Written By:
- Date published:
1:05 am, March 13th, 2026 - 47 comments
Categories: energy, Iran, polycrisis -
Tags: force majeure, Nathan Surendran, strait of hormuz, wise response, Wise Response Society
I sat down last night to catch up on what is happening with global oil supply (something that would normally make my eyes glaze over). It reminded me of those early weeks of the pandemic when we first started hearing truly alarming stories out of China and then Italy, but most people were just carrying on as normal.
Wise Response Society (a broad coalition assessing and responding to risks arising from climate change and economic insecurity) put out a press release on the 9th calling on the government to implement the National Fuel Security Plan (MBIE PDF),
This puts New Zealand in a critical situation that needs planning, public awareness, and action readiness. New Zealand is at the end of a very long supply chain and is more vulnerable than most to supply shocks of this kind. All of our exporting and importing relies on timely supply of fuel, and this is about to be seriously disrupted. All of our productive sector also relies on timely fuel supply, so this too will be heavily disrupted. The government needs to be getting its rationing priorities in place now so that people and businesses can plan for themselves.”
Chairperson of Wise Response and engineering consultant, Nathan Surendran, was interviewed on Checkpoint on Wednesday. This is partiuclarly pertinent,
Every emergency plan principle that I’m aware of says you communicate early, honestly and with a plan. The panic isn’t caused by the signal, the panic is caused by the shortage.
From what I can tell the gist is this,
New Zealand reserves
New Zealand holds a certain amount of reserves for petrol, diesel and aviation fuel, those reserves currently sit at between 2 – 4 weeks. We also have reserves in tankers within our exclusive economic zone, which almost certainly guarantees delivery.
Force Majeure
All our fuel comes from other countries, and those countries get their crude oil from other countries whose supply is blocked in the Strait of Hormuz due to the US/Israeli attacks on Iran, Iran’s strategic response, and insurance companies prioritising their finances over global oil supply. In addition, Iran has bombed oil production infrastructure in neighbouring countries. Consequently companies that deliver to New Zealand can break those contracts to deliver.
Supply shortages
At the moment most people are alarmed by the rise in fuel prices at the pump. Not many people are thinking yet about what it would mean if we had a serious constraint on supply. Everything we do is dependent on oil.
When will the war end?
The idea that the war will end on schedule is doing some very heavy lifting.
The key point here is the precautionary principle. Is it better to start conserving our supplies now (or at least planning to) and it turns out we didn’t need to, or should be carry on until the crisis hits us hard because we didn’t take action early?
RNZ reporting on the government response,
Associate Energy Minister and Regional Development Minister Shane Jones told Checkpoint the government was not considering rationing, despite the Australian government looking at contingency plans that included fuel rationing.
He said the government had been assured the physical arrival of the fuel was not under threat in coming months.
“But get to May we’re told by the industry unless things change there’ll be big challenges.”
…
Ministry of Business, Innovation and Employment (MBIE) data showed the country had 27 days of petrol in the country, and 22 days worth shipped but yet to arrive, 24 days of diesel, with 29 days on the water, and 28 days worth of jet fuel, with 22 days shipped.
Stuff ran five fuel rationing scenarios yesterday, from Nathan Surendran along with a water analogy,
Maintain the status quo
Let the market set the price, which lands unevenly across the population. Compare to a drought where water prices spike, “The family with a swimming pool keeps it full, while the family on a benefit can’t afford to do laundry”
Voluntary demand restraint
Early messaging asking people to limit their use. “He said an example would be councils telling people to use less water during droughts.” Most people will ignore this.
Mandatory demand restraint
Carless days scenario.
Surendran – referring again to the water analogy – said it was like “the council saying no watering your garden on Tuesdays and Thursdays. Simple and enforceable, but crude”.
“The family with four cars just picks a different car each day.
“The single car household genuinely loses mobility, and a farmer who needs a vehicle 7 days a week is stuck.”
