March 10, 2026 • 23 mins
A global oil giant is warning of a looming catastrophe unless the Strait of Hormuz reopens soon.
The US and Israel war on Iran is wreaking havoc on global oil and gas markets, spiking prices and sending shockwaves across global economies.
It’s being called by some commentators the “biggest oil disruption in history.”
Saudi Arabia’s state oil company, Aramco, has said there would be “drastic” consequences for the world economy if the disruption continued.
It’s believed oil could hit $150 US-dollars per barrel by the end of the month.
But what does the wholesale price of oil mean for you at the pump? And will things get a lot worse, before they get better?
Today on The Front Page, journalist and publisher of The Kākā, Bernard Hickey is with us to talk about the crisis – and what New Zealand should do next.
Follow The Front Page on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Editor/Producer: Richard Martin
Producer: Jane Yee
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Episode Transcript
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Speaker 1 (00:05):
Kiyota.
Speaker 2 (00:05):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. A global
oil giant is warning of a looming catastrophe unless the
Strait of Hormuz reopens soon. The US and Israel war
(00:26):
on Iran is wreaking havoc on global oil and gas markets,
spiking prices and sending shock waves across global economies. It's
being called by some commentators as the biggest oil disruption
in history, and Saudi Arabia's state oil company Aramcos has
said there would be drastic consequences for the world economy
(00:50):
if the disruption continued. It's believed oil could hit one
hundred and fifty US dollars per barrel by the end
of the month. But what does the wholesale price of
oil mean for you at the pump? And will things
really get worse before they get better? Today on the
Front Page, a journalist and publisher of The Kaka, Bernard Hickey,
(01:11):
is with us to talk about the crisis and what
New Zealand should do next. Bernard, So we hear about
crude oil and there are different types you've got brand etc.
I mean, what are the different types and why do
we care?
Speaker 3 (01:27):
Because the type of oil that we buy doesn't really
matter now because we don't refine it here in New Zealand.
We buy the product already refined, mostly from refineries in Asia.
And because they get their oil from the Middle East,
it's important where it comes from. It comes from the
(01:47):
Middle East in quite a thick and sticky form. Ours
we actually pull up from the ground here in Alta
is really really really sticky and in fact so difficult.
That's normally sent overseas. While we had mass and point
it was sent overseas to get refined. Yeah, so we
prefer the Brentish stuff which comes from the Middle East,
(02:12):
West Texas, comes from America, and that tends to have
quite a bit of gas in it, particularly the stuff
that's come out of the fracking fields, which is actually
mostly gas and other condensates.
Speaker 1 (02:22):
So the stuff we like.
Speaker 3 (02:24):
Comes from the Middle East and it gets refined or
cracked as they say, and you might hear this phrase
cracking spread or the crack spread, which is the difference
between the crude oil price and essentially what you get
at the end of it after they've cracked it up
into the different types of petroleum products.
Speaker 2 (02:44):
Right, and so generally, how quickly are we meant to
see So we said we're looking at the oil prices,
it's USD of course, because everything has to be if
it's traded glow belye for some reason. Hey, but we
see USD, it's going up and down, etc. How long
does it usually take for us to then see that
at the petrol pump.
Speaker 3 (03:02):
Well, sometimes it can be immediate because some of the
petrol companies will price for next week as if we
have to replace this liter of fuel with one that
we're buying right now from the refinery. So you have
to really watch what's happening with refined diesel prices in
Singapore because that's where we get most of our diesel,
(03:24):
or Singapore is the place where it's often traded. You
look out for the platz diesel oil price and that's
actually risen more than the crude oil price, because there's
a real crunch going on now right now throughout Asia
Pacific looking for diesel everyone in the world, but particularly
Asia Pacific because that's where it gets it gets most
(03:47):
of its original oil from the Middle East. Asia Pacific
is a little bit paniced, right now to the point
where the Philippines, for example, has already gone down to
a four day working week to try to conserve diesel.
And we've seen Thailand stop exporting refined products Korea. South Korea,
(04:07):
which provides about a half of our refined fuel, is
considering banning exports of refined fuel products so they can
protect their own economy. China has already decided to ban
exports of refined fuel, and that's important for the Asia
Pacific because those Chinese refineries are a big part of
the market.
Speaker 1 (04:26):
So we're at the end of a long supply chain.
Speaker 3 (04:29):
We often have to pay the prices upfront and early,
and we're vulnerable to not just the rise and the
crude price, but the rise in the crack spreads between
crude and the price of diesel. And we've got this
extra vulnerability now that Marsden Point is not there.
Speaker 1 (04:50):
We have to rely.
Speaker 3 (04:51):
On just tanks and occasionally truckfulls of diesel and petrol
and jet fuel just here. We can't have big tanks
full of crue that we can refine when we want to.
