Nicola Willis: Finance Minister on the impact of the conflict in the Middle East on fuel prices

The Government is actively monitoring the impact international fuel prices are having on the price we're being asked to pay at the pump. 

Crude oil prices have topped US$100 a barrel for the first time in three years, and our petrol prices surged another 14 cents in the weekend. 

Finance Minister Nicola Willis told Mike Hosking that they’re conscious that the price at the pump impacts not only most New Zealanders, but also freight costs and other costs across the economy. 

But she says they need to understand what the bigger picture looks like before they overreact, as any money they throw at the problem is money they will need to borrow.  

“We need to be prudent about New Zealand’s fiscal position.” 

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Episode Transcript

Speaker 1 (00:00):
The epic fury, the economic workings here at the bottom
of the world. The Commerce Commission's been asked to keep
an eye up for petrol price gouging. Ministerial Oversight Committee
has been set up fuel stocks both here and on
the water Seat and Fine Nikola Willis as the Finance
Minister and is with us. Good morning, Good morning. Make
I watched what you were trying to do with the
Prime Minister yesterday afternoon. Do you think you got your
message across?

Speaker 2 (00:20):
Yes? I did. I did. We are very much of
the view that this is a time that calls for
call heads. We could act in haste and regret at leisure.
We need to take dicisions consistent with the national interest
and to have a stronger prishtful management and ensure that
we are leading our response to potential fuel security issues

(00:41):
and the implications that will have to the economy. We're
doing that, we set out how we're doing it.

Speaker 1 (00:45):
I gave a list of countries that have reacted already
in fuel caps and prices and discounts in four day
weeks and universities being closed in various parts of Asia.
How much pressure do you feel will come on you
for people who want a quick fix solution to their
problem of this dregs.

Speaker 2 (01:03):
Well, we're very conscious that the price at the pump
is something that impacts not every New Zealander but also
our freight costs and costs across the economy. In the
first instance, however, we do need to see what unfolds internationally,
whether of course stocks are released, but through the International
Energy Agency, what responses the US and others have. We've

(01:25):
seen the oil price has spiked but then come back again,
and so we're conscious that we need to understand what
that picture looks like before we overreact, and that any
money that we throw at this problem right now is
money that we have to borrow. And so we need
to be prudent about New Zealand's the school position.

Speaker 1 (01:43):
And do you think people get that.

Speaker 2 (01:46):
I think people understand that there are international events unfolding
at past and they wouldn't want to see the government
having a knee jerk reaction, but to be considered and
clear about the trade offs and opportunity costs that would
exist with any immediate risk response.

Speaker 1 (02:00):
We had given this as early days and given how
fluid it is, and we won't name names, but there
was a person questioning desperately yesterday for specifics and numbers
and facts and stats. Does that mentality worry you that
we go into this blind panic of guessing and second guessing,
if not third guessing what we can't possibly know.

Speaker 2 (02:21):
Yeah, Look, I think New Zealanders will be realistic, which is,
of course I can't tell you right now exactly what
this means for the precise inflation number in the next quarter,
nor can I tell you what it means for GDP
growth forecasts for the coming year. Because there are many
events unfolding at pace. We do have an obligation to
share information transparently with New Zealanders, to let them know

(02:43):
of the potential scenarios that can play out, and to
assure them that we're positioning ourselves to respond sensibly and
we'll keep doing that.

Speaker 1 (02:50):
Are you comfortable? And how did we come to the
twenty five days plus whatever's on the water by way
of fuel supply when places like Europe have thirty plus
high thirties effect Well.

Speaker 2 (03:02):
That minimum stockholding obligation came into fourth in twenty twenty five,
and at the moment we have around fifty days fuel
combined onshore and very close to arriving on the water
and fuel companies are not reporting issues with supply chains currently,
they're reporting healthy stock levels and shipments preceding as scheduled.
We're also members of the International Energy Agency and that

(03:24):
requires us to hold fuel stock's equivalent to ninety days
of demand, and we meet that both through the domestic
stockholding are just outlined, but also through the use of
stock reservation agreements that we have with various suppliers and
other countries. So we meet that ninety day obligation that
other countries have in a combination of ways.

Speaker 1 (03:43):
The meeting the G seven finance ministers overnight, they didn't
pull the trigger on that is that in its own
way reassuring well.

Speaker 2 (03:50):
It tells us that they still think that there are options,
And of course the US Energy Secretary has noted that
one tanker has transited the strait that they are looking
to restore flows within weeks, not months. All democracies around
the world have an interest in fuel security and not
seeing the price of oil continue to spike, and so

(04:11):
we do expect partners around the world will act sensibly
in response to these issues.

Speaker 1 (04:16):
Do what level of I don't know, optimism do you
have that Trump, Hegseth et cetera. Are right. This is
a three to six week deal, and we'll be talking
about this in the past tenth in July.

Speaker 2 (04:29):
I wouldn't want to speculate. I'm conscious there's so much
information they have that I don't have. What I know
sitting down here in New Zealand is that looking at
a world with countries at war is disturbing, and we
can see that we're not immune from the impacts. This
may a war, but we have a great interest in

(04:49):
peace and normal international relations resuming because we simply can't
make ourselves immune in the international economic effects.

Speaker 1 (04:57):
Indeed, we cannot. What was sort of yesterday as you
came up with your forecasts for GDP, forget the war
for a moment. At three percent this year, three percent
next year, that's about as good as we get, isn't it.
I mean, it's a good number, and let's celebrate it.
But that's I mean, that's that's peak times, isn't it.

Speaker 2 (05:15):
Yes, Ironically, I got my preliminary budget forecasts last week
and they showed that we were running ahead of schedule.
You'll remember I released forecasts in December. Well, every thing's
been looking better since then, as those numbers had transpired,
with be on track to getting the books back in
balance sooner and net debt would be peaking at a
lower level. That was then This is now. Of course,

(05:38):
events internationally we'll have an impact on those forecasts. But
I simply shared that information to say, well, look, New
Zealand's coming into this a lot stronger than could have
otherwise been the case. We faced into these challenges from
a good position.

Speaker 1 (05:50):
What's Q four next week? Which comes out? Do you reckon?
If Q three was one point one? Is Q four closer?

Speaker 2 (05:57):
I've been really reluctant to guess the course GDP numbers
because they've been so volatile in recent times, and the Treasury,
the Reserve Bank, other bank forecasters haven't picked those numbers correctly.
Treasury are forecasting a zero point seven percent print for
the fourth quarter, but we'll wait and see.

Speaker 1 (06:17):
Okay, it's redundant, but I'll ask it anyway, because people
still raise at Marsden point, was that a catastrophic mistake?

Speaker 2 (06:24):
Well, it is the case that not having oil refinery
here does decrease our resilience. It's also the case that
was decisions made under the policy settings of the last government.
There's no point looking back in anger. We are where
we are and as I say, we do have these
minimum stockholding obligations and good arrangements of countries around the

(06:47):
world that allow us to assure New Zealanders there is
no immediate threat to fuel security.

Speaker 1 (06:51):
Appreciate your time as always, Nicola will as Finance Minister.
No point looking back in anger. That's pretty much what
New Zealand First has done for the last three years.
Of course, I hope be leaving that one go anytime soon.
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