Wartime-era coupon system
Ration books where households are given a certain amount then have to wait for the next allocation.
Trade-able Energy Quotas
An allocation system
Every adult receives an equal, free weekly allocation of TEQs units to an electronic account, like a bus card, Surendran said. This would use 40% of the budget.
The remaining 60% would be auctioned off weekly between businesses, government agencies, hospitals, farms, etc.
When you buy fuel, the units are deducted from accounts automatically.
Full explanation of the five scenarios and TEQs from Wise Response: Fair Shares: Why Tradable Energy Quotas Are New Zealand’s Best Option for the Crisis Ahead
ThanksWeka.
Good post.
I have been mulling about the complete disdain being shown by the Government and I think that privately they must be as scared as hell this will completely derail their re-election chances.
It also highlights how stupid their attacks on Labour's fuel efficiency and climate change policies are.
You can bet that if Jacinda was still in charge there would be a well communicated plan and we would already be adjusting.
I was wondering how scared they might be too. Election chances, and having to be competent under great stress if this turns into a major crisis. A grim irony given all the shit thrown Ardern, Labour and ministry people's way during the pandemic.
I'm torn between the need to critique them, and the need to have public trust in government if this does go badly.
I keep reminding myself that MBIE etc will have good and competent people in it. If National can sort their shit out to some extent we might be ok. But I fear cognitive dissonance and the stress won't bring out the best in them. Their general positioning on everything to do with energy and resiliency is the opposite of what we need, that's hard to turn around and still win an election.
I hope I am wrong. Or that we get a change of government before the crisis deepens.
In the May 28 Budget it would not be unreasonable for Willis to defer the entire $44-54 Billion Roads of National Significance for 2-3 years.
There's better things to do with that kind of money in the circumstances.
Very important post.
As well as the direct impact of the disruption of global fuel distribution, I have been seeing comments about the impact on food production, with access to fertiliser being a significant issue. I don't think it'll be as significant for NZ, though.
Euro News: "Why blocking Hormuz could threaten the world's food supply"
These don't sound very environmentally friendly to me.
NZ's use of nitrogen fertiliser dropped by 20% in 2020 & 23
In 2022 most of NZ's nitrogen fertiliser came from Norway, Denmark & Morrocco and none of it came from Gulf countries.
Euronews concludes:
the good news is we don't need artificial fert to grow food. The driver for industrial ag that is reliant on artificial fert is to make money.
We waste a huge amount of food globally, so there's plenty of leeway to transition to regenerative farming. The challenge is economics, or perhaps being wedded to neoliberal economics.
The other challenge is the mindset of farmers and the industry they sit within. I do think there are farmers who want to change, but Fed Farmers etc are adept at putting barriers in the way.
Weka: the good news is we don't need artificial fert to grow food.
I suspected that might be the case. And I agree the plan should be to move away from it ASAP.
Part of the plan right now should be to ensure affordable, nutritional food for all in NZ/Ao.
My understanding is that it doesn't (much) matter where we are currently getting stocks of artificial fertilizers. If there is a global shortage (because of production from the ME tanking) – then demand shifts to other sources, driving up the price and reducing availability.
I guess the next question is, are there other sources, which are not developed (not previously commercially viable, or not needed, because the ME source was sufficient).
better to transition now to regenag. Homegrown is more resilient. This won't be the last oil shock, conventional ag depletes soil over time, and those big ag systems are more vulnerable to extreme weather events
I would pick that there will be a natural reassessment of cost/benefit from agricultural producers over fertilizers.
If the price jumps sharply, then the end-product has to also increase in price (more expensive butter). If it gets to the point, where it is not cost-effective to farm, then farmers switch out of agriculture (we've seen this with the switch to forestry – which has it's own issues).
