1 00:00:09,093 --> 00:00:12,892 Speaker 1: You're listening to a podcast from Newstalks. Be follow this 2 00:00:13,053 --> 00:00:16,133 Speaker 1: and our wide range of podcasts now on iHeartRadio. 3 00:00:16,773 --> 00:00:19,172 Speaker 2: The conflict in the Middle East has renewed focus on 4 00:00:19,213 --> 00:00:23,212 Speaker 2: how our fuel supply gets here and our fuel security. 5 00:00:23,372 --> 00:00:27,293 Speaker 2: In New Zealand. Terry Collins is AA's fuel spokesperson and 6 00:00:27,373 --> 00:00:29,572 Speaker 2: joins us Now, Terry, very good afternoon to. 7 00:00:29,533 --> 00:00:31,893 Speaker 3: You, very good afternoon to here as well. 8 00:00:32,412 --> 00:00:35,373 Speaker 4: Now Terry. New Zealand's fuel supply chain has been described 9 00:00:35,573 --> 00:00:38,293 Speaker 4: as the justin time method. What does that exactly mean? 10 00:00:40,093 --> 00:00:42,733 Speaker 3: Yeah, because look, just the correct one thing. We talked 11 00:00:42,772 --> 00:00:44,933 Speaker 3: about having twenty one days of diesel, we actually have 12 00:00:44,973 --> 00:00:48,092 Speaker 3: twenty eight days of diesel. Under the old planned industry 13 00:00:48,132 --> 00:00:50,812 Speaker 3: had an obligation to keep three weeks. The government then 14 00:00:50,893 --> 00:00:54,053 Speaker 3: purchased an extra week, recognizing that three weeks wasn't long enough. 15 00:00:54,373 --> 00:00:56,733 Speaker 3: That obligation is going back to industry soon. So we 16 00:00:56,773 --> 00:00:59,133 Speaker 3: will have twenty eight days of diesel, twenty eight days 17 00:00:59,133 --> 00:01:01,413 Speaker 3: of petrol, and twenty four days of jet fuel. 18 00:01:01,533 --> 00:01:04,053 Speaker 2: Okay, good to clarify that. So just going back to 19 00:01:04,093 --> 00:01:06,813 Speaker 2: the just and time supply chain, can you just explain 20 00:01:06,853 --> 00:01:07,373 Speaker 2: how that works? 21 00:01:08,653 --> 00:01:12,413 Speaker 3: Well, basically, everything's on either we've got a limited amount 22 00:01:12,413 --> 00:01:15,333 Speaker 3: of storage. So as we're using the product up, they've 23 00:01:15,333 --> 00:01:18,092 Speaker 3: got a similar amount being used on the water coming 24 00:01:18,133 --> 00:01:20,613 Speaker 3: towards us. And then they're ordering from other ones at 25 00:01:20,652 --> 00:01:22,893 Speaker 3: the refinery, so there's a series of vessels coming in. 26 00:01:22,973 --> 00:01:25,973 Speaker 3: We'll basically lined up every couple of days to keep 27 00:01:26,013 --> 00:01:29,173 Speaker 3: the fuel levels roughly. Yet they're now filled up in 28 00:01:29,212 --> 00:01:29,652 Speaker 3: the tanks. 29 00:01:30,652 --> 00:01:32,812 Speaker 4: Now, how long does different fuels because this is really 30 00:01:32,813 --> 00:01:35,373 Speaker 4: the key to it. How long can we store different fuels? 31 00:01:35,373 --> 00:01:37,572 Speaker 4: Because of course crude oil you can store for a 32 00:01:37,613 --> 00:01:41,453 Speaker 4: very very long time, but gasoline, aviation fuel and diesel 33 00:01:41,853 --> 00:01:44,053 Speaker 4: not so long. Right, So it's not like we can 34 00:01:44,133 --> 00:01:46,813 Speaker 4: just stockpile fuel and the good times. 35 00:01:47,693 --> 00:01:50,693 Speaker 3: No, it's not. And look there's our commercial style. These 36 00:01:50,693 --> 00:01:52,773 Speaker 3: are all cost to it. Building all those bunkers and 37 00:01:52,893 --> 00:01:55,053 Speaker 3: the tanks, et cetera comes into an expense. And then 38 00:01:55,333 --> 00:01:57,253 Speaker 3: what they've tried to do to government is balance the 39 00:01:57,373 --> 00:02:01,133 Speaker 3: risk associated with the major disruption versus the cost of 40 00:02:01,173 --> 00:02:03,493 Speaker 3: the insurance, which is building all those extra tanks to 41 00:02:03,533 --> 00:02:04,173 Speaker 3: hold the product. 