Rising fuel prices and concerns over a potential global oil shortage were the focus of a seminar hosted by Transporting New Zealand in Wellington on April 9, where industry experts outlined New Zealand’s fuel supply chain, sources of refined fuel, national stockholdings, and the monitoring of global commodity movements and local retail pricing.
Consultant Steve West of Envisory told attendees that recent increases in fuel prices were not being driven by supply shortages, with diesel shipments continuing to arrive in New Zealand approximately every two days.
“We have a fuel price crisis, not a fuel supply crisis,” West says.
He says global market dynamics, rather than crude oil prices alone, are behind the surge in diesel prices. While oil prices have risen about 50% to as high as US$120 a barrel following attacks on Iran, benchmark diesel prices have more than trebled to around US$300 a barrel.
West says petrol commodity prices have risen less sharply, to about US$150 a barrel, helping explain why diesel prices have overtaken petrol at the pump despite petrol carrying an additional 76 cents per litre in tax.
He says about 85% of New Zealand’s fuel supply is sourced from Southeast Asia, although much of the crude oil originates from the Middle East, leaving the region particularly exposed to geopolitical disruption.
West says the now-closed Marsden Point refinery, which previously supplied around half of New Zealand’s refined fuel, could have faced challenges under current conditions due to its reliance on Middle Eastern crude. The site now operates as a storage facility, holding about 300 million litres, or around 40% of the country’s fuel stocks.
The seminar also heard from Bryan Chapple of the Commerce Commission, who outlined the regulator’s role in monitoring fuel pricing, including at truck stops.
Chapple says that prior to the current market conditions, rural areas were typically more expensive than urban centres, but that trend has since reversed. He says pump prices have also lagged behind commodity price increases, suggesting fuel companies have been smoothing some of the volatility.
He reiterated that companies must not discuss contract rates or fuel adjustment factors with competitors, and that any fuel surcharges must reflect actual changes in fuel prices to comply with the Fair Trading Act.
West says the speed at which pump prices increase reflects the need for importers to pay for upcoming shipments at current market rates, noting the cost of a tanker of diesel has risen from about $25 million to $75 million.
The seminar heard that recent fuel price increases are being driven by international market forces rather than domestic supply constraints, with New Zealand and the wider Asia-Pacific region particularly affected.