There's no refinery, so that increases the risks. We have
about three weeks of supply here in New Zealand and
(05:12):
another three or four weeks on the sea coming towards us.
And it's worth knowing that sometimes these ships will divert
halfway here or halfway to their destination because someone else
offer them a better price on the way. So it's
not a sure thing that the ship that's on its
way actually gets here with the diesel. So this is
(05:32):
something for those to think about. If we imagine the
Strait of hor Moves stays closed for months rather than weeks.
Speaker 2 (05:40):
In terms of what do we do if South Korea
all of a sudden says nope, we're going to keep
everything inside and we're going to keep it all for ourselves.
Where else do we.
Speaker 3 (05:48):
Look to, Well, firstly, we go to Singapore. We have
a special arrangement with Singapore. In times of security crisis
or shipping or supplied problems, we can go to Singapore
and ask because Singapore is a big base for not
just the trading but the actual refining of this fuel.
Speaker 2 (06:08):
And we already get a bit from them, Oh yeah,
quite a chunk.
Speaker 3 (06:11):
In fact, after South Korea, it's the second largest source
of refined fuel. But the problem is everyone's been to
be going to Singapore and asking for it. We also
have agreements in theory with the United States and Japan
to bring in extra fuel when we need it. In fact,
that's how we comply with the International Energy Agencies rule
(06:33):
that you have to have ninety days of supply. We
actually only have about twenty three days of supply, and
the other sixty or seventy days is actually on paper
in these so called tickets that we can present to
the United States or Japan to say, hey, we really
need to diesel, could we have it now. The trouble is,
of course, in times of war, countries are already saying, yeah,
(06:56):
that's just paper. We've got a crisis here. We need
to supply our voters, our truckers, our railways with the
diesel and the oil to help our economy going. And
that's why, you know, there's been a lot of people
critical of the current supply chain reliance effectively on the
markets to get it to us, because when wards start,
(07:19):
markets just don't work.
Speaker 2 (07:21):
Are we in direct competition with Australia when it comes
to getting this refined stuff in it or would it
be a good idea to team up.
Speaker 3 (07:28):
Yeah, Australia has a similar sort of problem. They've also
closed quite a few of their refineries and about seventy
five percent of their fuel comes from imported refined fuels.
And in fact, in some parts of Australia they are
already doing some rationing. Some of the independent wholesalers have
cut back on supplies to some particular buyers, and you know,
(07:51):
there are real concerns in Australia. There are big queues
at service stations, and I think New Zealand and Norway
has been quite complacent about this because we don't really
understand how the mechanics of the oil markets work, and
also just the logistics of getting through the strait of
(08:12):
hor moves. Donald Trump may say that, you know, the
war is over and we can all just go home
now and the price of war can go down, and
markets may.
Speaker 1 (08:20):
Believe them for a day or two.
Speaker 3 (08:22):
But the people in control of the Strait of hor
moves are the Iranian Revolutionary Guard. They don't care about markets,
they don't listen to Donald Trump. They have said, not
a leter of oil gets out of this Gulf while
we're being attacked by Israel and the United States. Now
Trump has said that you know, we'll just take over
the straits of Hormerves. Sure, that's a chunk of territory,
(08:45):
you know, half the size of Vietnam, riddled with caves
and tunnels, full of bristling with all sorts of weaponry.
Not to mention, the Iranians have got drone mines that
can simply drift into place you use the tides. They
don't have to be dropped by planes or ships. So
this idea that you know, the Straight of holl Moves,
(09:07):
it'll open pretty soon, no worries. Don Trump says it, Well,
biggest navy in the world. Yeah, well, as we've as
the Russians discovered in Ukraine, you can do an awful
lot with a drone that outweits the biggest ships on
the planet. And I think a lot of people in
New Zealand are a bit complacent about how soon the
(09:27):
Straight of holl Moves will open, and also how quickly
the oil supplies will regenerate out out of the Middle East,
because you can't just turn the tap on an oil well,
you have to so called shut it in, which means
you have to plug it up otherwise it won't work
in future. Now you don't just unplug them it's like
(09:47):
the bath plug. You know, this is a fair chunk
of work. It takes weeks and months to get that
stuff cracking in. So the longer this goes on, the
longer it'll take to restart. At the moment where looking
at weeks and that's everything goes fine from here on,
And it's pretty clear the Uranians are not playing ball,
(10:07):
and that straight is closed and twenty percent of the
world's oil goes through it, all of our oil effectively,
all of pretty much all of Asia Pacific's oil, and
we're going to have to compete with everyone in the
Asia Pacific to get our hands on that diesel in
a couple of months time, if you know, our supplies
run out, which you know at the moment we've got
(10:28):
about sixty or seventy days worth. And then it gets
very serious.
Speaker 4 (10:40):
Well we'll looking the oil prices down. We were artificially
up because of this excursion into a very positive thing.
