1 00:00:05,440 --> 00:00:05,880 Speaker 1: Kiyota. 2 00:00:05,960 --> 00:00:09,119 Speaker 2: I'm Chelsea Daniels and this is the Front Page, a 3 00:00:09,200 --> 00:00:16,800 Speaker 2: daily podcast presented by the New Zealand Herald. A global 4 00:00:16,960 --> 00:00:21,919 Speaker 2: oil giant is warning of a looming catastrophe unless the 5 00:00:21,960 --> 00:00:26,600 Speaker 2: Strait of Hormuz reopens soon. The US and Israel war 6 00:00:26,680 --> 00:00:31,160 Speaker 2: on Iran is wreaking havoc on global oil and gas markets, 7 00:00:31,320 --> 00:00:36,920 Speaker 2: spiking prices and sending shock waves across global economies. It's 8 00:00:36,960 --> 00:00:41,120 Speaker 2: being called by some commentators as the biggest oil disruption 9 00:00:41,360 --> 00:00:46,239 Speaker 2: in history, and Saudi Arabia's state oil company Aramcos has 10 00:00:46,320 --> 00:00:50,080 Speaker 2: said there would be drastic consequences for the world economy 11 00:00:50,159 --> 00:00:53,960 Speaker 2: if the disruption continued. It's believed oil could hit one 12 00:00:54,080 --> 00:00:57,040 Speaker 2: hundred and fifty US dollars per barrel by the end 13 00:00:57,040 --> 00:01:00,080 Speaker 2: of the month. But what does the wholesale price of 14 00:01:00,280 --> 00:01:04,039 Speaker 2: oil mean for you at the pump? And will things 15 00:01:04,160 --> 00:01:07,440 Speaker 2: really get worse before they get better? Today on the 16 00:01:07,440 --> 00:01:11,600 Speaker 2: Front Page, a journalist and publisher of The Kaka, Bernard Hickey, 17 00:01:11,640 --> 00:01:13,840 Speaker 2: is with us to talk about the crisis and what 18 00:01:13,959 --> 00:01:20,240 Speaker 2: New Zealand should do next. Bernard, So we hear about 19 00:01:20,400 --> 00:01:24,120 Speaker 2: crude oil and there are different types you've got brand etc. 20 00:01:24,600 --> 00:01:26,360 Speaker 2: I mean, what are the different types and why do 21 00:01:26,400 --> 00:01:26,760 Speaker 2: we care? 22 00:01:27,000 --> 00:01:32,440 Speaker 3: Because the type of oil that we buy doesn't really 23 00:01:32,480 --> 00:01:36,160 Speaker 3: matter now because we don't refine it here in New Zealand. 24 00:01:36,640 --> 00:01:41,240 Speaker 3: We buy the product already refined, mostly from refineries in Asia. 25 00:01:41,840 --> 00:01:44,200 Speaker 3: And because they get their oil from the Middle East, 26 00:01:44,520 --> 00:01:47,640 Speaker 3: it's important where it comes from. It comes from the 27 00:01:47,640 --> 00:01:51,520 Speaker 3: Middle East in quite a thick and sticky form. Ours 28 00:01:51,720 --> 00:01:55,480 Speaker 3: we actually pull up from the ground here in Alta 29 00:01:55,680 --> 00:01:59,720 Speaker 3: is really really really sticky and in fact so difficult. 30 00:02:00,120 --> 00:02:03,480 Speaker 3: That's normally sent overseas. While we had mass and point 31 00:02:03,480 --> 00:02:07,040 Speaker 3: it was sent overseas to get refined. Yeah, so we 32 00:02:07,520 --> 00:02:11,919 Speaker 3: prefer the Brentish stuff which comes from the Middle East, 33 00:02:12,160 --> 00:02:15,639 Speaker 3: West Texas, comes from America, and that tends to have 34 00:02:15,720 --> 00:02:17,440 Speaker 3: quite a bit of gas in it, particularly the stuff 35 00:02:17,480 --> 00:02:20,840 Speaker 3: that's come out of the fracking fields, which is actually 36 00:02:20,840 --> 00:02:22,919 Speaker 3: mostly gas and other condensates. 