A surge in global oil prices, triggered by escalating tensions in the Middle East and disruptions to shipping through the Strait of Hormuz, is hitting Fresh Zealand drivers hard. Petrol prices have already climbed above NZ$3 a litre in many areas, with some stations reporting temporary supply shortages as demand spikes. The crisis underscores a critical, and largely unaddressed, vulnerability for New Zealand: its complete dependence on imported refined fuel and a transportation system overwhelmingly reliant on oil. This isn’t simply a matter of higher costs at the pump; it’s a strategic risk that policymakers have, until now, failed to adequately mitigate.
The current situation stems from increased instability in Iran and its impact on one of the world’s most vital energy chokepoints. Approximately 20 percent of global oil supply passes through the Strait of Hormuz, and recent events have effectively closed that critical waterway, sending shockwaves through international markets. The International Energy Agency (IEA) has responded with its largest-ever coordinated reserve release – 400 million barrels – in an attempt to stabilize prices, but analysts warn that oil could reach US$150 a barrel if the strait remains closed, according to the Australian Financial Review.
New Zealand’s predicament is particularly acute. Since the Marsden Point Oil Refinery ceased refining operations in 2022, the country has been entirely reliant on imported refined fuel, primarily from South Korea, and Singapore. These refineries, in turn, depend on crude oil transiting the now-disrupted waters of the Persian Gulf. Official fuel stock updates from the Ministry of Business, Innovation and Employment (MBIE) reveal a precarious position: roughly 52 days of total fuel cover, with less than 33 days of petrol reserves. These reserves, however, are designed to buffer against short-term disruptions, not a prolonged supply crisis.
The immediate impact is already visible. Reports are emerging of motorists hoarding fuel, with petrol stations in Auckland selling out of fuel cans, as reported by the New Zealand Herald. Whereas panic buying is a natural reaction, it exacerbates the problem and highlights a deeper issue: a lack of viable alternatives for the vast majority of New Zealanders.
The Lost Opportunity of Electrification
New Zealand boasts a remarkably clean electricity grid, generating more than 85 percent of its power from renewable sources – a figure that reached a record 96.4 percent in the last quarter of 2025, according to MBIE data. This positions the country uniquely to transition away from fossil fuels. However, transport, accounting for nearly 40 percent of all energy consumption, remains overwhelmingly dependent on imported oil, with electricity contributing a mere 0.5 percent to domestic transport energy needs.
The potential for change was evident with the introduction of the Clean Car Discount scheme in 2021. While imperfect, the scheme provided rebates to 192,000 New Zealanders purchasing cleaner vehicles, costing $634 million, as detailed in NZTA reports. The program demonstrably shifted the market, with electric vehicle (EV) fleet growth exceeding 50 percent annually during its operation. However, the current government’s decision to end the scheme at the end of 2023 has effectively halted that momentum, with EV growth now falling below 10 percent.
Adding to this reversal, the government is reportedly considering scrapping the Clean Car Standard, the remaining incentive for importing lower-emission vehicles, as reported by RNZ. This move signals a broader shift away from policies designed to reduce New Zealand’s reliance on imported oil and accelerate the transition to sustainable transport.
Roads Over Alternatives: A Misplaced Priority
The shift away from promoting alternatives to petrol extends beyond the Clean Car Discount. Funding for public transport has been cut, including the removal of discounted fares for under-25s and children in Auckland. The Transport Choices program, which supported walking, cycling, and bus improvements nationwide, has been frozen and effectively dismantled. Planned light rail projects for Auckland have been cancelled, and even the walking and cycling components of a second Auckland Harbour crossing have been stripped out, with plans now focused solely on adding more car lanes.
The current National Land Transport Plan allocates approximately $391 million – just 1.7 percent of the total fund – to walking and cycling improvements, while a staggering $6.18 billion is earmarked for state highway improvements. The seventeen “Roads of National Significance” projects carry an estimated cost of between $44 billion and $56 billion, a figure that continues to climb, as reported by RNZ. Treasury has cautioned that the National Land Transport Fund can only cover approximately half of the overall projected $120 billion investment pipeline. Seven of the first eight of these highway projects proceeded without completed business cases, according to Treasury documents.
The Infrastructure Commission recently deemed the Roads of National Significance program “unaffordable,” a warning that came just ten days after the escalation of tensions involving Iran and Israel. This timing underscores the inherent risk of prioritizing infrastructure projects that reinforce car dependence in a world increasingly vulnerable to oil supply disruptions.
A Strategic Liability, Not Just a Lifestyle Choice
Oil shocks are a recurring feature of the global energy landscape. Each crisis presents an opportunity for New Zealand to reassess its strategic vulnerabilities and invest in a more resilient, sustainable future. Instead, the country has repeatedly reverted to short-term fixes and a continued reliance on imported fossil fuels. New Zealand now has 815 light vehicles per 1,000 people, one of the highest rates globally, and road transport emissions have grown by 82 percent since 1990, according to data from the Ministry for the Environment.
However, the situation is not irreversible. New Zealand already possesses the infrastructure and renewable energy capacity to power a diverse and sustainable transport system. Every investment in public transport, cycling infrastructure, and electric vehicle adoption represents a reduction in exposure to future oil shocks. The question now is whether New Zealanders, and their policymakers, will recognize car dependence not as a lifestyle choice, but as a significant strategic liability.
The immediate future will likely observe continued volatility in global oil markets. The next key development to watch is the outcome of ongoing diplomatic efforts to de-escalate tensions in the Middle East and restore stability to the Strait of Hormuz. Updates on the situation can be found on the RNZ website and through Reuters reporting.
What are your thoughts on New Zealand’s energy security? Share your comments below and let us know how you’re adapting to rising fuel costs.