However, it's not at all likely that NZ will be in control of the development of other fertilizer sources. If there are alternatives which are now cost-effective – then these are going to be developed; and it would be difficult to prevent agricultural users in NZ from accessing them (unless you're looking at bans or tariffs – which have other issues).
Regenag may be effective at small scales – but it seems unlikely to be successful in producing significant surplus – which is what is needed for a country dependent on trade. If we have nothing to trade, we have nothing to pay for things like importing solar panels, computer chips, or medicines.
what makes you say that?
Sources like this:
https://farmcarbontoolkit.org.uk/2024/05/02/financial-and-climate-impact-of-regenerative-farming-practice-adoption/
Acknowledging benefits – but also acknowledging drops in yield – especially in any bridging phase.
my understanding is that yield drops, costs also drop (because we don't have to import artificial fert from the middle east), biodiversity increases (which benefits nature, society and the farm including production), waterways are maintained at ecologically sane conditions, and so one. So it depends on what one is measuring as yield. In sustainable design increased soil health is a yield.
If we look at in the NZ context and export dollars, less yield of a higher paying product is acceptable and in fact desirable.
If we think about producing food for the world, we waste a large amount of food in the global supply chain (something like 30%).
If we instead relocalise food production globally, we again get multiple intersecting benefits: lowered GHG emissions, increased soil and water health, fresher produce, better biodiversity, more shade mitigation, better weather even mitigation. Better social cohesion, less war, as people have enough to eat and the flow on effects from that.
NZ can still export: high end products, organic/regen products, systems and knowledge, expertise. We should be leading on this.
Hard to have this conversation without mentioning the banks.
It's just the 4 big
parasitesAussie banks plus even bigger Dutch Rabobank. Loss of rural connection with several branches closing, 6 monthly climate emissions reprting compliance etc.Advice to farmers includes:
"When it comes to lending, the banks give each agribusiness client what’s called a Risk Rating. This is like a performance score, and the good news is that a Risk Rating can be changed and it’s not all about the financials."
and;
"Obtain independent advice when preparing budgets and sense test them against benchmarks. Gone are the days when your bank manager will prepare your budget and ask you to sign it off."
The banks parent companies are requring more blood from their customers, all making a pivot to regen ag harder.
https://www.bfa.co.nz/library/banking-changes-to-impact-on-farm-finances
While that is desirable (exporting premium quality products only) – it only holds true if the increase in price doesn't also result in decreased demand – and other suppliers (e.g. Ireland, Netherlands, Denmark – for butter) picking up the difference.
If the lower supply with increased price – results in lower demand (priced out of the market) – then the sums don't add up.
I also think that it's likely to have domestic repercussions – $15-20 block butter would be a significant PR hit.
That's a very big 'if'. There seems to be nothing that countries that rely on agricultural products (or agricultural product related supplies) – can export *instead*. Which means that they are effectively shut out of global trade (3rd world status).
While countries like India have a fighting chance of on-shoring manufacturing and supply) – countries like NZ have literally no chance of doing this. A prime precursor of falling social cohesion and war.
NZ is literally dependent on trade of our agricultural produce in return for manufactured goods (computers, medicines, solar panels, you name it). Almost none of which we have the ability, or really, the desire, to manufacture here.
Yes, I understand that the time may be fast approaching where we have no choice. But that lack of choice is going to come with some very nasty consequences (e.g. the elimination of the medicinal drugs budget is going to result in a huge number of preventable deaths; as is lack of medical equipment (try building or even repairing a MRI machine, or even a low level dialysis one).
Those points are not visible in regular communications, reports Belladonna and yet they are vital to understand.
I thought ex-Taranaki Mayor Neil Holdom made a notable comment (not sure of date late 2025?):
The one thing people like less than rate increases is cuts to their local services. We want European-standard services on an American-taxation model.”
He notes other OECD countries transfer significantly higher proportions of central taxes to local governments than New Zealand does. (There are more interesting facts and figures quoted, also from Craig Renney.)
