Status quo
On a day-to-day basis, New Zealand’s diesel supply is resilient. Diesel arrives on most fuel shipments into New Zealand. There is also more flexibility to relax standards for diesel quality compared to other fuels, so shipments into other countries can be more easily diverted to New Zealand in the case of a domestic shortage.
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In 2020, MBIE commissioned Hale and Twomey (now Envisory) to assess national fuel supply risks and options to mitigate the impact of disruption events. The report found that New Zealand would, on average, have 15 to 20 days’ cover of refined fuel in the country (including petrol, jet fuel and diesel) with a drawable stock range of 10 to 20 days’ cover. This was deemed reasonable for managing the impacts of a partial fuel import disruption, considering it would take around 25 days for a fuel shipment to arrive from Singapore’s refineries after an order is made (New Zealand gets the majority of our refined fuel products from Singapore).
Hale and Twomey: Fuel security and fuel stockholding costs and benefits 2020 [PDF 793KB]
The average level of diesel stock held at month end is estimated to be roughly 20 to 30 days’ cover, based on recent data that MBIE collects.* However, there are daily fluctuations in the volume of stock held throughout the month and there are periods where stock levels fall significantly below the average volume.**
While the risk of a sustained supply disruption is low, the consequences would be devastating for New Zealand at the current stockholding levels. Social unrest could result from difficulties in delivering goods and services, and the adverse economic impact could be in the order of billions of dollars for a disruption lasting more than several weeks. Such a disruption is therefore a low probability but very high consequence event, which justifies government intervention. Another example of a low probability but high consequence event was the COVID-19 pandemic. The impacts the pandemic had on international supply chains underscored New Zealand’s reliance on imports and the fragility of our supply chains.
* MBIE currently collects fuel stock data from fuel importers once a month, based on the stock level on the last day of each month. Stock levels are calculated as “days of stock” based on average consumption (including for international transport) over this period.
** The Fuel Industry (Fuel Resilience) Amendment Regulations 2024 will require fuel importers to disclose certain information about their fuel stockholding, which will give the government better oversight over our domestic fuel security. These regulations will commence on 1 January 2025.
Consultation question
1. Do you agree with this characterisation of the status quo? If not, please provide evidence to support your views.