Government announces who gets prioritised in event of major fuel crisis
The Government has set out new fuel rules. Photo / Mark Mitchell
Since the United States and Israel launched strikes on Iran at the end of February, the Government has faced questions over what it would do in the event of a supply crunch, in which the country faced the very real possibility of running out of fuel.
Will there be carless days, as was briefly the case during the last Middle East oil shock at the end of the 1970s? How will we make sure farms continue to grow food and ship it to supermarkets?
What about ambulances, air ambulances and rescue helicopters?
New Zealand already had a National Fuel Plan, which was updated to a Fuel Response Plan after the war broke out. As you’re probably familiar with by now, the four-phase plan gradually steps up measures to conserve fuel. It starts softly, asking people and businesses to ease up on consumption, before getting more strict and prioritising who gets what level of access to fuel.
Phases 3 and 4 of the first plan, which involved restricting people and businesses’ access to fuel, were put out to consultation.
In the original plan, restrictions were rolled out at Phase 3. People and businesses’ access to fuel would be determined by where they fell in a system of five “bands”.
At the top of the system, “Band A”, there were life-supporting services. At “Band B”, there were economically critical services, and right down the bottom at “Band E” was the general public trying to get to work.
The Government has changed the plan as a result of the consultation.
Under the original plan, the “band” system of prioritising who got what began in Phase 3.
The Government has changed this. Instead, Phase 3 of the plan will involve releasing emergency reserves of fuel, including the strategic diesel reserve for which the Government has recently done a deal with Z Energy.
Prioritisation would only occur at Phase 4 of the plan, which would be triggered in the very unlikely scenario in which New Zealand faced a severe shortage of supply. The Government was keen to emphasise just how unlikely this scenario was – with ministers saying it was “highly unlikely” more than 10 times during the Prime Minister’s post-Cabinet press conference. Finance Minister Nicola Willis put the probability of going to Phase 4 in the single digits. In fact, Willis said there is a chance New Zealand never moves beyond Phase 1 of the plan.
Nonetheless, in the unlikely event New Zealand did move to Phase 4, the Government outlined today who would get what level of access to fuel.
Access will be determined by where people fall in four categories.
Controversially, while many businesses will be required to save fuel, none will have their access to fuel capped. The general public will be the only group for whom there will be limits to the amount of fuel they are allowed.
The four categories are:
Critical services
At the top of the chain are “critical services”, these services will get uncapped access to fuel just as they do in ordinary times. The Government has determined that these services are sufficiently critical to face no mandatory restrictions. The prioritisation of fuel users owes a lot to the Civil Defence Act, which sets out critical lifeline services.
These services are:
- Emergency management response
- Fuel and energy continuity
- Health, disability and care services
- Social services
- Utilities, infrastructure, and public health protection
- Financial systems continuity
- Other health and safety – enabling works
- National security, border integrity and international obligations
- Public and passenger transport
- Airport operations
- Ports, shipping and border trade
- Animal welfare
- Other core state functions
- Education continuity
- Corrections, custodial services, justice sector
- Broadcasting and media
The Government says that this means frontline emergency services will continue to function in a somewhat normal fashion, as will fuel tankers, hospitals, aged care services, family violence services, defence, customs and border security, airports and ports.
Food and Freight
The next category down the chain is “food and freight”. This is one of the areas where there has been change from the draft that went out to consultation. The original draft had some critical freight, such as freight for supermarket and grocery supply chains, higher up the priority chain than other freight. Submitters said this would be unworkable as goods for supermarkets often shared trucks with other non-critical goods.
Services at this stage of the plan also have uncapped access to fuel, but they must implement fuel-saving plans to reduce their consumption. The amount of fuel savings that will be targeted in these fuel savings plans will be set by the Government, which will set the target based on its guess about how severe the supply shortage is expected to be. A brief supply disruption will mean lower savings targets, while a longer disruption will mean higher ones.
A card system will be used to allow these users to purchase fuel, avoiding the transaction limits imposed on users lower down the chain.
The Government would monitor adherence to fuel-saving plans through spot checks.
These services are:
- Freight, logistics and distribution
- Farming and Food production
- Fast-Moving Consumer Goods (FMCG) production, processing, storage and distribution
- Supply chains that support food production
- Retail to consumer food distribution networks
- Export facilitation
Community and commercial users
The next group are community and commercial users. These users also have uncapped access to fuel in return for attempting to save fuel in line with their fuel-saving plans. The only difference between this group and the food and freight group is that the Government will demand a higher level of fuel saving from their fuel-saving plan.
These services are:
- Commercial passenger transport (non-critical)
- Long-term biosecurity activities
- Manufacturing and processing of non-food products
- Construction and trades
- Retail, hospitality and office-based activities
- Tourism and events
- Wildlife management activities
- Tertiary education
- Other commercial and community users
General public
The final group is the general public – private citizens filling up their cars (or boats and lawnmowers) to get to work or go on holiday. This group will face transaction limits imposed by petrol stations – essentially a cap on how much fuel someone could purchase at once.
The Government says it will operate a “high trust” model with motorists so while it would be technically possible to get around the transaction limit at a single petrol station by visiting several stations until your tank is full, the Government is hoping motorists will play by the rules.
It’s also likely that by the time this stage of the plan is rolled out, fuel will be so expensive that the main measure of reducing demand will be the price of fuel itself.
Enforcement
The Government says it will take a light-touch approach to enforcing these rules, relying on people doing the right thing and spot checks to ensure they actually are.
“It will be self-managed but compulsory,” Willis said.
She said the feedback was that a self-managed approach was preferable to a system of centralised allocation.
Willis said penalties for non-compliance are still being designed. She said she preferred a system of spot fines, rather than a more rigorous system which involved the courts.