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Every Country in Our Supply Chain Has Declared an Emergency… NZ just launched an Ad Campaign

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From Nathan Surendran @ substack
via Energy and Resilience

What the ministerial press conference got wrong about NZ’s fuel supply, and what it didn’t mention at all.

I watched Nicola Willis announce, at a press conference convened to address the worst oil shock in history, that the government’s Phase 1 action is an EECA ad campaign at fuelsavingtips.govt.nz. I checked. The Onion already did this.

In June 2025 I submitted to Parliament’s Finance and Expenditure Committee on the Regulatory Standards Bill. In that submission, I named the Strait of Hormuz specifically and warned that a blockade would cause catastrophic fuel shortages and price spikes exceeding the 1970s. I warned that NZ’s closure of Marsden Point had left us uniquely exposed. I used the phrase “energy blindness” to describe the way our policymakers treat the economy as a financial system that can grow forever, rather than an energy system subject to physical laws.

Today the government held a ministerial press conference to announce a four-phase Fuel Response Plan (and that ad campaign). Here are some thoughts in response.

The TL:DR version: the plan is a framework without numbers, the stock figures are misleading, the geopolitical situation is considerably worse than the ministers alluded to, and NZ Inc still doesn’t understand what we’re looking at in terms of the scale of this disruption in coming months…

The 46 days that aren’t 46 days

The ministers claimed NZ has 49 days of petrol, 46 days of diesel, and 53 days of jet fuel as of midnight Sunday.

Please forgive the AI slop – I needed an image for the article in a hurry…

But their own press conference revealed the breakdown. For diesel: 18 days physically in the country. 16 days in NZ’s exclusive economic zone on ships unloading or transiting between ports. 12 days further out on the water.

Only 18 days is actually onshore. The rest is on ships that could be diverted, delayed, or fail to arrive if suppliers declare Force Majeure. Which is already happening across Asia.

MBIE released an unscheduled fuel update on 26 March after concerns about declining diesel stocks. Their own fuel supply analyst Mark Douglas confirmed that refineries in Singapore, Japan, and South Korea supplying NZ are now operating at reduced capacity, what he called “turn down”, processing crude at a slower rate to stretch remaining stocks.

As Bryce Edwards noted in his Democracy Briefing today, MBIE was forced to issue that update after independent analysts using ship-tracking data pointed out that its official figures on incoming fuel supplies were wrong. A website run by a BNZ financial markets analyst had better data than the ministry managing the crisis. The Taxpayers’ Union’s FuelClock.nz estimated NZ could run out of diesel by 16 April under business-as-usual, or by end of April even with emergency measures. Richard Harman’s reporting for Politik revealed that the Prime Minister held a private webinar briefing for top business CEOs while media were excluded. That’s not responsible communication management. That’s a two-tier information system.

The plan has tiers but no numbers

The four phases are sensible as a framework. Phase 1 is monitoring and voluntary conservation. Phase 2 is heightened risk with regulatory powers. Phase 3 is fuel prioritised to critical services. Phase 4 is strict allocation to life-preserving services.

The problem is that the government admitted it is “now consulting” on how to implement phases 3 and 4. They said they need “at least two weeks” to get the details right. They are building the lifeboat while the ship is taking on water.

The National Fuel Plan 2024 lists 14 “Critical Customer” categories. The lists are explicitly “not in priority order.” No volumetric quotas, no allocation formulas, no tiered triage system. Mike Hodgkinson at Laloli Research identified this gap: when stocks are actively depleting, an unranked list means inter-agency competition for a shrinking pool. Without a pre-agreed quantified framework, allocation defaults to ad hoc decisions under pressure, which means rationing by political weight, not by need. There are experts who have done the groundwork on this, including Mike and Adapt Research colleagues Matt Boyd and Nick Wilson, but the government is not calling on them.

NZ burns roughly 12.3 million litres of diesel per day. The government’s own numbers show 18 days of diesel onshore, roughly 220 million litres. If that needs to last three months, it is less than 2.5 million litres per day, about a fifth of normal consumption. Put that against 14 unranked priority categories and the gap between framework and reality becomes obvious.