37 00:02:22,919 --> 00:02:24,600 Speaker 1: So the stuff we like. 38 00:02:24,760 --> 00:02:27,960 Speaker 3: Comes from the Middle East and it gets refined or 39 00:02:28,040 --> 00:02:31,040 Speaker 3: cracked as they say, and you might hear this phrase 40 00:02:31,400 --> 00:02:34,919 Speaker 3: cracking spread or the crack spread, which is the difference 41 00:02:34,960 --> 00:02:39,480 Speaker 3: between the crude oil price and essentially what you get 42 00:02:39,480 --> 00:02:41,320 Speaker 3: at the end of it after they've cracked it up 43 00:02:41,360 --> 00:02:44,560 Speaker 3: into the different types of petroleum products. 44 00:02:44,200 --> 00:02:47,280 Speaker 2: Right, and so generally, how quickly are we meant to 45 00:02:47,560 --> 00:02:49,720 Speaker 2: see So we said we're looking at the oil prices, 46 00:02:49,800 --> 00:02:52,840 Speaker 2: it's USD of course, because everything has to be if 47 00:02:52,880 --> 00:02:55,920 Speaker 2: it's traded glow belye for some reason. Hey, but we 48 00:02:55,960 --> 00:02:58,919 Speaker 2: see USD, it's going up and down, etc. How long 49 00:02:58,960 --> 00:03:00,960 Speaker 2: does it usually take for us to then see that 50 00:03:01,000 --> 00:03:02,040 Speaker 2: at the petrol pump. 51 00:03:02,480 --> 00:03:05,399 Speaker 3: Well, sometimes it can be immediate because some of the 52 00:03:05,520 --> 00:03:10,960 Speaker 3: petrol companies will price for next week as if we 53 00:03:11,080 --> 00:03:13,640 Speaker 3: have to replace this liter of fuel with one that 54 00:03:13,639 --> 00:03:16,720 Speaker 3: we're buying right now from the refinery. So you have 55 00:03:16,760 --> 00:03:20,600 Speaker 3: to really watch what's happening with refined diesel prices in 56 00:03:20,639 --> 00:03:24,680 Speaker 3: Singapore because that's where we get most of our diesel, 57 00:03:24,800 --> 00:03:27,840 Speaker 3: or Singapore is the place where it's often traded. You 58 00:03:27,919 --> 00:03:33,560 Speaker 3: look out for the platz diesel oil price and that's 59 00:03:33,560 --> 00:03:36,880 Speaker 3: actually risen more than the crude oil price, because there's 60 00:03:36,920 --> 00:03:39,800 Speaker 3: a real crunch going on now right now throughout Asia 61 00:03:39,840 --> 00:03:44,520 Speaker 3: Pacific looking for diesel everyone in the world, but particularly 62 00:03:44,520 --> 00:03:47,800 Speaker 3: Asia Pacific because that's where it gets it gets most 63 00:03:47,800 --> 00:03:51,480 Speaker 3: of its original oil from the Middle East. Asia Pacific 64 00:03:51,560 --> 00:03:53,440 Speaker 3: is a little bit paniced, right now to the point 65 00:03:53,480 --> 00:03:56,760 Speaker 3: where the Philippines, for example, has already gone down to 66 00:03:56,840 --> 00:04:00,640 Speaker 3: a four day working week to try to conserve diesel. 67 00:04:00,960 --> 00:04:07,760 Speaker 3: And we've seen Thailand stop exporting refined products Korea. South Korea, 68 00:04:07,920 --> 00:04:12,280 Speaker 3: which provides about a half of our refined fuel, is 69 00:04:12,320 --> 00:04:16,360 Speaker 3: considering banning exports of refined fuel products so they can 70 00:04:16,360 --> 00:04:19,840 Speaker 3: protect their own economy. China has already decided to ban 71 00:04:20,160 --> 00:04:22,560 Speaker 3: exports of refined fuel, and that's important for the Asia 72 00:04:22,600 --> 00:04:26,000 Speaker 3: Pacific because those Chinese refineries are a big part of 73 00:04:26,000 --> 00:04:26,440 Speaker 3: the market. 