Diesel prices are on the rise again with continuing conflict in the Middle East and Ukraine constricting oil supplies.
So what’s happening, and what steps should transport operators be taking?
Key factors are:
- Iran’s restriction on shipping through the Straits of Hormuz
- Ukrainian drone attacks on Russian oil infrastructure
- Houthi forces restricting shipping through the Red Sea
- Attacks on a Saudi Arabian oil pipeline launched from Iraq
Diesel prices in the UK have reached the equivalent of NZ$4.50/l and even in the United States prices at the pump have increased significantly prompting President Trump to call on Ukraine to stop its drone attacks on Russian petrochemical plants – go figure!
In New Zealand the pump price of diesel has increased from about $2.37/l in mid-July to about $3.00/l last Friday. With such global uncertainty it’s impossible to say whether fuel prices will continue to increase or by how much in coming weeks and months.
According to this RNZ story, New Zealand’s top Government fuel official MBIE’s Iain Cossar is “reasonably confident” New Zealand will avoid fuel shortages – largely as a result of actions taken by an all-of-government-response group after the US and Israel launched attacks on Iran in February.
However, while Cossar is confident of continuing supply, his comments suggest prices may continue to rise.
Z Energy’s chief executive Lindis Jones also says New Zealand’s fuel supplies have been flowing normally and meeting local demand.
“Supply remains secure, fuel is still moving, it’s just taking longer and is more expensive to move, so it’s just a story of price not supply security.”
Member guidance
What does this mean for NRC members? Our message is unchanged from earlier in the year when diesel prices peaked at about $3.50/l.
NRC has a wealth of resources and services available to help members:
Fuel discounts – NRC provides members with highly-competitive fuel discounts from our service partners Z Energy and Mobil. Discounted fuel prices are updated every Friday. Contact NRC for more details.
Fuel adjustment factor tool – is available for members to use. This tool provides a mechanism for transport operators to manage short-term fuel price changes during longer-term contract periods with customers.
Transport cost-model tool – calculates accurate modelling on distance or weight-based total transport costs for your business, to help operators keep ahead of the cost curve.
Infometrics Customisable Transport Cost-index – a powerful tool for helping members to develop a deeper understanding of how changes in underlying costs impact their business.
Commercial Transport Specialists – our team of road freight and supply chain experts are available to members to help with any situation impacting your business. Just call us on 0800 686 777
Long term
The latest fuel price increases are yet another reminder we are vulnerable and reinforce NRC’s election call highlighting the critical national importance of fuel security now and to accelerate the shift to low emission vehicles over time.
As a country we need to firm up our onshore fuel supplies by increasing onshore storage capacity and grow our energy independence by backing the shift to low and zero-emission heavy vehicles
The total cost to New Zealand in increased diesel cost since the Iran war started in February is more than $1.7 billion.
NRC is collaborating with the Energy Efficiency and Conservation Authority to transition away from fossil fuels and NRC members NZ Post, WM New Zealand (formerly Waste Management) and truck rental company TR Group are leading the way in introducing electric and hydrogen powered trucks.
Good news
In this troubled world New Zealand is seen as a safe place to visit and international tourist numbers now exceed pre-Covid levels. The exchange rate means American tourists double their dollar value and Aussies aren’t far behind.
And our primary produce continues to earn good export dollars – the latest stat I noticed was avocado exports are expected to reach $100 million.
So the news isn’t all bad. Carry on!
Panel discussions in September
This month I have the privilege of participating in two important panel discussions for our industry.
The Custom Brokers and Freight Forwarders (CBAFF) Federation annual conference running Tuesday 22 to Thursday 24 September in Christchurch. I’ll be joining with Kiwirail, Lyttleton Port Company and shipping lines to discuss Supply Chain Resilience & Capacity – Keeping New Zealand moving. The Conference has a great line up of speakers and is promising to be a compelling event – NRC members are entitled to a $100 discount.
On Tuesday 29 September the Northern Infrastructure Forum is hosting a panel discussion on the Second Harbour Crossing. With a new detailed business case on the crossing commissioned by the Minister, this is a timely discussion on what is needed from the second crossing, and how it is going to be paid for.
Justin