42 00:02:06,413 --> 00:02:11,053 Speaker 4: No, now, so people say bring back Marsden point, that 43 00:02:11,093 --> 00:02:16,133 Speaker 4: doesn't seem like possible. Six seven billion dollars and maybe 44 00:02:16,173 --> 00:02:19,733 Speaker 4: six years just to roughly estimate or pull some figures 45 00:02:19,733 --> 00:02:21,933 Speaker 4: out of my butt to be more accurate. So what 46 00:02:22,013 --> 00:02:25,133 Speaker 4: is this? What is the solution here? Then? 47 00:02:26,333 --> 00:02:30,093 Speaker 3: Well, realistically the refinery is somewhere between six and sixteen 48 00:02:30,093 --> 00:02:32,253 Speaker 3: billion to replace, right, But I just don't like to 49 00:02:32,293 --> 00:02:35,253 Speaker 3: go back one step further. This is what we've seen here. 50 00:02:35,293 --> 00:02:37,493 Speaker 3: Around one hundred and ten dollars US of barrel has 51 00:02:37,532 --> 00:02:41,532 Speaker 3: not been seen since the Russian Ukrainian War. Now, that 52 00:02:41,693 --> 00:02:44,933 Speaker 3: war was around sanctions and putting price caps on it, 53 00:02:44,933 --> 00:02:48,373 Speaker 3: it didn't disrupt any of the supply. What we've got 54 00:02:48,413 --> 00:02:51,173 Speaker 3: in a straight up of the moves is a supply interruption. 55 00:02:51,773 --> 00:02:55,013 Speaker 3: And not only that because the ships can't lead the ports, 56 00:02:55,733 --> 00:02:58,412 Speaker 3: but the production lines have to stop because they've run 57 00:02:58,453 --> 00:03:01,532 Speaker 3: out of storage. So we've got this now, we've actually 58 00:03:01,532 --> 00:03:04,733 Speaker 3: got a physical less oil in the market, not like 59 00:03:04,773 --> 00:03:07,973 Speaker 3: happened last time. In some pundits overseas think the global 60 00:03:08,013 --> 00:03:11,773 Speaker 3: impact could be about fifteen times greater than what happened 61 00:03:11,813 --> 00:03:14,532 Speaker 3: with the Russian Ukrainian War. So this is a serious 62 00:03:14,613 --> 00:03:15,493 Speaker 3: global disruption. 63 00:03:15,972 --> 00:03:19,493 Speaker 4: But that's only twenty percent of the fuel supplier, right, 64 00:03:19,693 --> 00:03:22,133 Speaker 4: and that's not directly where New Zealand's getting our fuel. 65 00:03:22,173 --> 00:03:23,333 Speaker 4: Is that correct hearing? 66 00:03:24,413 --> 00:03:26,173 Speaker 3: We don't get it directly from there, but it's an 67 00:03:26,213 --> 00:03:28,813 Speaker 3: international market. If the people who buy that fuel can't 68 00:03:28,813 --> 00:03:31,132 Speaker 3: get it, they'll go to the markets which are ours 69 00:03:31,173 --> 00:03:34,493 Speaker 3: to buy it. So we're in direct competition anyway. But 70 00:03:34,813 --> 00:03:36,893 Speaker 3: how the government manages that, it does a couple of things. 71 00:03:36,973 --> 00:03:39,573 Speaker 3: When it keeps these twenty eight days of diesel petrol 72 00:03:39,813 --> 00:03:42,973 Speaker 3: physically located in our country. Two, it has what's known 73 00:03:43,013 --> 00:03:46,693 Speaker 3: as tickets for ninety days kept up around Singapore. Now 74 00:03:46,693 --> 00:03:49,253 Speaker 3: that means that obligation on those refineries is to get 75 00:03:49,333 --> 00:03:53,453 Speaker 3: us three months worth of fuel to us. Finally, what 76 00:03:53,533 --> 00:03:56,733 Speaker 3: they will influence as a planned and they had something 77 00:03:56,733 --> 00:04:00,613 Speaker 3: called a Fuel Security Plan twenty twenty five, they will 78 00:04:00,653 --> 00:04:07,413 Speaker 3: reduce and reallocate the fuel usage to manufacturers, exporders and 79 00:04:08,413 --> 00:04:12,693 Speaker 3: central services. What that means physically is about seventy percent 80 00:04:12,773 --> 00:04:15,613 Speaker 3: of the activity private activity that occurs won't have fuel 81 00:04:15,653 --> 00:04:18,493 Speaker 3: to do it. We will focus to get that ninety 82 00:04:18,533 --> 00:04:20,893 Speaker 3: days worth of fuel for the link that we've got 83 00:04:20,933 --> 00:04:24,613 Speaker 3: that disruption, focusing on about thirty percent of our activities 84 00:04:24,653 --> 00:04:29,453 Speaker 3: which are all essential, export driven or essential for our industry. 85 00:04:29,773 --> 00:04:33,053 Speaker 2: How how reliable are those tickets? Terry when you know, 86 00:04:33,093 --> 00:04:37,613 Speaker 2: if there is another significant impact to the supply chain, 87 00:04:37,693 --> 00:04:39,973 Speaker 2: maybe not in the Middle East, maybe in our own 88 00:04:40,093 --> 00:04:43,693 Speaker 2: area of the world, and we go to Singapore and say, hey, 89 00:04:43,773 --> 00:04:47,253 Speaker 2: you owe us the ninety days emergency and they say, well, 90 00:04:47,293 --> 00:04:49,453 Speaker 2: I'm sorry, you're down the list. Is that a possibility 91 00:04:49,493 --> 00:04:51,053 Speaker 2: that we are down the list in terms of those 92 00:04:51,053 --> 00:04:54,373 Speaker 2: tickets and it goes where it's needed in that circumstance, Well, 93 00:04:54,373 --> 00:04:54,893 Speaker 2: it might be. 94 00:04:54,933 --> 00:04:57,213 Speaker 3: That they mightn't be able to physically get it to us. 95 00:04:57,413 --> 00:04:59,213 Speaker 3: That could be the issue. Even though they may wish 96 00:04:59,213 --> 00:05:02,413 Speaker 3: to obligate on the obligation, it's still got to go 97 00:05:02,493 --> 00:05:04,213 Speaker 3: on to tankers and it's still got to get here. 98 00:05:04,613 --> 00:05:07,133 Speaker 3: And if there's something like the military interruption or some 99 00:05:07,213 --> 00:05:09,413 Speaker 3: activity going around the it puts out all at risk. 100 00:05:10,093 --> 00:05:11,613 Speaker 3: Then that's a real problem for us. 101 00:05:12,293 --> 00:05:14,293 Speaker 4: Now a lot of people are texting a similar question there. 102 00:05:14,333 --> 00:05:16,173 Speaker 4: If we have twenty eight days of fuel reserves, how 103 00:05:16,173 --> 00:05:19,573 Speaker 4: come fuel prices have risen after one week since the 104 00:05:19,613 --> 00:05:22,013 Speaker 4: restriction started because. 105 00:05:21,773 --> 00:05:24,453 Speaker 3: Basically they look that the oil companies do a replacement. 106 00:05:24,773 --> 00:05:27,133 Speaker 3: So because every couple of days is something coming they're 107 00:05:27,173 --> 00:05:30,773 Speaker 3: buying for how much should it cost me to replace 108 00:05:30,813 --> 00:05:33,413 Speaker 3: the fuel in that tank of just used. That's the 109 00:05:33,453 --> 00:05:35,733 Speaker 3: simplest way of putting it. So that's the pricing model. 110 00:05:36,093 --> 00:05:38,973 Speaker 3: So we assuming these prices go up. We didn't expect 111 00:05:38,973 --> 00:05:41,093 Speaker 3: it last week and I said, hey, hold far for 112 00:05:41,093 --> 00:05:42,813 Speaker 3: a little while. But I did expect it to go up, 113 00:05:42,853 --> 00:05:46,093 Speaker 3: but not immediately. But this week prices will go up 114 00:05:46,373 --> 00:05:49,933 Speaker 3: with the recent oil increases. Today they're going to go 115 00:05:50,013 --> 00:05:53,893 Speaker 3: up further, at least another fifteen cents again coming to 116 00:05:53,973 --> 00:05:56,093 Speaker 3: us very soon in the following weeks. 