74 00:04:26,560 --> 00:04:29,119 Speaker 1: So we're at the end of a long supply chain. 75 00:04:29,640 --> 00:04:34,520 Speaker 3: We often have to pay the prices upfront and early, 76 00:04:35,400 --> 00:04:38,599 Speaker 3: and we're vulnerable to not just the rise and the 77 00:04:38,680 --> 00:04:42,560 Speaker 3: crude price, but the rise in the crack spreads between 78 00:04:42,880 --> 00:04:46,479 Speaker 3: crude and the price of diesel. And we've got this 79 00:04:46,640 --> 00:04:49,960 Speaker 3: extra vulnerability now that Marsden Point is not there. 80 00:04:50,640 --> 00:04:51,680 Speaker 1: We have to rely. 81 00:04:51,520 --> 00:04:57,000 Speaker 3: On just tanks and occasionally truckfulls of diesel and petrol 82 00:04:57,160 --> 00:05:01,159 Speaker 3: and jet fuel just here. We can't have big tanks 83 00:05:01,240 --> 00:05:03,320 Speaker 3: full of crue that we can refine when we want to. 84 00:05:03,400 --> 00:05:07,200 Speaker 3: There's no refinery, so that increases the risks. We have 85 00:05:07,240 --> 00:05:12,200 Speaker 3: about three weeks of supply here in New Zealand and 86 00:05:12,279 --> 00:05:16,760 Speaker 3: another three or four weeks on the sea coming towards us. 87 00:05:16,880 --> 00:05:20,919 Speaker 3: And it's worth knowing that sometimes these ships will divert 88 00:05:21,160 --> 00:05:24,400 Speaker 3: halfway here or halfway to their destination because someone else 89 00:05:24,400 --> 00:05:26,880 Speaker 3: offer them a better price on the way. So it's 90 00:05:26,920 --> 00:05:30,040 Speaker 3: not a sure thing that the ship that's on its 91 00:05:30,040 --> 00:05:32,880 Speaker 3: way actually gets here with the diesel. So this is 92 00:05:32,920 --> 00:05:36,640 Speaker 3: something for those to think about. If we imagine the 93 00:05:36,720 --> 00:05:40,440 Speaker 3: Strait of hor Moves stays closed for months rather than weeks. 94 00:05:40,240 --> 00:05:42,599 Speaker 2: In terms of what do we do if South Korea 95 00:05:42,640 --> 00:05:44,480 Speaker 2: all of a sudden says nope, we're going to keep 96 00:05:44,520 --> 00:05:47,560 Speaker 2: everything inside and we're going to keep it all for ourselves. 97 00:05:47,920 --> 00:05:48,960 Speaker 2: Where else do we. 98 00:05:48,839 --> 00:05:51,680 Speaker 3: Look to, Well, firstly, we go to Singapore. We have 99 00:05:51,760 --> 00:05:56,839 Speaker 3: a special arrangement with Singapore. In times of security crisis 100 00:05:56,960 --> 00:06:01,560 Speaker 3: or shipping or supplied problems, we can go to Singapore 101 00:06:01,600 --> 00:06:05,160 Speaker 3: and ask because Singapore is a big base for not 102 00:06:05,200 --> 00:06:08,160 Speaker 3: just the trading but the actual refining of this fuel. 103 00:06:08,240 --> 00:06:10,480 Speaker 2: And we already get a bit from them, Oh yeah, 104 00:06:10,920 --> 00:06:11,520 Speaker 2: quite a chunk. 