Too much of the political conversation has been about petrol prices at the pump. That misses the point. As Edwards’ briefing notes, diesel is the crisis. Petrol shortages are inconvenient. Diesel shortages are existential. Diesel runs the trucks that stock supermarkets, the harvesters that pick crops, the milk tankers that collect from farms, the ambulances, the generators. The government’s own Phase 4 plan acknowledges this by prioritising “life-preserving services” – but the quantification of what that means in litres per day does not exist.

Wise Response and Mike Hodgkinson have put together an open letter calling on the government to publish exactly this: a quantified, tiered essential-use allocation framework for fuel. Not just who gets it, but how much, at what stock level, in what order. Hodgkinson’s analysis of the National Fuel Plan, the Fuel Security Plan, and the CDEM Guide shows the government has done the qualitative work – they know the categories – but has left the maths undone. We are launching the letter this morning, and invite NGOs, industry bodies, councils, and individuals to add their names.

Phase 2 should already be active

The government published six triggers for moving between phases. The first is export restrictions on refineries NZ imports from. South Korea imposed mandatory export caps on gasoline, diesel, and kerosene on 13 March. China banned fuel exports entirely. Thailand banned most refined product exports. By the government’s own published criteria, the trigger for Phase 2 was crossed weeks ago.

The ministers implied they are considering when to move. The question is, what are they waiting for?

Force Majeure is not a theoretical risk. It is happening now.

Force Majeure declarations have cascaded across the entire NZ supply chain and well beyond. Confirmed declarations:

Shane Jones said at the press conference that fuel companies have not once confirmed any supply problems, a classic case of his habit of listening to industry platitudes and reassurances over experts from the ministries and civil society with no pecuniary interest if ever there was one!

Refinery run cuts are confirmed and they affect NZ directly

Wood Mackenzie data via Vertium reports ExxonMobil’s Jurong Island operations cut to 50% or lower and Singapore Refining Co reduced to 60%. Total Asian run cuts estimated at 4-5 million barrels per day (bpd). Combined with the direct loss of Gulf refined product exports, the total global shortfall reaches 9-11 million bpd.

MBIE’s own analyst Mark Douglas confirmed on 26 March that NZ’s source refineries in Singapore, Japan, and South Korea are all on “turn down.”

Australia’s energy minister confirmed that six fuel shipments from Singapore and South Korea have been cancelled or diverted since the war began. Australia sources from the same refineries as NZ.

Air New Zealand has suspended earnings guidance due to jet fuel price volatility, with crack spreads widening from $22/bl pre-conflict to $115/bl.

South Korea’s GS Caltex has cut daily refining from 800,000 to 675,000 bpd. Korean airlines are cancelling routes. Hyundai Motor Group has suspended production of two vehicle models after a supply chain collapse. (Seoul Economic Daily, 25 March)

On 26 March, France’s Finance Minister Roland Lescure confirmed that 30-40% of Gulf refining capacity has been damaged or destroyed by Iranian retaliatory strikes. Separately, the total global shortfall now stands at roughly 11 million barrels per day – that figure includes the damaged refineries, crude oil blocked by the Strait closure, cascading run cuts across Asian refineries starved of feedstock, and precautionary shutdowns. Lescure warned destroyed facilities could take up to three years to restore, and precautionary shutdowns several months to restart. This is not a disruption that ends when the war ends.

What the press conference did not mention

The ministers treated this as a supply chain and logistics problem. It is not. It is a war that is escalating towards a ground phase, and the ministers didn’t mention it.

The US is assembling a ground invasion force

Trump said on 20 March that the US was considering “winding down” operations. The opposite is happening. Thousands of ground troops are converging on the Persian Gulf:

  • 31st Marine Expeditionary Unit (~2,500 Marines): ordered from Sasebo, Japan on 13 March aboard USS Tripoli. Expected in CENTCOM area any day now. (OPB/AP, 14 March)
  • 11th Marine Expeditionary Unit (~2,500 Marines): departed San Diego 19 March aboard USS Boxer. (Military.com, 20 March)
  • 82nd Airborne Division (~2,000-3,000 paratroopers): written deployment orders issued 24 March. Division commander Maj. Gen. Brandon Tegtmeier and headquarters staff deploying. (Washington Post, 24 March; CNN, 24 March)
  • 101st Airborne Division, 75th Ranger Regiment, 160th SOAR, 1st and 5th Special Forces Groups: all identified as deploying. Over 40 C-17 cargo flights tracked from US home stations to Middle East bases over the past two weeks, concentrated at Ovda Air Base in Israel, King Faisal Air Base and King Hussein International Airport in Jordan, and Al Dhafra in the UAE. (Future Warfare Magazine)

