NZ fuel supply directly threatened by Hormuz crisis

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3 March 2026 – The Wise Response Society is
warning that the military conflict now disrupting the Strait of Hormuz
poses a direct and immediate threat to New Zealand’s fuel supply, and is
calling on the government to be transparent with the public about the
severity of our exposure and to take concrete steps to prepare for what
may be a prolonged disruption.

Since the closure of the
Marsden Point refinery in 2022, New Zealand imports 100% of its refined
fuel. Approximately 48% comes from South Korea and 33% from Singapore –
both of which rely heavily on Middle Eastern crude oil, particularly
from Saudi Arabia and the UAE. That crude reaches those Asian refineries
through the Strait of Hormuz.

As of this weekend, following
US-Israeli strikes on Iran and Iran’s retaliatory attacks across the
Gulf region, the Strait of Hormuz is effectively closed to commercial
shipping. Major shipping lines including Hapag-Lloyd and Maersk have
halted or rerouted traffic. Vessels have been attacked. Maritime
insurers are withdrawing cover. Over 80% of oil transiting the Strait is
destined for the very Asian refineries that New Zealand depends on.

New Zealand is uniquely exposed.
Unlike most OECD nations, we have no domestic refining capacity, no
strategic petroleum reserve in the traditional sense, and we sit at the
far end of the world’s longest supply chain. Our minimum stockholding
obligation requires fuel importers to hold just 28 days’ cover for
petrol and 21 days for diesel onshore – and even these figures may
include fuel aboard tankers at sea that could be diverted or delayed in a
crisis. The diesel reserve is not scheduled to increase to 28 days
until July 2028.

These reserves were designed for
short-term, orderly disruptions – not a shooting war in the world’s most
critical energy chokepoint.

What Wise Response Is Calling For:

 

1. Immediate transparency.
The government must be honest with New Zealanders about the severity of
our fuel supply exposure. If this disruption persists beyond a few
weeks, rationing becomes not just likely but necessary. The public
deserves clear, accurate information now – not when queues form at
petrol stations.

2. Activate the National Fuel Plan now.
The government’s own Fuel Security Plan (November 2025) outlines
contingency steps including activation of the Fuel Sector Coordinating
Entity to lead disruption response. These mechanisms should be activated
immediately and publicly, not held in reserve until a crisis is already
upon us.

3. Investigate equitable rationing frameworks – including Tradable Energy Quotas.
If fuel must be rationed, it must be rationed fairly. Price-only
rationing means the wealthiest secure fuel while essential services,
agriculture, freight, and lower-income households are left without. This
is not hypothetical – it is the default outcome if no rationing
framework is in place when shortages arrive.

Tradable
Energy Quotas (TEQs), developed by the Fleming Policy Centre in the UK
and endorsed by the UK All Party Parliamentary Group on Peak Oil,
provide a proven model for fair, transparent energy rationing. Every
citizen receives an equal basic energy entitlement; those who use less
can sell their surplus; industry and government participate in the same
system. TEQs are explicitly designed to handle both carbon reduction
targets and fuel scarcity simultaneously.

Wise Response has
consistently called for investigation of TEQs as a policy instrument for
New Zealand, including in our August 2025 submission to the DPMC
Long-term Resilience Briefing. The current crisis makes that call
urgent.

4. Accelerate the structural transition away from imported fossil fuels.
This crisis exposes what Wise Response has warned about for over a
decade: New Zealand’s near-total dependence on imported hydrocarbons is a
critical national security vulnerability. The long-term response must
include rapid electrification of transport and industry, investment in
decentralised domestic renewable energy systems, and planned reduction
in aggregate energy demand – before it is forced upon us by events
beyond our control.

The Broader Context

 

This
crisis did not emerge from nowhere. Fossil energy is finite, and the
best-quality, most accessible reserves have already been consumed. The
escalating conflicts over remaining resources – whether in the Middle
East, Ukraine, Venezuela or the South China Sea – follow a
well-documented pattern of major powers competing for control of the
energy that underpins their economies.