117 00:05:56,933 --> 00:06:01,173 Speaker 4: What is the solution to our fuel security if there 118 00:06:01,213 --> 00:06:07,053 Speaker 4: is one, and is there any appetite to secure our 119 00:06:07,093 --> 00:06:08,613 Speaker 4: fuel security? 120 00:06:08,973 --> 00:06:12,733 Speaker 3: Well, we don't have much of Well, the recent government 121 00:06:12,773 --> 00:06:15,813 Speaker 3: allowed further exploration of oil and gas and New Zealand, 122 00:06:16,213 --> 00:06:20,053 Speaker 3: but that takes decades from exploration through to production if 123 00:06:20,053 --> 00:06:22,493 Speaker 3: it was to be found. One of the great hopes 124 00:06:22,573 --> 00:06:25,573 Speaker 3: is the electrication of the light fleet and variety of industries. 125 00:06:26,133 --> 00:06:28,853 Speaker 3: But we've got a very slow uptake on evs, which 126 00:06:28,933 --> 00:06:31,213 Speaker 3: may change because with the price of fuel, of it 127 00:06:31,213 --> 00:06:33,493 Speaker 3: gets to three dollars fifty year leater, I can imagine 128 00:06:33,493 --> 00:06:36,013 Speaker 3: the business case for buying an EV will be very good. 129 00:06:37,373 --> 00:06:39,573 Speaker 2: So you've mentioned three you're a couple of things here, 130 00:06:39,653 --> 00:06:41,213 Speaker 2: Terry and I'll try and break it down. And we 131 00:06:41,253 --> 00:06:44,733 Speaker 2: are speaking to Terry Collins, AA fuel expert. So we've 132 00:06:44,733 --> 00:06:46,853 Speaker 2: got the ninety day tickets in an emergency that if 133 00:06:46,853 --> 00:06:49,053 Speaker 2: we need to call on it, that agreement is there. 134 00:06:49,053 --> 00:06:52,373 Speaker 2: We've got twenty eight days on average on various types 135 00:06:52,413 --> 00:06:57,613 Speaker 2: of fuel less for jet fuel. So what is I mean, 136 00:06:57,613 --> 00:07:00,013 Speaker 2: are you worried about our fuel security here? When I 137 00:07:00,053 --> 00:07:02,853 Speaker 2: look at that, that's twenty eight days. That makes me 138 00:07:02,893 --> 00:07:05,333 Speaker 2: a bit concerned that if something more drastic was to 139 00:07:05,333 --> 00:07:08,293 Speaker 2: happen to those supply chains, we are in real trouble. 140 00:07:08,453 --> 00:07:10,893 Speaker 2: What's your view on it? And if we are in trouble, 141 00:07:10,893 --> 00:07:11,693 Speaker 2: what do we do about it? 142 00:07:13,413 --> 00:07:15,653 Speaker 3: We're at the mercy of the international events right now. 143 00:07:16,053 --> 00:07:19,213 Speaker 3: The major thing that needs to happen is the opening 144 00:07:19,293 --> 00:07:22,093 Speaker 3: up of those supply routes, without a doubt, So it's 145 00:07:22,093 --> 00:07:26,693 Speaker 3: how they can achieve that militarily by whatever means possible, 146 00:07:26,973 --> 00:07:29,573 Speaker 3: But they need to get the oil flying. What generally 147 00:07:29,573 --> 00:07:33,093 Speaker 3: happens after these geopolitical things is that supply chain routes 148 00:07:33,333 --> 00:07:36,613 Speaker 3: get reconfigured. Already, the Saudis are going out through the 149 00:07:36,613 --> 00:07:39,013 Speaker 3: Red Sea, but for many of the other producers in 150 00:07:39,053 --> 00:07:41,893 Speaker 3: the golf they don't have those pipelines with different excess points. 