Total ground-capable force converging on the region: potentially 8,000-12,000 troops. Combined with 50,000+ US personnel already in theatre, this is the largest ground force posture since the 2003 Iraq invasion.

The most likely targets: Kharg Island, which handles 90% of Iran’s crude oil exports and has already been struck by the US, and Qeshm Island near the Strait of Hormuz. Senator Lindsey Graham compared a Kharg assault to Iwo Jima on Fox News Sunday. Iran’s parliament speaker has said they anticipate a ground invasion of an island. CNBC reports that US officials are considering occupation or blockade of Kharg.

White House Press Secretary Karoline Leavitt was asked directly on Fox News whether mothers should worry about a draft. She responded that Trump “wisely does not remove options off of the table.” Trump himself, asked about ground troops on Air Force One: “Could there be? Possibly, for a very good reason.” (Fox News/Poynter, 8 March; Military.com, 9 March)

The Pentagon has requested US$200 billion from Congress for the war.

If the US seizes or blockades Kharg Island, Iran’s oil exports, roughly 1.5 million barrels per day, are removed from the global market entirely. On top of the supply already lost from the Strait closure, the refinery destruction across the Gulf, and the Force Majeure cascade. Trump has said he is “not concerned” if gas prices go up. NZ’s interests are not aligned with US war strategy.

The US is not a backup plan

Shane Jones pointed to the US as a potential alternative fuel source, noting that Asian refineries are “capable of drawing product from the United States.”

The US currently supplies 2% of NZ’s fuel. On 23 March, a major explosion hit Valero’s Port Arthur refinery in Texas, one of the largest in the US at 435,000 bpd. Officials say equipment failure. Pro-Iranian accounts are claiming sabotage, no evidence for that. Either way, 435,000 bpd just went offline at a refinery the minister implied could help fill NZ’s gap.

US west coast refining capacity is already shrinking. Phillips 66 ceased its 139,000 bpd LA refinery at end of 2025. Valero is idling its 150,000 bpd Benicia refinery. US firms are chartering rare fuel cargoes from the Gulf Coast to Australia as emergency supply, which tells you how stretched the system already is.

A country assembling an invasion force, requesting $200 billion in war funding, that hasn’t ruled out a military draft, and is losing domestic refining capacity, is not a reliable alternative supplier for New Zealand. Meanwhile attacks on Russian refining infrastructure by Ukraine continue to erode their capacity…

Why Aotearoa New Zealand’s supply has held – and why that could change

Our fuel shipments have continued arriving so far partly because our fuel companies have established term contracts with South Korean and Singaporean refineries, and partly because we can afford to pay elevated prices. But this stability is price-dependent, not structural.

In a tightening market, the queue is not determined by who pays the most. It is determined by who has leverage. The AP reported on 4 March that “when supply tightens, richer nations outbid poorer ones for scarce cargoes, leaving more vulnerable economies short of fuel” – a pattern documented during the 2022 Ukraine crisis when Europe outbid Asia for LNG, and now playing out in reverse as Asian buyers outbid Europe. The Atlantic Council confirms the dynamic: “European buyers will be forced to wait until Asian demand is satisfied, and then pay whatever price remains.”

We sit in an awkward position in the middle of this hierarchy. Wealthy enough to outbid the Philippines or Bangladesh, but not using commodity leverage. Australia is using its coal and iron sands as bargaining chips to secure diesel – Hooton’s “you want coal? Then gizza your diesel.” Japan and South Korea can outbid most of Asia. Countries with navies are discussing escort operations for the Strait. Aotearoa has none of these cards. We consume about 24 million litres of fuel a day – a rounding error for the refineries supplying us. When those refineries are on turn-down and choosing which customers to prioritise, small volumes are the first to get bumped. Australia’s energy minister has confirmed six April shipments of about 80 per month cancelled or diverted.

