Is NZ close to phase 2 of the fuel response? Some experts question if we should already be there

Saturday, 25 April 2026

A month ago, the Government set out how it would respond if the fuel crisis worsened.

Ministers spelled out four “response phases” (similar to the Covid-19 alert levels) and the triggers for moving between them.

New Zealand remains in phase 1, which means there are no restrictions on fuel use and officials are keeping a close eye on developments overseas.

But as similar countries introduce measures to reduce fuel consumption, some believe New Zealand should be stepping up its response.

Australia has taken a more aggressive approach, moving last month to level 2 and taking a series of measures including excise cuts, releasing fuel reserves and free public transport in some cities.

South Korea, a major supplier of New Zealand’s fuel, has placed limits on its exports and banned public sector workers from driving every second day.

In New Zealand, there are six triggers which could prompt ministers to consider a shift to a new phase.

Nathan Surendran, an engineer who specialises in energy transition, said in his view, at least two of the six criteria appeared to have been met several weeks ago.

Several key countries, in particular South Korea, had placed restrictions on exports, he said, which was one of the triggers for escalating New Zealand’s response.

“I'm deeply concerned about the potential impacts and outcomes of the current situation if we don't get more proactive measures in place from the Government,” he said.

So far, the Government has repeatedly said that fuel supply is steady until at least June and there is no need for change.

But Surendran said he believed New Zealand should be taking a more precautionary approach.

“The cost of acting early and being wrong is inconvenient, but the cost of acting late and being right is supply collapse in a 100% import-dependent economy.”

Ministry of Business, Innovation and Employment (MBIE) chief operating officer of the fuel response Iain Cossar said the triggers were not “automatic” and any response changes were decided by ministers based on a range of advice and evidence.

“New Zealand remains at phase 1 of the response plan because our fuel supply is sufficient, with good levels of fuel in New Zealand and more on the way,” he said. “Fuel importers continue to report no material issues with incoming shipments.

“MBIE continues to work closely with fuel importers to monitor fuel stocks. Fuel companies have been asked to provide immediate updates if they become aware of any disrupted supply, and we will keep ministers informed of any changes.”

Fuel stocks

Another of the triggers for moving to a higher phase is a drop of three days’ worth of fuel stocks between updates, which take place twice a week.

In an update on Wednesday, petrol stocks fell by 2.8 days since the last update, diesel by 2.2 days and jet fuel by 4 days. In all, there were 51 days of petrol and 41 days of diesel already in the country or on its way.

Finance Minister Nicola Willis said on Wednesday that diesel stocks were at or near their highest level since the Middle East conflict began.

She had asked MBIE if New Zealanders should be concerned about the latest figures and said she had been reassured that they were within expected levels.

“What's really important, what we're monitoring is, are we still getting the amount of ships coming to replenish those supplies? We are.

“We've also had assurances from fuel companies that the order books are full through to the end of May, and that they're no having no challenges placing future orders in June.”

Mike Hodgkinson, a risk analyst whose area of focus is global catastrophes, said the fuel stock numbers were “absolute maximums”.

“A lot of the fuel is in ships which are en route or booked. But those ships can divert, as they have done in the past if someone outbids New Zealand. So including them is really counting our eggs before they’ve hatched.”

Hodgkinson also said fuel storage tanks had unusable “heels” at the bottom which meant not all of the reserves could be used, and this was not factored into the fuel stock numbers.

In an opinion piece published last week, economist Shamubeel Eaqab said he was less concerned about the levels of fuel than the “direction of travel”.

“Days of cover is backward-looking,” he wrote. “Those ships were contracted over three weeks ago. We have no visibility of what is being contracted now, what premiums importers are paying, or whether force majeure notices have been received.”

Fuel conservation

MBIE estimates that New Zealand uses a total of around 24 million litres of petrol, diesel and jet fuel every day.

The Government launched an advertising campaign last month which focused on fuel savings tips like lightening vehicle loads.

It has not taken any measures to reduce demand yet and even under phase 2 there are no mandatory restrictions.

“There is currently no need for New Zealanders to change how they buy fuel,” MBIE said on its website.

Edward Miller, a researcher at the Centre for International Corporate Tax and Accountability Research, said a lack of available fuel storage in New Zealand could make conserving fuel difficult.

“Implementing a fuel conservation programme now when our limited storage capacity is still in use could prove counterproductive,” Miller said. “If conservation efforts mean incoming tankers can’t unload their fuel, another buyer could potentially buy that tanker out from under us.”

The Government has made a deal to increase diesel storage at the former refinery at Marsden Point in Whangarei by 93 million litres - around nine days’ worth of supply. That is expected to become available in June.

Associate Energy Minister Shane Jones halted work on creating a public diesel reserve in 2024. A fuel security study commissioned by Jones and published last year concluded that one of the most cost-effective strategies for building resilience was increasing diesel storage.

Cossar, from MBIE, said storage restraints were not a specific factor preventing a move to phase 2, while adding “extra storage does help enhance overall fuel resilience”.

A MBIE briefing to businesses last month said it would require a sustained fuel disruption for fuel rationing to be considered.

“We are preparing for this possibility as a precaution,” officials said in the briefing.

Phase 2

Under phase 2, there would still be no restrictions on fuel use but the public would be informed about reducing fuel bills and conserving fuel “in the national interest”.

Fuel would still be available nationwide but supply might be disrupted - deliveries could be delayed and there might be limits in some areas.

“This phase is about shoring up supply, closer coordination between government and industry, and managing demand,” MBIE said in an information sheet last month.

A national fuel plan released in 2025 gave more details about what measures could be taken at each response stage.

Under level 2, those measures could include keeping some petrol stations for only critical customers like emergency services. Designated lanes could also be established at petrol stations for critical customers.