Economies of scale are a factor here, too. NZ is a small (population) country over a large geographic area (well, large for the population size). Which makes a lot of the local or national infrastructure (both built and social) proportionally more expensive.
To take transport, for example. London can afford an extensive subway system (though, I wouldn't like to have to build it at today's prices) – which Auckland (similar geographic size, but 1/9 of the population) – simply cannot afford.
not quite following you. If you accept that the current global economic system has an end date in the foreseeable future, are you suggesting that instead of transition we should carry on with our excessively consuming lives until it all falls over?
I appreciate the conversation, because facing this head on is exactly what NZ should be doing right now, not clinging to the fossil economy life boat when we know it's going to sink.
I suggest being honest about the consequences of the decisions. Pretending that we can have it all – as well as transition is just not realistic.
Whatever happens, our current quality of life is highly likely to move 'downwards'. And that move won't be universal – wealthy people have the ability to cushion the shift to a much greater degree than poor ones. The social divide between rich and poor is likely to grow.
Pragmatically, in terms of regenag – I'd look at persuading local ag growers (i.e. ones not involved in the international trade) to transition. And finding ways to support them through the first 7 years (estimated) until the dividends start kicking in.
Farmers aren't stupid – they talk to each other, and are keenly interested in the bottom line (they are business people after all). If they see practical benefits in local trade, then they'll run the cost analysis for themselves.
Part of the issue is that the GP, have been positioned for so long as 'anti-farmer' that it's very difficult to get the two sides to speak to each other, let alone speak the same language.
There are lots of other interventions that we can do to build local capacity. But one of the biggest ones is heavily investing in hands-on apprenticeships in a whole raft of manufacturing adjacent areas. For example, I heard a radio programme a few weeks ago, which was raising the issue that all of the people in NZ who can make scientific/medical glassware are over 60 – several of them over 80.
When we have a whole batch of kids leaving school who have ambitions to be game designers, or influencers, etc – we have a big mismatch between the job market (or what NZ needs the job market to be) and the potential employees.
I'd be doing an awful lot more about giving institutions tax breaks for training locals, and using local products (the MoE was absolutely wrong about choosing nylon carpets rather than NZ wool carpet in schools). And the hospitals need to be automatically offering places to all nursing graduates (they can bond them for x years, if it makes them feel better).
I'm not in favour of a managed economy – too often the government gets it wrong – but I am in favour of adding financial incentives to areas that the government wants to grow. I think there is far too much money (still) going into academic tertiary education (and I say this as a BA, myself) – and not nearly enough going into practical vocational education (I have one of those as well). And far too much 'degree inflation' (too many qualifications that 40 years ago were 'learn on the job' or take block courses – are now full 3 year degrees, (before you actually learn that you don't like the job)
I don't think it's all or nothing. If we produce food locally, the amount a household spends on food drops. That frees up cash. If we then buy a pair of shoes that lasts five years instead of one, but costs more, is it really a net loss?
We are so inured to the cheap goods consumer economy it's like we can't see any other way of doing things.
I already listed things NZ could export instead.
The current economy suggests that this is a fallacy. The price of butter in NZ supermarkets reflects international demand, not cost of production, or local pricing.
Unless you are suggesting either strong protectionism (government mandate for selling local produce at lower cost), or total ban on overseas exports of food (meaning that the local market is all that there is) – international pricing will remain.
I don't have an issue with making (and buying) local when this is possible. But I also recall my mother stressing over buying kids shoes in the 70s – on a very limited budget – the cheapest pair were way more than the food budget for the week. Most of the population has absolutely no idea what the costs of living entirely off NZ production would be – to the household budget. We've had 40+ years of open markets to help us forget.
There is a *tiny* international market for this. Certainly the total worth would be in the millions, rather than the billions that the Fonterra trade alone brings in.
Nothing like enough to support a first world lifestyle – with the healthcare, welfare, etc. that go with that.
