The Russia – Ukraine conflict brings into stark focus the need for New Zealand to have a working oil refinery that could, if the need arises, refine enough of our own home produced oil to maintain critical transport needs.
With Russia being the second largest crude oil producer in the world, the conflict has already seen fuel prices spike dramatically with more increases likely to come if Russian oil exports are further reduced by sanctions imposed by the US and other countries.
New Zealand’s Marsden point refinery is due to shut down at the end of this month. The final tanker load of crude oil arrived at the refinery last week. We’re now left relying on the promises of the oil companies that they’ll be able to supply adequate refined fuel imports from their Asian refineries.
But what if the world’s oil supply reduces even further? Sanctions on Russian oil last for some time and other producers don’t ramp up their supply having taken a liking to the higher prices they’re now getting? Or China decides to invade Taiwan possibly cutting off supply lines to the Asian refineries?
New Zealand will be exposed, forced to invoke the international agreement and draw down on reserve stocks notionally held (on paper not in tanks) in other countries. That would mean other countries giving up some of their own refined product to supply us, something they are most unlikely to do when their own supplies are being put under the same pressure as New Zealand’s.
Yet our government was naive enough to accept oil company assurances that they would be able to ensure security of New Zealand’s fuel supply in a crisis.
A paper presented to cabinet in November 2021 by Energy Minister, Megan Woods, states “There does not appear to be a clear case for maintaining refinery operations for fuel resilience reasons, except to address an exceptional ‘no fuel imports’ scenario. This is an unlikely scenario, but not entirely implausible, therefore I believe the option of maintaining refinery capacity warrants an active decision by Government”.
Amongst its recommendations was this “Note that closure of the refinery is expected to have little impact on fuel supply resilience under most disruption scenarios, but it could reduce New Zealand’s resilience to a low likelihood but high consequence event that leaves New Zealand with no ability to import fuels.”
Cabinet sat on its hands and allowed closure of the refinery to proceed, despite concerns raised by the Maritime Union, First Union, the Biofuels Association, the Sustainability Council, Merchant Service Guild, fuel researchers, strategic policy analysts both in New Zealand and Australia, and the Social Credit party.
Just five months later that “high consequence event that leaves New Zealand with no ability to import fuels” and “an exceptional ‘no fuel imports’ scenario” may just have arrived.
The Social Credit party instituted a petition which gained 18,300 signatures, and that petition currently languishes on the desk of parliament’s Petitions Committee. Sadly, despite the pending crisis, the committee appears in no hurry to consider it.
That petition calls on parliament to ensure the refinery remains in operation and is taken over by the government, using Reserve Bank, not taxpayer, funds, to buy out existing shareholders and for it to be run as an State Owned Enterprise.
In its submission on the petition Social Credit foresaw just such an event. “In the event of a natural disaster or a geopolitical conflict…. the supply of fuel for essential services could be severely compromised”.
Already people are feeling the effects of supply lines being compromised, with supermarket shelves often empty and prices rising. If the country’s transport fleet that moves goods around New Zealand, and our agricultural machinery and horticultural equipment are all facing fuel shortages those shop shelves will quickly become even emptier.
If the refinery remained in operation, it could refine our own Taranaki oil (albeit less efficiently than normal crude) to keep essential services running.
The cabinet paper acknowledges that “Having a domestic refinery could potentially enable the refining of at least some fuels from crude oil produced within New Zealand together with any imported crude oil that is available.”
Yet for the sake of around $300 million cabinet decided not the provide the country with an insurance policy that could have kept at least some essential services, including search and rescue and helicopter rescue, running, should fuel supplies from overseas be disrupted.
Considering the Reserve Bank has created around $55 billion in the last two years that was an incredibly short-sighted decision.
It’s not too late to change it.
I agree, if we suddenly run out of fuel things could get very difficult very quickly since so much depends on it including the food supply. To me this is a much better use of money than much of what was spent on covid.
A real country with political visionaries would recognize that Marsden Point is a strategic asset, in the nation’s realm of national security. We’re a long way from the rest of the world and shipping costs are unlikely to reduce in my lifetime, if at all. As politicians are now unable to speak against the green religion, we are in trouble. Labour passes the baton to National and National passes it to Labour. The decades we’ve had where each Party has sold this country down the river is evident now. Taranaki oil and gas has been shut down while Norway’s oil made their citizens millionaires who have heavily subsidized electric cars, medical care and pensions.
Do please consider changing the name of your party to something less reminiscent of the Chinese social credit system.
A digital rationing card introduced in response to a fuel/food crisis would be one backdoor route to such a system, so do please keep highlighting these issues.
Sadly, after 70 years as a political party (formed in 1953), and history we are having to consider changing the party name.
Thanks for replying Chris. Yes I can see that it’s sad to have to consider a name change because of something outside of your control.
Coincidentally, I came across an interesting article describing various alternative systems of political economy including Social Credit.
https://www.ecosophia.net/reimagining-political-economy/
These are all ideas we may need to start reexamining if our current system starts coming apart, as seems increasingly likely.
This Jabcinda Farten led govt has been nothing but a huge disappointment for hard working Kiwis. She is an absolute sellout. Convid scam, 3 waters, He Puapua, shutting down oil refineries to name a few.
One of the biggest drains on New Zealand now and in future is the unscientific and expensive bondage to climate change. Ordinary NZers are paying billions in tax for this scheme.
This beautiful country will be very different in not too distant future. I work in the employment sector and I can see another massive brain drain around the corner.
Australia is only a few hours away and offers better opportunities, better rewards for one’s hard work, not to mention much cheaper cost of living, yet higher standard of living.