The finance minister has shut down suggestions of cutting the fuel excise tax but is open to delaying a planned hike, writes Madeleine Chapman in today’s excerpt from The Bulletin.
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Petrol prices to rise (and rise)
New Zealand petrol prices are expected to continue rising amid the ongoing Middle East conflict. On Monday evening NZT, brent crude oil (the benchmark for global oil prices) hit a four-year high of US$116.8 a barrel and is currently hovering around $100. Before the conflict began last Saturday, crude oil was trading at around US$72 a barrel.
AA principal policy adviser Terry Collins told 1News that a general rule of thumb is every dollar increase on the price of crude oil results in a 1c increase at the petrol pump.
Willis says no to short-term relief
Finance minister Nicola Willis has shut down suggestions of a fuel excise tax cut floated by the Taxpayers’ Union and opposed by the Act Party, as reported by The Post (paywalled). Speaking to media at Monday’s post-cab press conference, Willis said any short-term gains needed to be weighed up against “medium term pain”.
Labour’s finance spokesperson Barbara Edmonds told The Post there “may be a case for temporarily reducing the fuel excise duty as global petrol prices rise… but we also need to be upfront that it comes at the cost of maintaining infrastructure funding.”
Act leader David Seymour said while the idea was “politically tempting”, but given the government’s deficit, the funds for it would have to be borrowed. “A temporary fuel tax cut would be paid for by future taxpayers,” he said.
The previous Labour government reduced the fuel tax in March 2022 following Russia’s invasion of Ukraine. The cuts were supposed to last just three months but weren’t removed until July 2023 for a total estimated cost of $2bn. Willis did, however, say the government was open to delaying a 12c per litre fuel tax increase planned for 2027 if conditions worsened.
The canary in the coal mine
Petrol may be the most obvious and immediate good impacted but New Zealand can expect to see negative flow-on effects the longer the conflict persists.
Director of Rocket Freight Lisa Coleman told RNZ on Monday that freight said international carriers across land, sea and air had introduced surcharges in light of the oil price hikes. Those charges, she said, will be passed on to local consumers. “Every product that arrives on shelves will be affected.” She also warned of significant delays due to freight route uncertainty.
NZ Herald’s Edward Gray reports fertiliser prices are set to skyrocket, with massive impacts for New Zealand growers and therefore consumers. Fertiliser for crop growth and diesel for farm machinery are the two key input prices for food production, Gray writes, and about 45% of urea (an organic compound preferred in fertiliser for its quick release of nitrogen) is transported through the now-restricted Strait of Hormuz
This all means a vastly different economic outlook to just three months ago, when the Reserve Bank forecast New Zealand’s economy to grow by 3% this year and next. As Thomas Coughlan reports (Herald), Willis has cautioned putting too much stock in that forecast due to the war. “That was then, and this is now,” she said.
Checking in on the alternatives
There’s nothing like a petrol price hike to remind one of electric vehicles. The sale of EVs has dropped drastically in the past two years after the government removed the Clean Car Discount (which took thousands off the purchase price of EVs). In 2025, 9,000 plug-in battery EVs were sold in New Zealand, compared to more than 26,000 in 2023, reported The Detail in February. However, The Press (paywalled) reports one Christchurch secondhand EV seller has enjoyed a 50% increase in sales this week.
EVs still require energy, however, which turns one’s attention to solar. Last week, Kirsty Johnston reported in-depth for RNZ on New Zealand’s lagging solar power uptake, despite having higher than average sunlight hours. Set-up costs proved the biggest barrier to uptake and, unlike in Australia where subsidies are offered for installing home solar systems, New Zealand doesn’t offer any incentives for residential solar.