The popular assumption that
renewable energy will seamlessly replace fossil fuels at the scale
required to maintain current economic activity is not supported by the
physics or the engineering evidence. The net energy (Energy Return on
Investment – EROI) available from newer energy sources is structurally
lower than what fossil fuels have provided for the last century.
Renewables are essential, but they cannot replicate the energy density,
portability, and embedded infrastructure of fossil hydrocarbons. Honest
planning must start from this reality.

In our August 2025 submission on long-term resilience, Wise Response warned: “You can’t print energy. You can’t download resources. The era of cheap, high-return fossil fuels is over.” Six months later, with the world’s most critical energy chokepoint in flames, that warning could not be more relevant.

New
Zealand has a narrow window to act – both in response to this immediate
crisis and to begin building the resilient, lower-energy economy that
our geography and circumstances demand.

ENDS

Contact: Nathan Surendran – Chairperson, Wise Response Society

Phone: 0212096286 Email: nathan@schema.nz

About Wise Response Society:
Wise Response is a New Zealand incorporated society, founded in 2013,
that calls on the government to formally assess the key risks to New
Zealand’s future and to respond wisely. It brings together academics,
engineers, and policy experts focused on the intersection of biophysical
limits, climate change, and economic resilience. For more information
and prior submissions, visit wiseresponse.org.nz.

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Evidence and Sources Sheet

 

Supporting
documentation for the Wise Response Society press release of 2 March
2026. Intended for journalists, editors, and policymakers to verify
claims.

1. New Zealand’s Fuel Supply Chain

 

Marsden Point closure and 100% import dependency

 

Since
the closure of New Zealand’s only oil refinery at Marsden Point in
April 2022, all domestic petroleum needs are served by imports of
refined products (petrol, diesel, jet fuel). NZ has zero domestic
refining capacity.

Where NZ’s refined fuel originates

 

Korea
provides 48% of the value of fuel imported into NZ (12 months to March
2025). Singapore provides 33%. Both countries’ refineries source crude
from the Middle East, particularly Saudi Arabia and the UAE – via the
Strait of Hormuz.

Fuel reserve levels (minimum stockholding obligation)

 

From
1 January 2025, fuel importers must hold: 28 days’ cover for petrol, 24
days for jet fuel, and 21 days for diesel. The diesel obligation
increases to 28 days from July 2028 (for importers with >10% market
share). These figures may include fuel in transit aboard tankers –
supply that could be diverted or delayed during a major disruption.

Z Energy’s disruption modelling

 

Z
Energy estimated that if NZ lost all supply from North Asia, it would
have approximately 90 days petrol, 60 days jet fuel, and 50 days diesel
from existing storage and remaining trade flows. Alternative supply
chains from SE Asia could be established in ~30 days; from
India/US/Middle East in ~50 days. Note:
This analysis assumed an orderly single-source disruption – not a
multi-front military conflict affecting the entire Persian Gulf region.

Detailed NZ supply chain vulnerability analysis

 

Comprehensive
analysis of NZ’s refined fuel dependency post-Marsden Point, including
refinery configuration risk, EROI implications of lighter crude slates,
and Middle Eastern supply chain exposure.

  • New Zealand Energy Substack – “2026 Energy Stock-Take – Part 3 – Refined Fuels”:

 

New Zealand Energy
New Zealand’s 2026 Energy Stock-Take – Part 3 – Refined Fuels
At
the end of the 19th century, Rudolf Diesel set out to solve a practical
engineering problem, how to convert fuel into useful work more
efficiently than the steam engines prevalent at the time. In 1897, he
demonstrated what would become one of the most consequential inventions
in modern history, the diesel engi…
Read more
a month ago · 60 likes · 157 comments · New Zealand Energy

 

2. The Strait of Hormuz – Strategic Significance

 

Approximately
20% of global oil supply (~20 million barrels/day) and 20% of global
LNG trade transits the Strait of Hormuz daily. Over 80% of crude
transiting Hormuz is destined for Asian markets. China, India, Japan,
and South Korea account for 69% of all Hormuz crude flows – these are
the countries whose refineries supply New Zealand.

