Bill to safeguard oil supply passed

Energy Minister Simon Bridges says a new Bill passed last night will help safeguard the security of New Zealand’s oil supplies.

“A secure supply of energy is critical to the well-being of New Zealanders, and is an important part of the government’s Business Growth Agenda,” Mr Bridges says.

The Energy (Fuels, Levies, and References) Amendment Bill is the latest in a series of actions the government is taking to improve oil security.

“It establishes a fairer and more sustainable way to fund New Zealand’s oil stock-holding obligations, which act as a buffer against any sudden spikes in international oil prices.”

Under a collective arrangement with the International Energy Agency (IEA), New Zealand is obliged to hold oil stocks equivalent to 90 days of net imports. The arrangement is designed to mitigate any disruptions in international oil supply and the impact this would have on oil prices and the domestic economy.

Under the Bill, the costs of maintaining these oil stocks will be met through the Petroleum or Engine Fuel Monitoring Levy on imported fuel, rather than being paid by general taxpayers. 

“Domestic oil production in New Zealand is offset against our oil stockholding obligations to the IEA,” Mr Bridges says.

“Any major new oil discovery in New Zealand would reduce these obligations and further increase the security of our transport fuel supply.”

The levy already covers the cost of monitoring fuel quality and other costs relating to the IEA, such as energy data collection and analysis. 

The new levy rates will be set in regulations, and there will be further consultation on the levy rate before the regulations are made.