NZ has food. Half the world wants it. That is leverage, if anyone in Wellington is willing to use it. Right now it appears that we are relying on commercial goodwill and market price alone, in a world that is rapidly moving towards bilateral barter and strategic allocation.

The government is not reading the room

Transport Minister Chris Bishop said something at an Infrastructure NZ conference this week that politicians rarely say: “It’s a scary prospect and I’m not 100 per cent sure the public have quite worked it out yet.” He added: “the reality is, it could happen.” Matthew Hooton, writing in the Herald today, put it more bluntly: “Thought Covid was bad? If New Zealand runs out of diesel, Covid will look like the rehearsal.” Z Energy chief executive Lindis Jones told Newsroom: “I heard it described as the biggest energy shock in the history of the world. It certainly feels like it.”

Hooton makes the point plainly. During Covid, the circulatory system of the economy kept pumping. Trucks delivered to supermarkets, harvesters picked crops, milk tankers collected from farms, ambulances ran. None of that is guaranteed now. And as he notes, “being the last station on the southern line makes New Zealand more vulnerable to disruptions to supply lines, not less.” (Both Hooton and Bishop are cited via Edwards’ Democracy Briefing.)

The Wareing Group, a major South Island logistics operator with 270 drivers, has been hitting fuel outages since Tuesday. Truck stops in Taupo, Sanson, parts of Christchurch, Ashburton, Oamaru, and Winton have been running dry. The company is paying $10 million more than expected for fuel. Health Minister Simeon Brown is seeking advice on the supply of helium for MRI machines – between a quarter and a third of the world’s helium comes from Qatar’s Ras Laffan facility, which has been struck. If helium runs short, cancer diagnoses get delayed.

Compare NZ’s response to what every other country in its supply chain is doing:

NZ’s own suppliers:

Wider international response:

  • Australia: suspended fuel quality standards, relaxed minimum stockholding obligations, chartering emergency fuel from the US Gulf Coast. More than 500 petrol stations have run dry. Six fuel shipments from Singapore and South Korea cancelled or diverted. (The Spinoff, 26 March; Vertium, March 2026)
  • Philippines: declared a national energy emergency. (CNN, 25 March)
  • Sri Lanka: rationing fuel, motorists limited to 15 litres per week. (The Spinoff, 26 March)
  • Pakistan: moved to a four-day working week in the public sector. (The Spinoff, 26 March)
  • Italy: PM Giorgia Meloni flew to Algeria for emergency gas talks to replace lost Qatari LNG supply. (France 24, 26 March)
  • UK and Germany: both signalled the crisis is accelerating their green energy transitions. (France 24, 26 March)
  • IEA: triggered a record 412-million-barrel emergency stock release, the head of the IEA calling this the “greatest global energy security challenge in history.” (Argus Media, March 2026)

NZ launched an EECA ad campaign asking people to “stretch their tank by 20%.”

The response gap is bad. The comprehension gap is frightening.

The economy is an energy system using money

The NZ conversation treats this crisis as a temporary logistics disruption caused by a geopolitical event that will eventually resolve. Ministers cite fuel company reassurances. Commentators talk about “when the war ends.” Winston Peters said in mid-March that the conflict “won’t be very long before it’ll be over. It won’t be months.” It is now a month in and escalating towards a ground invasion.

The framing is wrong because it treats energy as a commodity to be sourced from somewhere else, not as the binding constraint on everything the economy does.

The economy is an energy system using money, not a financial system using energy. Money is a claim on energy. It has no intrinsic value. Central banks cannot print physical resources into existence.

I published a white paper in February, “The Limits to the Energy Transition: What Physics Means for New Zealand’s Economy“, which argued that NZ’s 100% import dependency, rising Energy Cost of Energy (ECoE), and the geological reality of fossil fuel depletion made a supply crisis inevitable. The only unknown was the trigger. The trigger has arrived.

Standard economic models treat energy as a marginal input with a cost share of 3-7% of GDP. Under those models, a 10% fall in energy reduces output by less than 1%. A 90% fall reduces it by just 15%. Keen, Ayres, and Standish (2019) showed this is nonsensical – “labour without energy is a corpse, capital without energy is a sculpture” – and demonstrated that energy is not an independent input alongside labour and capital but an input to both, without which neither produces anything.