105 00:06:11,880 --> 00:06:14,720 Speaker 3: In fact, after South Korea, it's the second largest source 106 00:06:14,920 --> 00:06:18,160 Speaker 3: of refined fuel. But the problem is everyone's been to 107 00:06:18,160 --> 00:06:20,680 Speaker 3: be going to Singapore and asking for it. We also 108 00:06:20,760 --> 00:06:23,760 Speaker 3: have agreements in theory with the United States and Japan 109 00:06:24,360 --> 00:06:27,680 Speaker 3: to bring in extra fuel when we need it. In fact, 110 00:06:28,200 --> 00:06:33,000 Speaker 3: that's how we comply with the International Energy Agencies rule 111 00:06:33,000 --> 00:06:35,359 Speaker 3: that you have to have ninety days of supply. We 112 00:06:35,400 --> 00:06:38,680 Speaker 3: actually only have about twenty three days of supply, and 113 00:06:38,760 --> 00:06:42,720 Speaker 3: the other sixty or seventy days is actually on paper 114 00:06:42,839 --> 00:06:45,880 Speaker 3: in these so called tickets that we can present to 115 00:06:45,960 --> 00:06:49,359 Speaker 3: the United States or Japan to say, hey, we really 116 00:06:49,400 --> 00:06:51,880 Speaker 3: need to diesel, could we have it now. The trouble is, 117 00:06:51,920 --> 00:06:55,960 Speaker 3: of course, in times of war, countries are already saying, yeah, 118 00:06:56,400 --> 00:06:59,800 Speaker 3: that's just paper. We've got a crisis here. We need 119 00:06:59,800 --> 00:07:03,880 Speaker 3: to supply our voters, our truckers, our railways with the 120 00:07:03,920 --> 00:07:07,600 Speaker 3: diesel and the oil to help our economy going. And 121 00:07:07,640 --> 00:07:09,880 Speaker 3: that's why, you know, there's been a lot of people 122 00:07:10,240 --> 00:07:15,520 Speaker 3: critical of the current supply chain reliance effectively on the 123 00:07:15,600 --> 00:07:19,560 Speaker 3: markets to get it to us, because when wards start, 124 00:07:19,920 --> 00:07:21,200 Speaker 3: markets just don't work. 125 00:07:21,640 --> 00:07:24,480 Speaker 2: Are we in direct competition with Australia when it comes 126 00:07:24,480 --> 00:07:26,320 Speaker 2: to getting this refined stuff in it or would it 127 00:07:26,360 --> 00:07:27,640 Speaker 2: be a good idea to team up. 128 00:07:28,240 --> 00:07:30,680 Speaker 3: Yeah, Australia has a similar sort of problem. They've also 129 00:07:30,760 --> 00:07:34,360 Speaker 3: closed quite a few of their refineries and about seventy 130 00:07:34,360 --> 00:07:39,600 Speaker 3: five percent of their fuel comes from imported refined fuels. 131 00:07:40,200 --> 00:07:42,360 Speaker 3: And in fact, in some parts of Australia they are 132 00:07:42,440 --> 00:07:46,840 Speaker 3: already doing some rationing. Some of the independent wholesalers have 133 00:07:46,920 --> 00:07:51,360 Speaker 3: cut back on supplies to some particular buyers, and you know, 134 00:07:51,400 --> 00:07:54,680 Speaker 3: there are real concerns in Australia. There are big queues 135 00:07:54,840 --> 00:07:58,160 Speaker 3: at service stations, and I think New Zealand and Norway 136 00:07:58,200 --> 00:08:02,360 Speaker 3: has been quite complacent about this because we don't really 137 00:08:02,440 --> 00:08:08,080 Speaker 3: understand how the mechanics of the oil markets work, and 138 00:08:08,200 --> 00:08:12,240 Speaker 3: also just the logistics of getting through the strait of 139 00:08:12,280 --> 00:08:15,480 Speaker 3: hor moves. Donald Trump may say that, you know, the 140 00:08:15,520 --> 00:08:17,480 Speaker 3: war is over and we can all just go home 141 00:08:17,520 --> 00:08:19,680 Speaker 3: now and the price of war can go down, and 142 00:08:19,800 --> 00:08:20,520 Speaker 3: markets may. 143 00:08:20,440 --> 00:08:21,840 Speaker 1: Believe them for a day or two. 144 00:08:22,480 --> 00:08:24,560 Speaker 3: But the people in control of the Strait of hor 145 00:08:24,600 --> 00:08:29,120 Speaker 3: moves are the