Source: Radio New Zealand
Business New Zealand’s head of advocacy Catherine Beard. Supplied / Business NZ
Businesses say the government’s deal with Z Energy for an emergency diesel reserve is reassuring in case of supply disruption, but will not help with high prices.
Prime Minister Christopher Luxon on Tuesday announced the deal which will see Z Energy procure, own and manage 90 million litres of diesel at Marsden Point refinery’s refurbished fuel tanks.
The government would then be able to release the fuel to service stations if normal supply shipments were disrupted.
Business New Zealand’s head of advocacy Catherine Beard told RNZ it was reassuring to businesses.
“All of the goods that move around New Zealand … for anything industrial and commercial it’s diesel is really the critical fuel, so I think this will be quite, quite encouraging for businesses to know that there’ll be extra stock on hand.
“It may not need to be used, but it will shore things up. I understand that supply chains are actually working quite normally, which is really good.”
However, it would do little to help with high diesel costs – which she said was the main problem faced by businesses.
“The issue really has been the price problem. This won’t resolve the price problem but it will give companies and business, I guess, more confidence that we’ve got enough.”
Price monitor app Gaspy showed a diesel price of about $3.32 a litre – down about 20 cents over the past month, but still nearly $1.50 higher than before the Iran conflict.
“It absolutely is a problem, obviously, and businesses would have been trying to where they can absorb it, but it will have to be passed on eventually,” Beard said.
“It’ll start to flow through supply chains and ultimately hit consumers in the pocket as it affects everything that’s moved around.”
She said the government’s moves towards cutting regulations on truck weights – announced by ACT leader David Seymour over the weekend – could take pressure off businesses struggling with those costs.
NZ First leader and Minister for Rail Winston Peters has taken a different tack, calling for a focus on rail instead – a stance Labour and the Greens have also been pushing.
Beard, however, pointed out trains had their limitations.
“Rail is there, but it doesn’t get the goods to the door of the customer. It can work well on main trunk line and taking things maybe from Auckland to Wellington for example, but you still need to distribute your goods to the end user so you can’t really get away from trucks.
“Maybe more could go on the train, but it also depends on timeliness – of how urgent it is to get things delivered and what customers expectations are – but I suppose when we’re in this situation of going into the slightly unknown that all of those things could change.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