Only Saudi
Arabia and the UAE have pipeline infrastructure capable of partially
bypassing the Strait (combined ~2.6 million b/d spare capacity vs 15+
million b/d normally transiting by sea). No pipeline alternatives exist
for LNG.

3. Current Situation (as at 2 March 2026)

 

Following
US-Israeli strikes on Iran (28 February 2026) that killed Supreme
Leader Khamenei, and Iran’s retaliatory attacks across the Gulf:

  • Iran’s Revolutionary Guards have broadcast VHF warnings that no vessel may transit the Strait.

  • Ships have been attacked off the coasts of Oman and the UAE.

  • Hapag-Lloyd has halted all traffic through the Strait. Maersk has rerouted all vessels around the Cape of Good Hope.

  • Maritime security agencies report “significant military activity” in the Strait area.

  • Oil
    analysts warn Brent crude could reach $100+/barrel if disruption
    persists. Some scenarios project $200+ for a sustained closure.

Sources:

New Zealand-specific coverage

 

4. Equitable Rationing – A Primer on Tradable Energy Quotas (TEQs)

 

Why rationing matters now

 

When
fuel becomes scarce, one of two things happens. Either it is rationed
by price – meaning the wealthiest consumers and corporations secure what
they need while essential services, agriculture, freight operators, and
lower-income households go without – or it is rationed deliberately,
through a framework designed to ensure fair access.

New Zealand
currently has no such framework. If the Hormuz disruption persists and
fuel shortages materialise, the default outcome is price rationing: pump
prices spike, panic buying accelerates shortages, and those least able
to afford fuel – including the rural communities, farmers, and freight
operators our economy depends on – are left most exposed.

Wartime
rationing systems in the UK and elsewhere demonstrated that equitable
rationing, while unpopular in principle, dramatically outperforms
unmanaged scarcity in practice. It maintained social cohesion, protected
essential services, and actually improved nutritional outcomes for the
poorest citizens. The question is not whether rationing is desirable –
it is whether we prepare a fair system before it becomes necessary, or
improvise one in crisis.

What are TEQs?

 

Tradable
Energy Quotas (TEQs, pronounced “tex”) are an electronic energy
rationing system designed by Dr David Fleming, first published in 1996
and developed over the following two decades with input from UK
government departments, academic institutions, and the All Party
Parliamentary Group on Peak Oil.

TEQs work as follows:

 

For individuals:
Every adult receives an equal, free weekly entitlement of TEQs units,
credited automatically to an electronic account (comparable to a bank
card). When purchasing fuel or electricity, TEQs units are deducted
alongside the monetary payment – automatically, at the point of sale.
This is the only time individuals interact with the system. Those who
use less energy than their entitlement can sell their surplus units on
an open market. Those who need more can purchase additional units. The
system is redistributive by design: since lower-income households
typically use less energy, they gain a supplementary income stream by
selling unused units.

For organisations:
Businesses, industry, and government purchase their TEQs units at a
weekly national auction (the “Tender”), or on the open market. They
participate in the same system as individuals – there is one unified
market and one price for units, preventing arbitrage between separate
household and commercial schemes.

The national budget:
The total number of TEQs units available nationally is set by an
independent committee (analogous to New Zealand’s Climate Change
Commission) based on either a carbon emissions reduction pathway,
available fuel supply, or both simultaneously. The budget decreases over
time in a planned, transparent staircase – giving all participants a
clear long-term signal to reduce energy dependence.

The market mechanism:
The price of TEQs units is set by supply and demand on the open market.
If national energy demand is high relative to the budget, unit prices
rise – creating a direct, visible incentive for everyone to reduce
consumption. If demand falls (through efficiency, behaviour change, or
fuel switching), unit prices fall. This creates a positive feedback
loop: it becomes transparently in everyone’s interest to help each other
reduce energy use.

Why TEQs, not carbon taxes or simple rationing?

 

Compared to carbon taxes:
A carbon tax raises the price of energy for everyone equally, which
disproportionately burdens the poor. TEQs guarantee a basic entitlement
to every citizen regardless of income, and the tradability of units
means those who use less are financially rewarded rather than simply
paying less of a penalty.