I mean, this was an excursion that a lot of
people wouldn't have done. I knew oil prices would go
up if I did this, and they've gone up, probably
less than I thought they'd go up. But I don't
think anybody thought we were going to be this quickly successful.
(11:01):
This was a military success the likes of which people
haven't said. We have the best military, we have the
best equipment, we have I believe, the best generals, we
have the.
Speaker 2 (11:14):
Best What numbers should we be looking at and worrying
and starting to have that rationing conversation?
Speaker 3 (11:22):
Do you think, yeah, well, we need to know in
a much more direct and transparent way how much fuel
we've got left now? The government and NBI said on
Monday that as of March the first, that was now
ten days ten to twelve hours ago, we had about
twenty six days of fuel on shore. Now that is fine,
(11:46):
but that was eight days ago. You know, we should
know a lot more and a lot sooner than that,
particularly if you want people to believe what you're saying
and not just panic and go on queue and start
hoarding diesel. So that's something we'd like to see today.
The government is having its Ministerial oversight meeting and hopefully
we get some more information out of that, although we
(12:07):
saw yesterday from Shane Jones and saying if nothing changes,
the straight stays closed, then you know, by May we're
in a serious situation. That's when you definitely will be
talking about rationing, you know, making sure that the fire
trucks and the ambulances get it first, and the dairy
tankers and then of course all the trucks that we
(12:27):
need to fill our supermarkets COVID style, because remember the
government's already been advised on this. Last year Castalia did
a fuel security study and recommended to the government that
we increase our supplies of diesel from twenty one days
on average to twenty eight and that we think of
a crisis like the closing of the Strait of hor
Moves is very similar to a COVID style event because
(12:51):
it's actually worse than Ukraine situation. We will remember those
spikes and petrol prices three dollars a liter plus when
Russia invaded Ukraine. But if you look at the scale
of the blockage, we're talking twenty percent of the world's
oil rather than two or three percent of the world's oil.
And so the risk is that the spiking prices that
(13:13):
we have if the Strait of Hormus remains closed is
significantly more than the spike we saw during the Ukraine crisis,
and just the sheer physical volume of fuel that we
don't have. And remember back twenty two twenty three, Muslim
Point was still just finishing, so there was still quite
(13:35):
a bit of stuff happening. Now it's gone and we
have to survive on our own and get our hands
on that diesel from a refinery in Korea that may
have stopped exporting, or China which has definitely stopped exporting.
Speaker 1 (13:49):
In Singapore. We fall in love with the Singaporeans.
Speaker 2 (13:52):
I think has the closing of Marsden Point exacerbated the
situation that we are currently.
Speaker 3 (14:00):
Yes, because we had more storage and more control of
crude oil when we could refine it ourselves. It was
one of the reasons it was built to start with.
It was one of the great projects post Second World
War when people did worry about this stuff a lot.
They've been through an immediate experience during wars where you know,
ships couldn't get through they keep getting tall.
Speaker 2 (14:20):
Be day well, even the Suez Crisis in the fifties
as well, exactly so.
Speaker 3 (14:25):
And then through the seventies there were various christs including
the Irana Raq War, the Golf War. So this is
in living memory for a bunch of people. Carlos Days,
my family's day was Wednesday, Aunt Carlos Day. Now people,
a lot of younger people haven't really thought about this.
We just assume the market will provide. You know, it's
(14:47):
amazingly resilient and you know, it's amazing how things get
rerouted and the market works well. In this case, there
isn't a lot of, as they say, elasticity in this market.
We need oil and diesel to get to work. Do
we don't have an alternative? Now, some people have got
themselves an alternative, particularly moving to electric, but that has
(15:10):
slowed down the last couple of years as the government
changed its policies and so. In fact, one of the
recommendations from the Castalia Report was that we aggressively moved
to electrify our transport fleet as fast as we can.
It's actually the cheapest and fastest way to reduce our
vulnerability to a strait of hormus crisis. It also looked
(15:30):
at the option of restarting massen Point or building brand
new refineries, particularly in Taranaki, because we have a little
bit of oil that we produce ourselves. Now turning it
into actually something we can use might not be easy,
but we can get these so called mini refineries and
then there's other things that we could use, include bio diesel,
(15:52):
but really the most immediate, best, fastest, cheapest option is
for as many people to go electric as fast as
we can, to move the buses away from diesel to
electric and reduce the amount of strain on the system
from people driving cars and double.
Speaker 1 (16:10):
Cab utes around. There are a lot of fully.
Speaker 3 (16:13):
Electric cars and double cab utes right now, and the
electric buses coming from China, ironically are you know, some
of the cheapest and if you can see in Auckland,
upwards of fifteen percent of the fleet will soon be
totally electric. That's where we've got the best opportunity to
increase our resilience and reduce our risks and reduce the
costs because this oil is not going to get cheaper.