151 00:07:42,493 --> 00:07:45,333 Speaker 3: So what will happen over a period of time is 152 00:07:45,333 --> 00:07:47,973 Speaker 3: that somebody will work out how to start moving it around, 153 00:07:48,733 --> 00:07:51,533 Speaker 3: not without going through that location, but that's going to 154 00:07:51,533 --> 00:07:55,373 Speaker 3: take some time. The real fear in the short time 155 00:07:55,453 --> 00:07:59,093 Speaker 3: frame is this ceasing of production, because it's not like 156 00:07:59,173 --> 00:08:00,813 Speaker 3: you can walk in and just flip the lights back 157 00:08:00,853 --> 00:08:04,213 Speaker 3: on the next day. Should those passage routes open up, 158 00:08:04,493 --> 00:08:06,053 Speaker 3: they take a bit of time for them to come 159 00:08:06,053 --> 00:08:09,293 Speaker 3: back online, which will sustain those higher price Is. 160 00:08:09,253 --> 00:08:15,013 Speaker 4: There any way to store fuel longer? Gasoline, diesel fuel, 161 00:08:15,053 --> 00:08:19,493 Speaker 4: aviation fuel is anyway if. 162 00:08:19,413 --> 00:08:21,333 Speaker 3: You're thinking of buying it and storing it goes off 163 00:08:21,373 --> 00:08:23,693 Speaker 3: after that three months, Yeah, it kind of gets all 164 00:08:23,773 --> 00:08:27,853 Speaker 3: varnishy and kind of loses its ability to start the 165 00:08:27,853 --> 00:08:28,933 Speaker 3: engine basically and run it. 166 00:08:28,973 --> 00:08:31,613 Speaker 2: Even at the industry level that if we were serious 167 00:08:31,653 --> 00:08:36,573 Speaker 2: about this, so no price on investments would make a 168 00:08:36,612 --> 00:08:37,453 Speaker 2: difference in that front. 169 00:08:39,293 --> 00:08:41,852 Speaker 3: Well, when you've got storage, you've always got new fuel 170 00:08:41,892 --> 00:08:44,013 Speaker 3: coming in, so let's mixing with the old fu so 171 00:08:44,012 --> 00:08:46,813 Speaker 3: it's always refreshed. No, So just the idea of holding 172 00:08:46,852 --> 00:08:49,053 Speaker 3: it the twenty eight days that we held it. That 173 00:08:49,053 --> 00:08:50,852 Speaker 3: would keep us over the short period of time till 174 00:08:50,852 --> 00:08:55,093 Speaker 3: the ninety day supply started tuning up. But again that happens. Really, 175 00:08:55,132 --> 00:08:56,893 Speaker 3: the question to be asked is what happens once you're 176 00:08:56,933 --> 00:08:58,492 Speaker 3: running at your ninety day tickets. 177 00:08:58,892 --> 00:09:03,253 Speaker 4: And finally, you said before about EV uptake being not 178 00:09:03,333 --> 00:09:06,293 Speaker 4: as fast as it could be. But if we suddenly 179 00:09:06,333 --> 00:09:09,653 Speaker 4: all went to ev are we anywhere having enough power 180 00:09:09,732 --> 00:09:17,333 Speaker 4: to you know, charge a system based on on evs globally? 181 00:09:17,453 --> 00:09:20,213 Speaker 3: The impact on the electricity systems coming from AI, not 182 00:09:20,453 --> 00:09:25,293 Speaker 3: in data seeders, not from electric vehicles. I don't we 183 00:09:25,372 --> 00:09:28,492 Speaker 3: could sustain a mess of increase in evs without putting 184 00:09:28,612 --> 00:09:30,852 Speaker 3: stress on a network electricity network. 185 00:09:31,413 --> 00:09:34,852 Speaker 2: Terry, thank you very much for joining us and your expertise. 186 00:09:34,933 --> 00:09:36,493 Speaker 2: Really appreciate it. You have a good afternoon. 187 00:09:37,293 --> 00:09:37,933 Speaker 3: Oh thank you. 188 00:09:38,053 --> 00:09:40,692 Speaker 2: That is AA Fuel spokesperson Terry Collins. 189 00:09:41,213 --> 00:09:44,173 Speaker 1: For more from News Talks B listen live on air 190 00:09:44,333 --> 00:09:47,053 Speaker 1: or online, and keep our shows with you wherever you 191 00:09:47,132 --> 00:09:49,533 Speaker 1: go with our podcasts on iHeartRadio.