We're already rationing fuel. We're just doing it badly

Thursday, 19 March 2026

Nathan Surendran is chair of the Wise Response Society and principal consultant at Schema Consulting, specialising in energy systems and transition strategy.

OPINION: On Monday afternoon, Finance Minister Nicola Willis held a press conference to update New Zealand on the fuel crisis. She said the Government had not taken a paper to Cabinet. She had not considered specific options. She repeated “targeted, temporary and timely”, without explaining what any of those words mean in practice.

She did say one useful thing. She described a mother in south Auckland, a cleaner who drives to her airport shift because there is no bus at that hour, facing acute income pressure from $3 petrol. Willis used this woman to explain why any future relief would need to be targeted.

Here is what Willis did not say: that woman is already being rationed. Every litre, affordable to the wealthy, prices her out. That is price rationing - the system we have right now by doing nothing, and it is the worst option available, allocation by wealth.

Nobody in Parliament is proposing an actual mechanism for managing fuel as it gets scarcer. They are arguing about who to compensate for the pain rather than how to manage the supply.

The situation we face is a much bigger disruption than the 1970s. As Stuff reported last week, the Government's options under the Petroleum Demand Restraint Act range from voluntary restraint through car-less days to coupon rationing.

Each has problems: voluntary restraint failed in 1979 and was replaced by car-less days within months; car-less days punish single-car households while multi-car families rotate; and fixed coupons struggle to account for the fact that a dairy farmer in Southland has different fuel needs from a public servant in Wellington.

There is a modern, fair, electronic option, fit for the scale of this challenge. It has been studied by the UK Government, endorsed by the UK All-Party Parliamentary Group on Peak Oil, and developed across two decades of academic research. It is called Tradable Energy Quotas, or TEQs (pronounced ‘tex’).

Every adult gets a free, equal weekly fuel entitlement loaded onto an electronic card (like a commercial fuel card). When you buy fuel, units are deducted at the pump alongside your normal payment. One tap. That is the only interaction most people ever have with the system.

If you use less than your share - because you bike to work, have an EV, or do not drive much - you sell your surplus units and earn money. If you need more - because you farm, run a freight business, or live rurally - you buy additional units. The total stays within what the country physically has available.

The Wise Response Society has been analysing the options to implement TEQs in New Zealand with urgency. We are releasing a white paper on this subject on our Substack today.

We found that New Zealand already has most of the infrastructure for this. Eftpos is universal; IRD and MSD already run mass-scale electronic entitlement systems that credit millions of accounts automatically every week; the Environmental Protection Authority runs an electronic unit registry for the Emissions Trading Scheme that the Government itself describes as working “like a bank, but for emission units”; the banking system already tags every fuel purchase with a merchant category code - meaning TEQ deductions could be enforced through your bank without changing a single fuel pump.

A TEQ market could run through an app or a simple web portal. Sell your surplus with a few taps. Buy extra the same way. The unit price floats with supply and demand: when fuel is tight, units cost more, which rewards people who conserve. No queues, no coupons, no bureaucrats deciding who gets what.

New Zealanders already live with this system. We just apply it to fish. The Quota Management System sets a total allowable catch, allocates individual quotas, and lets holders trade on an open market. Nobody calls it rationing, but that is exactly what it is.

TEQs apply the same logic to fuel, with the added bonus that all New Zealanders are quota holders, able to profit from fuel use restraint, other forms of demand management and efficiency.

And if the Government is serious about protecting households from energy costs, it should look at where it is spending money. The proposed Liquefied Natural Gas import terminal in Taranaki carries a price tag of around $1 billion, to import fossil gas through the same volatile international markets that created this crisis.

For roughly the same money, you could put solar panels on the roofs of our poorest 5%, around 95,000 homes, permanently reducing their electricity bills and freeing up grid capacity for everyone else. One set of options locks us deeper into the problem. The wise ones start moving us to a better future.

Willis said on Monday she is looking for a “trigger” before considering demand measures. The trigger is here. Petrol is past $3. The Strait of Hormuz is closed. South Korea, our largest fuel supplier, is discussing an export ban. The Petroleum Demand Restraint Act sits on the statute books. The National Fuel Plan was published four months ago. I have sent detailed briefings on TEQs to every party in Parliament.

We are rationing fuel right now. We are just doing it in the worst possible way. To misquote David Fleming, who originated the TEQs concept: rationing energy supply fairly stands at the limits of political possibility. But it has the decisive argument in its favour - there will be no popular alternative.