumers.
Increasing New Zealand’s diesel reserves to an average of 28 days’ cover will benefit the public through increased fuel resilience. In the event of a severe and sustained fuel disruption, essential services will be able to operate for a month longer than the status quo (assuming rationing at 25%). These essential services would include food production and diastribution, emergency services and emergency electricity generation.
We welcome your views on whether 28 days’ cover is the right level. There is no objective measure for determining the ‘right’ level of fuel resilience, but in selecting 28 days’ cover we factored in:
- our onshore fuel stocks before the Refinery’s closure (roughly 20 days’ cover for diesel in the country plus 5 days’ cover for crude oil for the Refinery’s operation)
- Australia’s minimum stockholding level for diesel (20 days initially, increasing to 32 days on 1 July 2024 for importers)
- modelling results that suggested the impacts of a partial fuel import disruption (which is more plausible than a closed-border event cutting off New Zealand from the rest of the world) would be manageable, should there be 20 days’ cover of fuels.
Consultation questions
3. Have we identified the correct objectives?
4. Is 28 days’ cover the right level? Should we have more or less? Why?
Between now and the time it takes to get additional reserve diesel stocks into tanks, New Zealand's exposure to the impacts of such a disruption remains elevated. It is therefore prudent to favour options that can minimise this risk as quickly as possible.
Fuel resilience comes at a cost, which would be passed on to consumers at the pump. Options should strike a balance between improving diesel resilience in New Zealand, and therefore mitigating the impacts that would be felt by New Zealanders in a sustained fuel disruption, and minimising costs to the public.