As fuel costs bite, Shane Jones’ decision to scrap a plan for an emergency diesel reserve is coming under scrutiny, writes Catherine McGregor in today’s excerpt from The Bulletin.
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Fuel levels rise, but urgency remains
New Zealand remains in phase one of the national fuel plan following Monday’s post-cabinet briefing from Christopher Luxon and Nicola Willis. The latest MBIE figures, taken on March 25, show 59.3 days of petrol, 54.5 days of diesel and 50.4 days of jet fuel either in the country or on the water. Petrol and diesel levels have increased since the last update, while jet fuel is down but remains within normal parameters.
Willis also announced the government is actively seeking commercial proposals for additional New Zealand-refined fuel imports, which could see supply stockpiled offshore as a buffer against shortage. “The time to take action is now,” she said, “not several weeks from now when a fuel supply problem could potentially emerge.”
That urgency has been strengthened by supply chain data from JP Morgan suggesting the last shipments from the Gulf are likely to arrive in NZ on April 20, and by Westpac chief economist Kelly Eckhold’s warning on Morning Report that “mid-April is looking like … when there will be challenges here”. Eckhold is calling on the government to begin prioritising diesel allocation immediately: “Diesel that we burn now could be diesel that we need in three or four weeks.”
Why diesel is in a league of its own
For decades, diesel has been cheaper than petrol at the pump, but that is no longer the case. As 1News’s James Ball reports, diesel now averages $3.43 per litre against $3.42 for 91 octane, having surged 85% over 28 days – more than double petrol’s 35% rise. “Diesel, a thicker and denser fuel, is more expensive to produce than petrol because of the way crude oil is refined. From every three barrels of crude oil, refiners typically produce about two barrels of petrol and only one barrel of diesel,” Ball explains. Until recently, taxes on petrol have masked the price differential. Now diesel prices are rising so fast they’re outstripping petrol, regardless of the taxes.
The big problem for NZ’s farming, manufacturing and logistics sectors is that there are no substitutes for diesel. Petrol users can take the bus, walk, cycle or buy an EV; those operating the “heavy fleet” – lorries, farm machinery, construction, food production – cannot.
The price shock bites
The diesel crisis is starting to hit parts of the building industry. As Interest.co.nz’s Greg Ninness reports, QV has found that excavation costs are up 7.8% in a single month, with demolition, piling and site preparation also climbing sharply – increases that QV attributes directly to diesel.
Meanwhile, as harvest season continues, RNZ reports that rural fuel distributor Fern Energy is already prioritising deliveries based on need. The forestry sector is also struggling with skyrocketing diesel prices. Says Federated Farmers’ David Birkett: “Some of them are actually saying ‘do you know what? We’re going to just pull up and stop working until this settles down’.”
The reserves debate
The crisis has reopened a pointed debate about diesel decisions made and not made. As The Post’s Tom Pullar-Strecker reports (paywalled), in 2024 associate energy minister Shane Jones scrapped Labour’s plan for a government-owned public diesel reserve of 70 million litres, the equivalent of roughly seven extra days’ supply on top of the government-mandated 21-day minimum reserve. He said the plan was unfunded, amounting to nothing more than “some doodling left on the side of a Cabinet paper by [former energy minister Megan Woods]”.
In February 2025, a study commissioned by Jones to investigate both NZ’s fuel resilience and the feasibility of reopening Marsden Point came back. It found that restarting the refinery would be prohibitively expensive, and “the most cost effective strategies for enhancing fuel resilience is accelerating the transition to zero-emission vehicles, adding trucking capacity and increasing diesel storage.”.
In the wake of that study, the 21-day minimum was raised to 28 – but the deadline for fuel companies to comply is 2028. Fuel researcher Edward Miller, writing in The Post (paywalled), has some belated advice for Jones: “You can’t call the insurance company after you’ve crashed your car and request a policy.”
