Options for improving our diesel resilience

About the consultation

Diesel is New Zealand’s most strategically important fuel, and plays a key role in keeping our economy going. It is essential for food production and distribution, emergency electricity generation and the movement of essential goods and services. A severe shortage of diesel would impact industry and cause significant hardship to New Zealanders. There needs to be enough reserve diesel in the country to ride out any disruptions to our supply chains.

The minimum fuel stockholding obligation (MSO) will commence on 1 January 2025. Fuel importers will be required to have at least 21 days’ cover for diesel on average each month. The original intent was to complement that with Crown procurement of reserve diesel stock so that total diesel reserves in New Zealand, including both industry and government stocks, would provide 28 days’ cover. However, the Government has paused the work on Crown procurement so that it can explore other options.

This discussion document seeks your feedback on the following options for domestic diesel reserves:

• Option 1: status quo, the MSO for diesel remains at 21 days’ cover
• Option 2: increase the MSO for diesel from 21 to 28 days’ cover – roughly 70 million litres of additional diesel 
• Option 3: Crown procurement of diesel and its storage, either fully or partly funded by the Petroleum or Engine Fuels Monitoring Levy 
• Option 4: increase the MSO for diesel but provide government support (e.g., grants).