Not true
https://www.rnz.co.nz/news/business/544853/nz-s-game-development-industry-on-track-to-reach-1b-annual-export-revenue
@Incognito. Game development wasn't one of the areas that Weka listed. But I don't have any confidence that it will continue to grow in a time of dropping living standards.
I think it was, or should have been, but I’m happy to give you a sticker for effort if that makes you happy. Would ‘professional, scientific and technical services’ be more like it, with annual exports of over $4 billion (2024)?
It’s not that you lack the confidence, it’s that you lack the imagination, ambition, and courage. But that’s ok because others are not held back in the same way and will take the lead and set an example. If we wait till you have enough confidence, we can wait till the cows come home.
BTW, have you heard of Rocket Lab?
Of course, there are other areas/sectors that could expand to support our living standards and even lift them. AI comes to mind.
When we saw the Covid pandemic looming we had clear messaging from the Labour government and understood what the plan might look like, if not the full understanding on the impacts as it dragged on.
With the oil crisis looming, we hear jack from the COC or Mr 28%. Little clue, little thinking, little communication. We are getting the facts from the media, not the COC.
In terms of options for a petrol/diesel shortage. Carless days did not work that well when Muldoon tried them. A better option might be cutting the speed limit. This will, of course, require clear and careful communication . is there anyone in the COC capable of that?
A speed limit reduction to 80kmh was part of the Muldoon package, and I seem to remember it lasting until the mid 80's.
However Sir Simeon says the faster you go the more productive you are and it increases efficiencies.
Simeon, right. The guy, who after the covid royal commission report was released, could have told NZ what he was going to do to strengthen NZs response to another pandemic. But who instead just wanked on about labour, labour, labour.
Our current lot are dinosaurs. Send them that way:
https://www.rnz.co.nz/news/political/589466/nz-has-lined-up-with-maga-us-states-on-oil-former-marsden-point-boss-says
"If I was running New Zealand we should use this as the impetus to move us to energy self-sufficiency."
Keat said that had two components; 100 percent renewable electricity generation and slowly electrifying the transport fleet.
"Most other countries in the world outside MAGA US states and New Zealand are doing that now, at pace. For some reason, New Zealand 's going down the 1980s' path."
For example, he said South Australia was on track to hit its target of 100 percent renewable electricity generation by 2027.
"As a result their electricity prices have reduced by about 30 percent. Of course we're looking to go the other way with LNG."
There’s no corruption in New Zealand right?
Our electricity generation is about 85% renewables and our prices have gone up and up and up. if we get to 100% renewables I doubt prices will come down at all.
Prices are not just for generation.
New Zealand electricity spot prices follow the highest marginal cost of generation at the time. Of course, firing up coal and gas generation is giving generators the best monetary return.
And it’s an indictment on Labour that the chap in my quote above has got a clear message to market.
Are the attacks on Chippy succeeding enough to stop him communicating this stuff? Is it not being reported? Or do we need to hear from a broader opposition front bench anyway? Willis, Bishop, Mitchell, Goldsmith and Brown are regularly in the news. Who’s marking them? And that’s before we get to Jones, Peters, Epsom nepoboy, and van der velden.
I can name more Green Party MPs from Fitzsimmons era than potential Labour ministers.
While this isn't strictly what the post is about it does contain some solutions to the cost side of any meaningful reform. I didn't listen to the whole segment, where I came in the guest has done a lot of work in sustainable finance.
Big initiatives can be paid for, long term, with things like bonds.
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2019026433/thirty-kiwis-share-their-take-on-climate-solutions
76% of NZ's oil products are used in transportation.
