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NZ to join international efforts on oil

3 September 2005

NZ to join international efforts on oil

New Zealand will be joining international efforts to ease pressure on the international oil market in the wake of Hurricane Katrina, Energy Minister Trevor Mallard said today.

"Hurricane Katrina has caused material damage to both crude oil production and to refining capacity in the affected parts of the United States, leading to significantly higher fuel prices. Although efforts are underway to restore capacity, it will take some time," Trevor Mallard said.

"As a result, the International Energy Agency (IEA) - of which New Zealand is a member - has recommended that member countries collectively make available to the market 60 million barrels, or an average of two million barrels per day for 30 days, with a review of the required volumes after 15 days.

A number of IEA countries have significant oil stocks, and are planning to release some of those stocks to the market. New Zealand does not currently have surplus stocks, which will constrain our options to contribute to the collective international effort.

"The IEA has asked its 26 member countries to develop a plan which sets out the actions each country will take in order to meet its obligations. Under IEA rules, plans are to take effect within 15 days, but any earlier action would clearly be beneficial.

"As with other countries, our plan will include low level action such as voluntary savings and using existing stocks to the extent possible to contribute to this international effort. The Government will be working through all the available options, in conjunction with the oil companies and other key stakeholders.

"There is no actual or expected physical shortage of oil product supplies, and so no cause for people to be concerned about ongoing availability of petrol, diesel and other oil products, nor do we anticipate any requirement for any mandatory measures to reduce demand - such as rationing or carless days.

"Early signs are of international oil prices softening as a result of this collective response by IEA members in response to the recent and tragic damage caused by Hurricane Katrina to life, to property and to oil supply facilities," Trevor Mallard said.

Questions and Answers

How is Hurricane Katrina affecting supply of oil to New Zealand?
We do not expect any shortages of supply, but we have to pay world prices for oil and product. World prices will reflect tightness in the global oil market.

What plans does New Zealand have in place to take emergency response measures?
New Zealand, like all IEA members, has a contingency plan and organisational arrangements in place, comprising officials and oil sector representatives, to respond quickly to any IEA request or directive.

We have contingency plans to put in place voluntary demand restraint measures, if required.

This would involve things like encouraging people to reduce their car use, for example by car pooling, reducing discretionary travel, taking public transport and the like.

Will these sorts of measures increase the price of petrol even more?
No, quite the opposite. Prices are expected to stabilise somewhat in the wake of the international communities response and any reductions in demand.

What can we do to save petrol?

Avoid unnecessary travel by car or reduce travel by car
In the workplace - teleconferences for meetings, working from home, staggering start times to relieve traffic congestion
Commuting - walk, cycle, take public transport, car pool
Leisure - delay or defer discretionary leisure travel
Drive smoothly
Make sure you accelerate smoothly. Change gear early (but don't labour the engine). If you drive an automatic, choose 'economy' gear switching as this will keep the engine speed down.
Don't speed
Driving faster doesn’t necessarily mean you’ll get there any faster. By travelling at 100km/h instead of 110km/h you can cut around 13% off your fuel bill.
Reduce idling time
If you're going to be stationary for more than 30 seconds, switch your engine off.
Love your car
A little love goes a long way. Keeping your tyres at the right pressure saves fuel, as does checking your alignment, engine timing, air filter and spark plugs regularly.
Watch your air con
Only use air conditioning when absolutely necessary, as it tends to eat fuel, up to 10% more in fact. Other features such as the rear window demist can also be a drain, so make sure you switch them off when they've done their job.
Keep your load down
Sounds obvious, but a heavier vehicle means more drag. So take those golf clubs out of the boot after the game, and remove the roof rack when you're not using it. The same goes for the bike rack.

When will petrol prices start coming down?
It is expected that prices will stabilise in response to additional supplies of oil being released on to the market.

Why not cut the taxes so drop the price of oil?
Because this will encourage people to use more petrol, not to save petrol.

Are car-less days likely?
No. Car-less days and rationing are last resort measures which would only be considered in response to a catastrophic disruption to world oil supplies.

Hurricane Katrina is well short of that level of disruption.

ENDS

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