Speaker 1 (16:37):
You know, these wars aren't just suddenly going to stop.
Speaker 3 (16:40):
And you know, one of the themes of the last
decade really is as we get closer to the point
we're extracting oil costs more than we want and a
lot more people are moving away into renewable we should
be thinking about that too. Unfortunately, the current government is
not moving in that direction. But maybe this will be
a wake up call and also a reminder that if
(17:02):
we introduce this LNG import facility, we are effectively tying
our energy costs directly to the price of LNG, which
is dominated by one big plant in Kuwait which is
currently closed. So this is something we need to think about.
We forget that we're part of a global system of markets,
and one way to reduce that is to have a
(17:24):
whole bunch of panels and batteries and electric vehicles. Where
the ships don't come, we can still move around.
Speaker 2 (17:30):
Well, we're not Fortress New Zealand anymore, are we? We
are very reliant on other you know, international what's happening internationally.
What price is too much for your average key we
family to afford.
Speaker 5 (17:47):
Well, we are very conscious of that, and that is
why as a government, when we came in, we froze
and tended futurl tax increases. We said this is not
the time to be continuing to increase prices though they'd
fallen behind inflation, because we recognized the impact that has
on Kiwis and we will continue to judge that very carefully.
(18:08):
I'm not going to give you a number today. I'm
conscious that we're still experiencing significant volatility and we will
be monitoring it.
Speaker 2 (18:18):
It could the war whether on push more countries towards
clean energy.
Speaker 1 (18:22):
I suppose once.
Speaker 2 (18:24):
The dust settles.
Speaker 3 (18:25):
Yeah, And China has a very strategic approach to this,
and they've been madly not just moving to electric as
fast as they can. That's why they've got the world's
most productive and efficient electric car and truck building sector.
And they've got the fastest rollout of electric panels and
(18:46):
batteries and grid infrastructure in the world, which reallydoing it
five or six times faster than the United States. And
they have been building up their stocks of oil like
mad for a couple of years.
Speaker 1 (18:59):
They've been thinking.
Speaker 3 (19:00):
They've been knowing that there is a risk of something
like this, and so they've prepared well.
Speaker 2 (19:04):
They've been thinking not twenty eight days ahead, they've been
thinking a couple of years ahead.
Speaker 3 (19:08):
Right, And they're prepared to say to whoever owns the
refineries and actually most of those are state owned, to say,
you know what, markets, sh markets, we need to protect
China's economy. You cannot export that stuff. It's for the
nation of China and the nation Trump's the markets. And
(19:30):
New Zealand is still pretty much the market's trump the
nation type of place, and I think.
Speaker 1 (19:36):
With the global rule of law.
Speaker 3 (19:40):
And the sort of markets dominance of global affairs ebbing away,
we need to revisit that and rethink what are the
risks of relying on you know, these global rules and
global markets to provide when everyone else is pretty much
given up on it and every man's slash women's life
ah country for themselves.
Speaker 2 (20:02):
Well, that doesn't put us in a very good position.
So like in the list of people who are to
put their hand up and ask for something, we're probably
very far down and getting what we want. So is
that why should we come out with some kind of
Asia Pacific alliance or something like that as to you know,
have a bigger voice in the game.
Speaker 3 (20:23):
Yeah, we sort of already have a type of alliance
like that with Australia, I mean seer as effectively our
version of the EU, even to the extent that we
have freedom of movement for workers, which is great and
that essentially increases the size of our economy from five
million people to thirty million people, which is great. We
(20:45):
have lots of agreements, you know, some of them with
the Middle East at the moment, which aren't very good. Incidentally,
a big ship had to turn around with a bunch
of meat that was going to the Middle East because
it can't get.
Speaker 1 (20:56):
Through the Strait of hor moves.
Speaker 3 (20:59):
But Singapore, we have a Singapore right now is pretty
bloody useful. But we also have an opportunity here. We
are the only country in the world, literally the only
country in the world where you cannot get on a
rubber dinghy and just come here. We're the only place
(21:20):
in the world where actually it will be just too
expensive and difficult to invade, as the Japanese discovered, and
you know, you actually need a proper ocean going ship
to get here. It's not easy to get here. You
can stop planes from landing and taking off pretty easily,
but the ships are you know, they're hard to get here.
(21:40):
So we when we talk about fortress in New Zealand,
we're the one place in the world that really could
do fortress, and particularly when it comes to migration and
people movements, where the place where the only place in
the world where you literally cannot get on a rubber
dingy and go there. We're also incredibly well resourced with
(22:02):
water and with energy sunshine, and we should be using
that and at the moment, we're not We're just relying
on markets sh markets and we need to be much
better at using in our own resources and you know,
just realizing that market sh markets is a thing of
the past.
