Energy (Fuels, Levies, and References) Amendment Bill - Third reading

Sunday, February 15, 2015

STUART SMITH: First of all, I would like to mark the passing of Celia Lashlie, as has been done by colleagues earlier in the evening. As a father of teenagers, I certainly was one of those people who took a lot of note of what she said. She has left her mark on New Zealand and will be long remembered.

The Energy (Fuels, Levies, and References) Amendment Bill is a very important bill, and I would like to start by just challenging what was said earlier in the evening about the price and calling for an inquiry into the price of fuel.

Carmel Sepuloni : What’s going on? Filibustering going on over there.

STUART SMITH : I think if we want to talk a little bit about fuel running out, we can hear what happens when an engine runs low on fuel, with that spluttering coming from the other side of the House—running quite roughly.

As I said, price has actually got a lot to do with exchange rates. It has to do with the price of oil. Incidentally, it might come as a surprise to members across the House, but the oil price is going back up. It is over $61 a barrel today, so it is quite considerably higher than when it was in the high forties just a couple of weeks ago. The interesting thing is that the exchange rate is going in the opposite direction to fuel prices. So that has caused a buffering effect and that is why the fuel price has not moved at the pump in the way people would have expected.

Anyway, having said that, I would like to dwell for a little minute also on what would happen should we run out of oil. I think one of the things that is not appreciated, should that happen, is that most petrol stations around the country do not fill their tanks all the time. What they do is put in the minimum amount for a couple of days’ supply, quite simply because they do not want to bank on the price of the day. They want to meet their buy price and sell price and keep that gap at pretty much the same, so that they are buying and selling on the same market. So a change in supply would have an impact almost immediately at the fuel pumps, and New Zealanders would very quickly find that their car that was on half full would run out in a few days and then they would not be able to fill up because all the fuel supplies around the country would run dry very, very quickly. So this bill aims to alleviate that.

Also, the instability in the Middle East at the moment is something that we should not just sit back and hope will not ever have an impact on us. Although the Islamic State of Iraq and Syria is a terrible beast at the moment, the instability that it is causing over there could quite easily interrupt supply. It is not that hard to imagine things blowing up in the Middle East, and New Zealand, like the rest of the world, going through an oil shock, which was alluded to earlier on—like in the 1970s. That was a long time ago, I appreciate, but carless days did not happen only here in New Zealand. They also happened in Europe, in major parts around Europe, where you could drive your car only on alternate days, I understand. So that would be a pretty difficult thing to imagine today.

While it seems for some a utopia to imagine a world dependent on public transport, New Zealand is not ideally suited for public transport. We are not densely populated enough to really get the frequency of service that we see around the world in places like the UK, Paris, and Singapore. Although Singapore has a very similar sized population to New Zealand, it is in an area roughly the size of Lake Taupō, so you can see how a density of population makes those things work.

The ticket contracts are quite an interesting concept in that we do not have to stock a whole lot of barrels on the wharf. I am quite surprised that the Greens were calling for us to actually do that and keep the actual physical supply here because that, I would have thought, would be of great concern to them. That would carry quite an environmental risk for New Zealand—not one that would be taken lightly. Besides the cost of installing all of that infrastructure to look after those supplies, it would really be a great impost on our environment and an environmental risk.

There is a lot to be said for domestic production, as has been spoken about before, but our oil is light sweet crude oil and our refinery at Marsden Point is designed for heavy crude. So on that note I take great pleasure in commending this bill to the House. Thank you.