Shamubeel Eaqub: Simplicity chief economist voices concerns with the Government's handling of the fuel crisis

Fears the Government isn't taking the fuel crisis seriously enough.

We have 56.3 days of petrol, 45.4 days of diesel, and 47 days of jet fuel, either landed or on the way.

Simplicity chief economist, Shamubeel Eaqub says there seems to be a lack of certainty the fuel will actually arrive.

He says we should be conserving supplies more. 

"Because any time we buy now gives us more resilience." 

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Episode Transcript

Speaker 1 (00:00):
Afternoon. Now, fuel levels in the country have dropped for
the second update in a row. There is now slightly
less than three weeks worth of diesel in New Zealand.
It's not enough of a concern for the government to
move us from level one. We're not there yet and
we hope to never get there.

Speaker 2 (00:13):
But as a prudent and responsible government, we know it
is better to have a plan you don't use than
to need one and to be caught short.

Speaker 1 (00:19):
There are some criticism now emerging of the government's relatively
relaxed approach to what is going on with fuel. Simplicity's
chief economist, Chumabil Yakub reckons the full stage plan is quote,
do nothing, do nothing, do nothing. Then o f let's
talk to him. Hi shummu Hello, Okay. Do you have
a problem with the four stages themselves or is it
the four stages and everything else with this fuel plan.

Speaker 2 (00:43):
No, it's really the four stages in that we're not
moving through them fast enough. We should be in level two,
where we should be trying to conserve a bit because
any time we're buy now gives us more resilience. But
also Phase four, which is the kind of the extreme
scenario just needs to be really clear and really trying.
At the moment, it's too contingent. It lacks transparency, it

(01:04):
doesn't have the triggers, it doesn't define who the essential
businesses are, workers are and all of those things are
the same problems we suffer through COVID, and it seems
extraordinary to me that we're making those mistakes again.

Speaker 1 (01:15):
Okay, now I understand the desire to start conserving, but
is our problem not also that if we conserve, we
will possibly run out of storage capacity. This is why
we're talking about increasing storage at Marsden Point and having
potentially a tanker floating off the coast. We might not
if we conserve, we might not have anywhere to put it.

Speaker 2 (01:35):
Oh well, not really. We've already seen demand four right,
so we've already seen fred usdave forbe but ten percent
since February. So people are responding to the increase in
prices already. So we've got sufficient flex there. It's just
that I think we're not talking seriously enough in terms
of how we're going to manage this, in terms of
extending the fuel that's coming. Now that we know that
there is less fuel that's coming on the ships. We

(01:58):
know that in one month's time we might have to
deal with some reduction in supplies and we're not really
prepared for that. So it's not about a panic today
because there is no reason for panicking in news on
at all. But we need to be thinking to the
month ahead because all the stuff that's coming on the
pipe at the moment that's about stock that pretty much
left before the war really took off. So we still

(02:19):
have not dealt with the disruption that's out there.

Speaker 1 (02:21):
Right We've had the first shipment that's been held up
in Singapore, just a delay, not a cancelation. But is
this to you the start of it.

Speaker 2 (02:29):
Well, it's more what's been happening in places like Australia
and knowing that a lot of the force measure notices
are going out and we're not seeing that here. So
what my told us today is stuff that was signed
off three four weeks ago, but we don't know what's
going on in between on the period of the uncertainty,
and that's the bit that would give us a little

(02:50):
bit more transparency. I'm only concerned because I don't know,
I don't understand do we have enough supply coming if
we knew for sure that there was enough supply that
those uncertainties that other countries are facing, if we're not facing,
there's great wishure we're in a great position, but we
simply don't know. Now.

Speaker 1 (03:06):
You also make the point that not all of the
fuel that we have in country can be used because
some of the fuel has to stay in the system
to keep the pumps working. So if you strip that out,
how much does it drop our supply by.

Speaker 2 (03:18):
It takes one to two days away, And I think again,
it's really but just making sure that we've planned for
it properly. That what we don't want is to get
to the levels where we get to zero, because that's
absolutely not how we should be running this kind of thing.
It's about insurance. The reason why we're in this kind
of predicament at the moment is because of just in time,
and we can't have a just in time approach to

(03:39):
the crisis response as well.

Speaker 1 (03:40):
All right, Chelmith, thank you for your time. Schaumville Yakub
Simplicity's chief economists.

Speaker 2 (03:44):
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