Compared to non-tradable rations:
Fixed, non-tradable rations have historically driven black markets and
criminalised otherwise law-abiding people. TEQs legalise and formalise
the exchange, while ensuring that total national consumption stays
within the budget. Different vocations and circumstances require
different amounts of energy – a farmer needs more fuel than an office
worker – and tradability accommodates this without abandoning the
principle of equal entitlement.

Compared to doing nothing (price rationing):
Price rationing concentrates fuel access among those with the most
purchasing power. It provides no mechanism for prioritising essential
services, no floor for vulnerable households, and no national
coordination. It is the worst-performing option in every historical
comparison.

Political and academic track record

 

TEQs have been subject to extensive scrutiny:

  • 2006:
    UK Government-commissioned scoping study by the Centre for Sustainable
    Energy concluded that personal carbon trading “has the potential to
    achieve emissions savings in a fairer way than carbon taxes.”

  • 2008:
    Full UK Government pre-feasibility study across four reports. Headline
    finding: the system has potential but was “ahead of its time” relative
    to public readiness and implementation costs at that date.

  • 2011:
    Endorsed by the UK All Party Parliamentary Group on Peak Oil, whose
    report stated: “TEQs provide the fairest and most productive way to deal
    with the oil crisis and to simultaneously guarantee reductions in
    fossil fuel use.”

  • 2020: Peer-reviewed academic paper by Alexander & Floyd in Energies
    journal analysed TEQs through the lens of Joseph Tainter’s theory of
    societal complexity and collapse, concluding that TEQs offer a viable
    policy framework for managing energy descent equitably.

The
system has never been implemented at national scale. However, the
Fleming Policy Centre (which maintains the TEQs framework) notes that
technological barriers identified in 2008 – particularly around
electronic transaction infrastructure – have been comprehensively
resolved by advances in digital payment systems since that date.

Applicability to New Zealand’s current situation

 

TEQs
are designed for exactly the scenario New Zealand now faces: a nation
confronting both immediate fuel scarcity and the longer-term reality of
declining fossil fuel availability. The system could be deployed in two
phases:

Immediate (crisis response): A
simplified version covering liquid fuels only – petrol and diesel – to
ensure equitable access during a supply disruption. This would function
as a modernised, electronic version of wartime fuel rationing, with the
added benefit of tradability to accommodate varying needs.

Longer-term (structural transition):
A full TEQs system covering all fossil fuel energy, aligned with New
Zealand’s emissions reduction targets and managed descent from fossil
fuel dependence. This would provide the “fit for purpose” demand-side
policy instrument that Wise Response has called for since its August
2025 DPMC submission.

Sources

 

Wise Response prior advocacy

 

Wise
Response has consistently advocated for TEQs as a policy instrument for
New Zealand. In its August 2025 submission to the DPMC Long-term
Resilience Briefing, the Society identified TEQs as the primary
demand-side policy lever for managing energy descent, stating: “Of
primary importance is a cross-party Energy Descent Action Plan
leveraging ‘fit for purpose’ policy instruments like Tradable Energy
Quotas (TEQs) to proactively manage our transition to a lower-energy
society, avoiding the chaos of an unplanned collapse.”

5. Energy Transition – Physical Limits

 

Fossil
fuels currently supply approximately 80% of global primary energy. The
net energy (EROI) available from newer energy sources is structurally
lower than what fossil fuels provided during the 20th century. This
means the total surplus energy available to society will decline as the
transition progresses, requiring either reduced aggregate consumption or
increasing energy investment in energy production itself.

Renewable
energy is essential, but cannot replicate the energy density,
portability, and embedded infrastructure of fossil hydrocarbons at
equivalent scale without fundamental changes to economic activity,
consumption patterns, and expectations of material growth.

Sources:

6. Wise Response Background

 

Wise
Response Society was founded in 2013 and has made submissions to
Parliament, government agencies, and local bodies on energy security,
climate risk, and biophysical limits for over a decade. Key prior work
includes:

https://wiseresponse.org.nz

This
evidence sheet is intended for journalists and policymakers to verify
claims made in the accompanying press release. All sources are publicly
accessible unless otherwise noted. For further information or expert
comment, contact the Wise Response Society via the details above.