Speaker 2 (22:22):
Thanks for joining us, Bernard Jeers. That's it for this
episode of The Front Page. You can read more about
today's stories and extensive news coverage at enzidherld dot co
dot enz The Front Page is hosted and produced by
me Chelsea Daniels. Caine. Dicky is our studio operator, Richard Martin,
(22:44):
our producer and editor, and our executive producer is Jane Ye.
Follow the Front Page on the iHeart app or wherever
you get your podcasts, and join us next time for
another look beyond the headlines.
Kiyota.
Speaker 2 (00:05):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. A global
oil giant is warning of a looming catastrophe unless the
Strait of Hormuz reopens soon. The US and Israel war
(00:26):
on Iran is wreaking havoc on global oil and gas markets,
spiking prices and sending shock waves across global economies. It's
being called by some commentators as the biggest oil disruption
in history, and Saudi Arabia's state oil company Aramcos has
said there would be drastic consequences for the world economy
(00:50):
if the disruption continued. It's believed oil could hit one
hundred and fifty US dollars per barrel by the end
of the month. But what does the wholesale price of
oil mean for you at the pump? And will things
really get worse before they get better? Today on the
Front Page, a journalist and publisher of The Kaka, Bernard Hickey,
(01:11):
is with us to talk about the crisis and what
New Zealand should do next. Bernard, So we hear about
crude oil and there are different types you've got brand etc.
I mean, what are the different types and why do
we care?
Speaker 3 (01:27):
Because the type of oil that we buy doesn't really
matter now because we don't refine it here in New Zealand.
We buy the product already refined, mostly from refineries in Asia.
And because they get their oil from the Middle East,
it's important where it comes from. It comes from the
(01:47):
Middle East in quite a thick and sticky form. Ours
we actually pull up from the ground here in Alta
is really really really sticky and in fact so difficult.
That's normally sent overseas. While we had mass and point
it was sent overseas to get refined. Yeah, so we
prefer the Brentish stuff which comes from the Middle East,
(02:12):
West Texas, comes from America, and that tends to have
quite a bit of gas in it, particularly the stuff
that's come out of the fracking fields, which is actually
mostly gas and other condensates.
Speaker 1 (02:22):
So the stuff we like.
Speaker 3 (02:24):
Comes from the Middle East and it gets refined or
cracked as they say, and you might hear this phrase
cracking spread or the crack spread, which is the difference
between the crude oil price and essentially what you get
at the end of it after they've cracked it up
into the different types of petroleum products.
Speaker 2 (02:44):
Right, and so generally, how quickly are we meant to
see So we said we're looking at the oil prices,
it's USD of course, because everything has to be if
it's traded glow belye for some reason. Hey, but we
see USD, it's going up and down, etc. How long
does it usually take for us to then see that
at the petrol pump.
Speaker 3 (03:02):
Well, sometimes it can be immediate because some of the
petrol companies will price for next week as if we
have to replace this liter of fuel with one that
we're buying right now from the refinery. So you have
to really watch what's happening with refined diesel prices in
Singapore because that's where we get most of our diesel,
(03:24):
or Singapore is the place where it's often traded. You
look out for the platz diesel oil price and that's
actually risen more than the crude oil price, because there's
a real crunch going on now right now throughout Asia
Pacific looking for diesel everyone in the world, but particularly
Asia Pacific because that's where it gets it gets most
(03:47):
of its original oil from the Middle East. Asia Pacific
is a little bit paniced, right now to the point
where the Philippines, for example, has already gone down to
a four day working week to try to conserve diesel.
And we've seen Thailand stop exporting refined products Korea. South Korea,
(04:07):
which provides about a half of our refined fuel, is
considering banning exports of refined fuel products so they can
protect their own economy. China has already decided to ban
exports of refined fuel, and that's important for the Asia
Pacific because those Chinese refineries are a big part of
the market.
Speaker 1 (04:26):
So we're at the end of a long supply chain.
Speaker 3 (04:29):
We often have to pay the prices upfront and early,
and we're vulnerable to not just the rise and the
crude price, but the rise in the crack spreads between
crude and the price of diesel. And we've got this
extra vulnerability now that Marsden Point is not there.
Speaker 1 (04:50):
We have to rely.
Speaker 3 (04:51):
On just tanks and occasionally truckfulls of diesel and petrol
and jet fuel just here. We can't have big tanks
full of crue that we can refine when we want to.
There's no refinery, so that increases the risks. We have
about three weeks of supply here in New Zealand and
(05:12):
another three or four weeks on the sea coming towards us.
And it's worth knowing that sometimes these ships will divert
halfway here or halfway to their destination because someone else
offer them a better price on the way. So it's
not a sure thing that the ship that's on its
way actually gets here with the diesel. So this is
(05:32):
something for those to think about. If we imagine the
Strait of hor Moves stays closed for months rather than weeks.
