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

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

Mr. Bridges says-

“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.

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

Although the press release doesn’t make it clear, I’m assuming that the change is that the levy will be added to the cost of fuel, rather than being paid from some consolidated govt fund.

I suppose this is what Mr. Bridges means by “fairer”, but even if it is fairer, any increase in the price of fuel is spread right throughout the economy by transport charges. Its also a significant dampener on economic activity.

I knew as soon as petrol prices dropped there would be some move by govt to take advantage. Maybe I’m wrong but I guess we will soon see.