When Kümmel, Ayres, and Lindenberger fitted their LINEX production function to data for Germany, Japan, and the USA, they found energy’s actual output elasticity is an order of magnitude larger than its cost share – upwards of 30%, not 3%. Their models reproduced the recessions from the 1970s oil shocks without needing to assume mysterious “technological progress.” The implication is direct: when the energy supply contracts, the economic hit is not a rounding error. It is structural, it is large, and no monetary or fiscal policy offsets a physical constraint.

The standard model’s “cost share” massively understates energy’s role. What conventional economics attributes to “total factor productivity” – the mysterious residual that accounts for most economic growth in standard models – is largely the contribution of useful energy. The policy implication is direct: when the energy supply contracts, the economic impact is not a rounding error. It is structural, it is large, and no amount of monetary or fiscal intervention can offset a physical constraint.

Even if the Strait reopens tomorrow, the structural trajectory remains: rising extraction costs, declining EROI, cascading supply chain fragility, now compounded by destroyed extraction, export and refining capacity. This crisis is a preview, not an anomaly.

France’s finance minister has confirmed it will take up to three years to restore destroyed Gulf infrastructure, and the UK and Germany have both signalled that the crisis is accelerating their green transitions. Italy’s PM flew to Algeria to negotiate for emergency gas. These are countries that understand the structural nature of what is happening.

What should be happening

Three things, starting today.

First, publish the actual depletion timeline. Not headline stock figures, but what happens if no more ships arrive. The public deserves to see the curve, not the snapshot.

Second, move to Phase 2 immediately. The government’s own triggers have been met. Voluntary demand restraint messaging should have started weeks ago. Every day of delay burns through stock that cannot be replaced at the current rate. Jumping straight from Phase 1 to Phase 4 will be unnecessarily destructive.

Third, quantify the allocation plan and prioritise food. Shane Jones himself has said it plainly: “A shortage of diesel would literally bring the economy to its knees.” He told CNBC: “You cannot have a food industry, you cannot have a forestry industry, you cannot have a fishing industry, you cannot have a horticultural industry unless you’ve got significant security and robustness about diesel supplies.” He is right. So act on it.

If I were making this call today, I’d be ring-fencing diesel for domestic food production now: arable crops, vegetables, the minimum livestock operations for domestic meat and dairy, and the transport to get it to market. Winter crop planting decisions are being made right now.

Hooton makes a more provocative version of this argument. NZ has food. Other countries want it. He suggests Luxon should use that leverage with counterparts in Singapore, South Korea, and Malaysia: food in exchange for fuel. He acknowledges this would require “some sort of state control over international trade that we haven’t seen since 1984.” But the scale of the potential crisis justifies it. Australia is already playing this game, using its coal and iron sands as leverage to secure diesel and petrol shipments. As Hooton puts it: “You want coal? Then gizza your diesel.”

This is not radical. Every country in our supply chain is already doing some version of this. We are the ones who aren’t.

As Edwards put it today: “The test of democratic governance in a crisis is not just competence in managing the immediate mechanics. It is whether the Government is honest about the risks, fair about who bears the cost, and brave enough to act before it’s forced to.” The government’s credibility on this is more fragile than it realises. If NZ ends up at Phase 3 or 4 in a few weeks, having been told the situation was fine, public trust will be destroyed.

Chris Bishop was honest enough to say the public hasn’t worked out how bad this could get. The government should trust the public enough to tell them. And then act accordingly.

There are none so blind as those who refuse to see…

Nathan Surendran is Chairperson of the Wise Response Society and Principal Consultant at Schema Consulting Ltd. He is a mechanical and energy systems engineer specialising in energy transition strategy. His white paper “The Limits to the Energy Transition: What Physics Means for New Zealand’s Economy” is available on this Substack.

The Wise Response open letter calling for an Essential Use Allocation Plan for Fuel, developed with researcher Mike Hodgkinson at Laloli Research, is available here.

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Image by Alexander Fox | PlaNet Fox from Pixabay

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