Speaker 2 (05:40):
In terms of what do we do if South Korea
all of a sudden says nope, we're going to keep
everything inside and we're going to keep it all for ourselves.
Where else do we.
Speaker 3 (05:48):
Look to, Well, firstly, we go to Singapore. We have
a special arrangement with Singapore. In times of security crisis
or shipping or supplied problems, we can go to Singapore
and ask because Singapore is a big base for not
just the trading but the actual refining of this fuel.
Speaker 2 (06:08):
And we already get a bit from them, Oh yeah,
quite a chunk.
Speaker 3 (06:11):
In fact, after South Korea, it's the second largest source
of refined fuel. But the problem is everyone's been to
be going to Singapore and asking for it. We also
have agreements in theory with the United States and Japan
to bring in extra fuel when we need it. In fact,
that's how we comply with the International Energy Agencies rule
(06:33):
that you have to have ninety days of supply. We
actually only have about twenty three days of supply, and
the other sixty or seventy days is actually on paper
in these so called tickets that we can present to
the United States or Japan to say, hey, we really
need to diesel, could we have it now. The trouble is,
of course, in times of war, countries are already saying, yeah,
(06:56):
that's just paper. We've got a crisis here. We need
to supply our voters, our truckers, our railways with the
diesel and the oil to help our economy going. And
that's why, you know, there's been a lot of people
critical of the current supply chain reliance effectively on the
markets to get it to us, because when wards start,
(07:19):
markets just don't work.
Speaker 2 (07:21):
Are we in direct competition with Australia when it comes
to getting this refined stuff in it or would it
be a good idea to team up.
Speaker 3 (07:28):
Yeah, Australia has a similar sort of problem. They've also
closed quite a few of their refineries and about seventy
five percent of their fuel comes from imported refined fuels.
And in fact, in some parts of Australia they are
already doing some rationing. Some of the independent wholesalers have
cut back on supplies to some particular buyers, and you know,
(07:51):
there are real concerns in Australia. There are big queues
at service stations, and I think New Zealand and Norway
has been quite complacent about this because we don't really
understand how the mechanics of the oil markets work, and
also just the logistics of getting through the strait of
(08:12):
hor moves. Donald Trump may say that, you know, the
war is over and we can all just go home
now and the price of war can go down, and
markets may.
Speaker 1 (08:20):
Believe them for a day or two.
Speaker 3 (08:22):
But the people in control of the Strait of hor
moves are the Iranian Revolutionary Guard. They don't care about markets,
they don't listen to Donald Trump. They have said, not
a leter of oil gets out of this Gulf while
we're being attacked by Israel and the United States. Now
Trump has said that you know, we'll just take over
the straits of Hormerves. Sure, that's a chunk of territory,
(08:45):
you know, half the size of Vietnam, riddled with caves
and tunnels, full of bristling with all sorts of weaponry.
Not to mention, the Iranians have got drone mines that
can simply drift into place you use the tides. They
don't have to be dropped by planes or ships. So
this idea that you know, the Straight of holl Moves,
(09:07):
it'll open pretty soon, no worries. Don Trump says it, Well,
biggest navy in the world. Yeah, well, as we've as
the Russians discovered in Ukraine, you can do an awful
lot with a drone that outweits the biggest ships on
the planet. And I think a lot of people in
New Zealand are a bit complacent about how soon the
(09:27):
Straight of holl Moves will open, and also how quickly
the oil supplies will regenerate out out of the Middle East,
because you can't just turn the tap on an oil well,
you have to so called shut it in, which means
you have to plug it up otherwise it won't work
in future. Now you don't just unplug them it's like
(09:47):
the bath plug. You know, this is a fair chunk
of work. It takes weeks and months to get that
stuff cracking in. So the longer this goes on, the
longer it'll take to restart. At the moment where looking
at weeks and that's everything goes fine from here on,
And it's pretty clear the Uranians are not playing ball,
(10:07):
and that straight is closed and twenty percent of the
world's oil goes through it, all of our oil effectively,
all of pretty much all of Asia Pacific's oil, and
we're going to have to compete with everyone in the
Asia Pacific to get our hands on that diesel in
a couple of months time, if you know, our supplies
run out, which you know at the moment we've got
(10:28):
about sixty or seventy days worth. And then it gets
very serious.
Speaker 4 (10:40):
Well we'll looking the oil prices down. We were artificially
up because of this excursion into a very positive thing.
I mean, this was an excursion that a lot of
people wouldn't have done. I knew oil prices would go
up if I did this, and they've gone up, probably
less than I thought they'd go up. But I don't
think anybody thought we were going to be this quickly successful.
(11:01):
This was a military success the likes of which people
haven't said. We have the best military, we have the
best equipment, we have I believe, the best generals, we
have the.
Speaker 2 (11:14):
Best What numbers should we be looking at and worrying
and starting to have that rationing conversation?
