Is NZ running out of petrol? An economist tells us whether you should stock up

Petrol prices have been one of the biggest concerns among Kiwis, with last week seeing 91 climb over $3 per litre and diesel top $2.50 across the country.

This morning, Opes Partners resident economist Ed McKnight told Mai FM’s morning crew what we can expect from the rise in petrol prices, how much supply New Zealand actually has left, and what it could mean for our wallets.

As many people have noticed, fuel hasn’t been cheap - and that’s largely due to the ongoing conflict in the Middle East creating a scarcity of oil.

Oil tankers have reportedly been backed up, unable to pass through the Strait of Hormuz, after Iran threatened attacks in the area.

Is NZ going to run out of petrol?!

When asked whether it’s likely New Zealand could run out of petrol in the next month, Ed says it’s highly unlikely.

“We’ve got 50 days’ worth of supply. In fact, for petrol it’s slightly over 50 days,” Ed said.

“That might not sound like a lot, but the legal minimum petrol companies need to have is about 26 days’ worth of supply, so we’re well over that.”

However, Ed says the real concern is what could happen in the next six to eight weeks.

He explained the issue comes down to the fact that New Zealand imports petrol from Singapore and South Korea.

That means there’s a risk if those countries don’t have enough oil to export - or if their governments decide to prioritise their own supply instead of sending it overseas to us.

Is New Zealand at a disadvantage?

When asked whether New Zealand is at a disadvantage due to our location, Ed said it’s a global challenge, and he wouldn’t necessarily say we have it worse than other countries.

However, one disadvantage is that New Zealand no longer operates its own refinery.

The refinery at Marsden Point stopped refining fuel in 2022 and now operates as a fuel import terminal run by Channel Infrastructure - relying on the supply from Singapore and South Korea.

Will rideshares get more expensive?

For those who don’t own a vehicle, Ed says the rise in petrol prices could eventually flow through into rideshare costs, including the likes of Uber.

“If drivers are paying more for petrol, it’s likely to follow through,” he said.

However, there haven’t yet been widespread reports of fares increasing just yet.

Where an impact has been seen is in the sky. Last week, Air NZ announced it will cancel around 1100 upcoming flights through to early May because of jet fuel price increases due to the conflict.

44,000 passengers will be affected by cancellations.

How long will it take for prices to drop?

With prices able to jump quickly during global events like these, why don’t they drop just as fast once the situation settles?

Ed says this comes down to “spot prices” for oil.

Even though petrol businesses still had supply, the spot price rises, and that’s identifiable by businesses who will need to continue to purchase the oil for future supply.

While it’s hard to predict exactly how quickly prices could fall once the conflict eases, Ed says both media and government will be closely watching petrol prices - putting the pressure on those prices to drop.

Should we stock up on petrol?

The simple answer is NO. Panic buying is strongly discouraged in situations like this.

Some Gull stations ran out of fuel over the weekend, but Ed says that wasn’t due to a lack of supply - it was simply because demand spiked so quickly that stations struggled to restock in time.

He compared it to the toilet paper shortages during the COVID-19 pandemic, where supermarkets couldn’t refill shelves fast enough to keep up with demand.

Ed adds that panic buying could actually push prices even higher if demand spikes further.

For now, the advice is don’t panic. Prices may continue to affect other areas of spending, but letting panic set in will only make the situation worse.