If only they had invented vehicles that didn't run on oil products. (Sarc)
Any rationing system that isn't crude and inequitable will require a significant planning and implementation horizon. This government is unlikely to act early enough and so would panic into a rationing scheme that is crude and inequitable – and one where the inequities will invariably favour their own social class. Plus, their core ideology is to shrink the capacity of the state to do anything much other than enforce property rights. This item of faith is based on the bogus principle of the public sector 'crowding out' more efficient private enterprise. If they saw the Covid response as a violation of individual and market freedom, then a rationing scheme is surely much the same.
Therefore, we need some options that can be implemented quickly:
Lower GST to 12.5% across the board. Fuel prices will therefore rise, but the rise is ameliorated for the public by lowering the cost of living in other areas. The price signal from rising fuel costs is not lost, so that incentives remain for electrifying vehicle fleets, and for simply using petrol and diesel vehicles less until the crisis is over. To pay for this the government will have to carry more debt in the short term and postpone investments of marginal public value (see Ad above on roads of national significance.) It also provides an historic opportunity to not raise GST back to 15% but think about reconfiguring the tax system into a less regressive form – and keep doing so to get GST down to a lower figure still. (I think we need it in some form so that tourists pay for the infrastructure that their holidays rely on) The landlord tax breaks could be reversed immediately. Fuel taxes could be reduced temporarily if the price gets too horrendous, but this must be temporary to not hide price signals and risks on fossil fuels. In addition, reduce the open road speed limit to 90km/h as others have suggested – with a plan to keep it that way once the safety benefits become obvious.
In the medium term. Re-introduce the clean-car discount, but make it contestable among manufacturers and confer exclusivity for 2-3 years on the manufacturer who offers the best deal of providing good quality, reliable, everyday (not luxury) vehicles (both new and used) at a price affordable by most people. In other words, confidently force the market to behave in a socially useful way and make it profitable for firms that are prepared to do that. Work on a rationing plan and have it up your sleeve if the crisis is prolonged. Similarly work on a medium-long term energy strategy that reduces dependency on fossil fuels. Also look at all other supply chain chokepoints that are vulnerable, e.g. if we are relying on EVs, where does the lithium for batteries come from and who has the power or inclination to disrupt it? No doubt there are plenty of other things.
Lowering the fuel excise tax would be more direct and be more targeted.
If the income tax system was fair for a start and if all income was subject to income tax as it should be, we wouldn't need GST at all.
Unfortunately, this government's already shown itself to have a very high tolerance for the "crude and inequitable," so my money's on them going with that.
Best option is to priint out evs and solar power with a large industrial power storage either onslow or large battery is the way of the future
Australia will be worse off than us now.
But there will be more demand for refined oil from our sources such as South Korea (c50%), Singapore and Japan.
https://www.thepost.co.nz/business/360967078/iran-war-china-stops-exporting-petrol-diesel-and-jet-fuel-australia-bears-brunt
The Albanese government this week agreed to subsidise its remaining two oil refineries. They also offered this kind of subsidy back in 2020.
We used to have one.
As we are approaching a crisis, the PM has been sidelined by lower ministers. He should be out there reassuring us and setting out options. Maybe his handlers are concerned that he will speak with his usual lack of clarity and make things worse?
But they've shipped him off on a South Pacific tour. Winston will be angry
I spent the last few days thinking "Perhaps they know something we don't and this will be a brief alarm that doesn't turn into anything," but it's getting pretty hard to picture what they might know that would mean no communication about potential disruptions is necessary. Once again, the take-home message seems to be "It isn't possible to overestimate this government's incompetence."
Winston Peters told them, no need to worry.
https://www.stuff.co.nz/politics/360949486/peters-says-iran-war-will-end-much-more-quickly-people-are-thinking
So, once those cavemen stop throwing stones at passing tankers, the supply chain through the Strait of Hormuz will resume and everything will return to normal, according Peters. That was 5 days ago, so what are they waiting for?
Which is why, unlike in the tanker war in the Gulf in the late 1980s, the US isn't sending its warships through the strait. And which makes his "The war will end more quickly than people are thinking" just sound like wishful thinking on his part.