Speaker 3 (11:22):
Do you think, yeah, well, we need to know in
a much more direct and transparent way how much fuel
we've got left now? The government and NBI said on
Monday that as of March the first, that was now
ten days ten to twelve hours ago, we had about
twenty six days of fuel on shore. Now that is fine,
(11:46):
but that was eight days ago. You know, we should
know a lot more and a lot sooner than that,
particularly if you want people to believe what you're saying
and not just panic and go on queue and start
hoarding diesel. So that's something we'd like to see today.
The government is having its Ministerial oversight meeting and hopefully
we get some more information out of that, although we
(12:07):
saw yesterday from Shane Jones and saying if nothing changes,
the straight stays closed, then you know, by May we're
in a serious situation. That's when you definitely will be
talking about rationing, you know, making sure that the fire
trucks and the ambulances get it first, and the dairy
tankers and then of course all the trucks that we
(12:27):
need to fill our supermarkets COVID style, because remember the
government's already been advised on this. Last year Castalia did
a fuel security study and recommended to the government that
we increase our supplies of diesel from twenty one days
on average to twenty eight and that we think of
a crisis like the closing of the Strait of hor
Moves is very similar to a COVID style event because
(12:51):
it's actually worse than Ukraine situation. We will remember those
spikes and petrol prices three dollars a liter plus when
Russia invaded Ukraine. But if you look at the scale
of the blockage, we're talking twenty percent of the world's
oil rather than two or three percent of the world's oil.
And so the risk is that the spiking prices that
(13:13):
we have if the Strait of Hormus remains closed is
significantly more than the spike we saw during the Ukraine crisis,
and just the sheer physical volume of fuel that we
don't have. And remember back twenty two twenty three, Muslim
Point was still just finishing, so there was still quite
(13:35):
a bit of stuff happening. Now it's gone and we
have to survive on our own and get our hands
on that diesel from a refinery in Korea that may
have stopped exporting, or China which has definitely stopped exporting.
Speaker 1 (13:49):
In Singapore. We fall in love with the Singaporeans.
Speaker 2 (13:52):
I think has the closing of Marsden Point exacerbated the
situation that we are currently.
Speaker 3 (14:00):
Yes, because we had more storage and more control of
crude oil when we could refine it ourselves. It was
one of the reasons it was built to start with.
It was one of the great projects post Second World
War when people did worry about this stuff a lot.
They've been through an immediate experience during wars where you know,
ships couldn't get through they keep getting tall.
Speaker 2 (14:20):
Be day well, even the Suez Crisis in the fifties
as well, exactly so.
Speaker 3 (14:25):
And then through the seventies there were various christs including
the Irana Raq War, the Golf War. So this is
in living memory for a bunch of people. Carlos Days,
my family's day was Wednesday, Aunt Carlos Day. Now people,
a lot of younger people haven't really thought about this.
We just assume the market will provide. You know, it's
(14:47):
amazingly resilient and you know, it's amazing how things get
rerouted and the market works well. In this case, there
isn't a lot of, as they say, elasticity in this market.
We need oil and diesel to get to work. Do
we don't have an alternative? Now, some people have got
themselves an alternative, particularly moving to electric, but that has
(15:10):
slowed down the last couple of years as the government
changed its policies and so. In fact, one of the
recommendations from the Castalia Report was that we aggressively moved
to electrify our transport fleet as fast as we can.
It's actually the cheapest and fastest way to reduce our
vulnerability to a strait of hormus crisis. It also looked
(15:30):
at the option of restarting massen Point or building brand
new refineries, particularly in Taranaki, because we have a little
bit of oil that we produce ourselves. Now turning it
into actually something we can use might not be easy,
but we can get these so called mini refineries and
then there's other things that we could use, include bio diesel,
(15:52):
but really the most immediate, best, fastest, cheapest option is
for as many people to go electric as fast as
we can, to move the buses away from diesel to
electric and reduce the amount of strain on the system
from people driving cars and double.
Speaker 1 (16:10):
Cab utes around. There are a lot of fully.
Speaker 3 (16:13):
Electric cars and double cab utes right now, and the
electric buses coming from China, ironically are you know, some
of the cheapest and if you can see in Auckland,
upwards of fifteen percent of the fleet will soon be
totally electric. That's where we've got the best opportunity to
increase our resilience and reduce our risks and reduce the
costs because this oil is not going to get cheaper.
Speaker 1 (16:37):
You know, these wars aren't just suddenly going to stop.
Speaker 3 (16:40):
And you know, one of the themes of the last
decade really is as we get closer to the point
we're extracting oil costs more than we want and a
lot more people are moving away into renewable we should
be thinking about that too. Unfortunately, the current government is
not moving in that direction. But maybe this will be
a wake up call and also a reminder that if
(17:02):
we introduce this LNG import facility, we are effectively tying
our energy costs directly to the price of LNG, which
is dominated by one big plant in Kuwait which is
currently closed. So this is something we need to think about.
