Oil prices have surged past US$100 a barrel following disruptions in the Strait of Hormuz and escalating tensions in Iran, leading to petrol prices reaching NZ$3 a litre in New Zealand and reports of fuel shortages at some stations.
Fuel Supply Concerns
The disruption, affecting approximately 20 percent of the world’s oil supply, prompted the International Energy Agency to announce its largest-ever coordinated reserve release of 400 million barrels. However, analysts caution that oil could reach US$150 a barrel if the strait remains closed. New Zealand, which imports all of its petrol, diesel, and jet fuel, faces significant vulnerability as a result.
Since the Marsden Point refinery ceased oil refining in 2022, New Zealand has relied on imported refined fuel, primarily from South Korea and Singapore, both dependent on crude oil shipments through the now-blocked waters. Current fuel stock levels are roughly 52 days of total cover, with less than 33 days of petrol available.
Motorists are already responding to the price increases by hoarding fuel, with reports of petrol stations in Auckland selling out of fuel cans.
Failure to Electrify
New Zealand generates more than 85 percent of its electricity from renewable sources, reaching a record 96.4 percent in the last quarter of 2025. Despite this clean energy infrastructure, transport accounts for nearly 40 percent of the country’s total energy consumption and remains almost entirely reliant on imported oil, with electricity providing only 0.5 percent of domestic transport energy.
The Clean Car Discount scheme, launched in 2021, had begun to shift this trend, providing 192,000 rebates for cleaner vehicles at a cost of $634 million. The scheme spurred EV fleet growth exceeding 50 percent per year. However, growth has since fallen to under 10 percent after the government ended the program at the end of 2023.
The government is also considering scrapping the Clean Car Standard, the remaining incentive for importing lower fossil fuel-consuming vehicles.
Unaffordable Road Projects
Government funding for public transport has also been reduced, with the withdrawal of funding for Auckland’s under-25 and children’s fares, and the freezing and subsequent cancellation of the Transport Choices program, which funded walking, cycling, and bus improvements. Planned light rail for Auckland was cancelled, and the walking and cycling component of a second Auckland Harbour crossing was removed, with plans now focused on adding more car lanes.
The current National Land Transport Plan allocates approximately 1.7 percent of its funds to walking and cycling improvements, while state highway improvements receive $6.18 billion. Seventeen mega-highway projects, known as the Roads of National Significance, carry an estimated cost of between $44 billion and $56 billion, a figure that continues to rise. Treasury has warned that the National Land Transport Fund can cover just under half of the overall projected $120 billion investment pipeline.
Seven of the first eight of those highway projects did not have completed business cases when funding decisions were made. The Infrastructure Commission recently called the program unaffordable.
Never Too Late
New Zealand has repeatedly failed to capitalize on past oil shocks to reduce its reliance on petrol. The country currently owns 815 light vehicles for every 1,000 people, one of the highest rates globally, and road transport emissions have grown 82 percent since 1990.
New Zealand still has the opportunity to transition to a more sustainable transport system, building on its existing renewable electricity infrastructure. Every bus electrified, cycleway built, and train funded reduces the country’s vulnerability to future crises.
Timothy Welch is a senior lecturer in urban planning at the University of Auckland, Waipapa Taumata Rau.
-This story was originally published on The Conversation.
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