We forget that we're part of a global system of markets,
and one way to reduce that is to have a
(17:24):
whole bunch of panels and batteries and electric vehicles. Where
the ships don't come, we can still move around.
Speaker 2 (17:30):
Well, we're not Fortress New Zealand anymore, are we? We
are very reliant on other you know, international what's happening internationally.
What price is too much for your average key we
family to afford.
Speaker 5 (17:47):
Well, we are very conscious of that, and that is
why as a government, when we came in, we froze
and tended futurl tax increases. We said this is not
the time to be continuing to increase prices though they'd
fallen behind inflation, because we recognized the impact that has
on Kiwis and we will continue to judge that very carefully.
(18:08):
I'm not going to give you a number today. I'm
conscious that we're still experiencing significant volatility and we will
be monitoring it.
Speaker 2 (18:18):
It could the war whether on push more countries towards
clean energy.
Speaker 1 (18:22):
I suppose once.
Speaker 2 (18:24):
The dust settles.
Speaker 3 (18:25):
Yeah, And China has a very strategic approach to this,
and they've been madly not just moving to electric as
fast as they can. That's why they've got the world's
most productive and efficient electric car and truck building sector.
And they've got the fastest rollout of electric panels and
(18:46):
batteries and grid infrastructure in the world, which reallydoing it
five or six times faster than the United States. And
they have been building up their stocks of oil like
mad for a couple of years.
Speaker 1 (18:59):
They've been thinking.
Speaker 3 (19:00):
They've been knowing that there is a risk of something
like this, and so they've prepared well.
Speaker 2 (19:04):
They've been thinking not twenty eight days ahead, they've been
thinking a couple of years ahead.
Speaker 3 (19:08):
Right, And they're prepared to say to whoever owns the
refineries and actually most of those are state owned, to say,
you know what, markets, sh markets, we need to protect
China's economy. You cannot export that stuff. It's for the
nation of China and the nation Trump's the markets. And
(19:30):
New Zealand is still pretty much the market's trump the
nation type of place, and I think.
Speaker 1 (19:36):
With the global rule of law.
Speaker 3 (19:40):
And the sort of markets dominance of global affairs ebbing away,
we need to revisit that and rethink what are the
risks of relying on you know, these global rules and
global markets to provide when everyone else is pretty much
given up on it and every man's slash women's life
ah country for themselves.
Speaker 2 (20:02):
Well, that doesn't put us in a very good position.
So like in the list of people who are to
put their hand up and ask for something, we're probably
very far down and getting what we want. So is
that why should we come out with some kind of
Asia Pacific alliance or something like that as to you know,
have a bigger voice in the game.
Speaker 3 (20:23):
Yeah, we sort of already have a type of alliance
like that with Australia, I mean seer as effectively our
version of the EU, even to the extent that we
have freedom of movement for workers, which is great and
that essentially increases the size of our economy from five
million people to thirty million people, which is great. We
(20:45):
have lots of agreements, you know, some of them with
the Middle East at the moment, which aren't very good. Incidentally,
a big ship had to turn around with a bunch
of meat that was going to the Middle East because
it can't get.
Speaker 1 (20:56):
Through the Strait of hor moves.
Speaker 3 (20:59):
But Singapore, we have a Singapore right now is pretty
bloody useful. But we also have an opportunity here. We
are the only country in the world, literally the only
country in the world where you cannot get on a
rubber dinghy and just come here. We're the only place
(21:20):
in the world where actually it will be just too
expensive and difficult to invade, as the Japanese discovered, and
you know, you actually need a proper ocean going ship
to get here. It's not easy to get here. You
can stop planes from landing and taking off pretty easily,
but the ships are you know, they're hard to get here.
(21:40):
So we when we talk about fortress in New Zealand,
we're the one place in the world that really could
do fortress, and particularly when it comes to migration and
people movements, where the place where the only place in
the world where you literally cannot get on a rubber
dingy and go there. We're also incredibly well resourced with
(22:02):
water and with energy sunshine, and we should be using
that and at the moment, we're not We're just relying
on markets sh markets and we need to be much
better at using in our own resources and you know,
just realizing that market sh markets is a thing of
the past.
Speaker 2 (22:22):
Thanks for joining us, Bernard Jeers. That's it for this
episode of The Front Page. You can read more about
today's stories and extensive news coverage at enzidherld dot co
dot enz The Front Page is hosted and produced by
me Chelsea Daniels. Caine. Dicky is our studio operator, Richard Martin,
(22:44):
our producer and editor, and our executive producer is Jane Ye.
Follow the Front Page on the iHeart app or wherever
you get your podcasts, and join us next time for
another look beyond the headlines.
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