Iranian Revolutionary Guard. They don't care about markets, 146 00:08:29,160 --> 00:08:32,000 Speaker 3: they don't listen to Donald Trump. They have said, not 147 00:08:32,400 --> 00:08:36,160 Speaker 3: a leter of oil gets out of this Gulf while 148 00:08:36,160 --> 00:08:38,960 Speaker 3: we're being attacked by Israel and the United States. Now 149 00:08:39,000 --> 00:08:41,280 Speaker 3: Trump has said that you know, we'll just take over 150 00:08:41,320 --> 00:08:45,160 Speaker 3: the straits of Hormerves. Sure, that's a chunk of territory, 151 00:08:45,360 --> 00:08:50,520 Speaker 3: you know, half the size of Vietnam, riddled with caves 152 00:08:50,640 --> 00:08:54,640 Speaker 3: and tunnels, full of bristling with all sorts of weaponry. 153 00:08:55,160 --> 00:08:58,760 Speaker 3: Not to mention, the Iranians have got drone mines that 154 00:08:58,880 --> 00:09:01,640 Speaker 3: can simply drift into place you use the tides. They 155 00:09:01,679 --> 00:09:04,320 Speaker 3: don't have to be dropped by planes or ships. So 156 00:09:04,640 --> 00:09:07,079 Speaker 3: this idea that you know, the Straight of holl Moves, 157 00:09:07,120 --> 00:09:10,480 Speaker 3: it'll open pretty soon, no worries. Don Trump says it, Well, 158 00:09:11,040 --> 00:09:14,040 Speaker 3: biggest navy in the world. Yeah, well, as we've as 159 00:09:14,160 --> 00:09:17,320 Speaker 3: the Russians discovered in Ukraine, you can do an awful 160 00:09:17,400 --> 00:09:21,840 Speaker 3: lot with a drone that outweits the biggest ships on 161 00:09:21,880 --> 00:09:24,640 Speaker 3: the planet. And I think a lot of people in 162 00:09:24,640 --> 00:09:27,360 Speaker 3: New Zealand are a bit complacent about how soon the 163 00:09:27,360 --> 00:09:30,320 Speaker 3: Straight of holl Moves will open, and also how quickly 164 00:09:30,480 --> 00:09:35,600 Speaker 3: the oil supplies will regenerate out out of the Middle East, 165 00:09:35,679 --> 00:09:39,920 Speaker 3: because you can't just turn the tap on an oil well, 166 00:09:40,040 --> 00:09:42,240 Speaker 3: you have to so called shut it in, which means 167 00:09:42,280 --> 00:09:44,600 Speaker 3: you have to plug it up otherwise it won't work 168 00:09:44,720 --> 00:09:47,800 Speaker 3: in future. Now you don't just unplug them it's like 169 00:09:47,840 --> 00:09:50,960 Speaker 3: the bath plug. You know, this is a fair chunk 170 00:09:50,960 --> 00:09:53,040 Speaker 3: of work. It takes weeks and months to get that 171 00:09:53,080 --> 00:09:56,680 Speaker 3: stuff cracking in. So the longer this goes on, the 172 00:09:56,840 --> 00:10:00,600 Speaker 3: longer it'll take to restart. At the moment where looking 173 00:10:00,640 --> 00:10:04,000 Speaker 3: at weeks and that's everything goes fine from here on, 174 00:10:04,360 --> 00:10:07,600 Speaker 3: And it's pretty clear the Uranians are not playing ball, 175 00:10:07,920 --> 00:10:11,160 Speaker 3: and that straight is closed and twenty percent of the 176 00:10:11,160 --> 00:10:14,520 Speaker 3: world's oil goes through it, all of our oil effectively, 177 00:10:14,679 --> 00:10:17,440 Speaker 3: all of pretty much all of Asia Pacific's oil, and 178 00:10:17,480 --> 00:10:20,000 Speaker 3: we're going to have to compete with everyone in the 179 00:10:20,040 --> 00:10:23,200 Speaker 3: Asia Pacific to get our hands on that diesel in 180 00:10:23,320 --> 00:10:26,160 Speaker 3: a couple of months time, if you know, our supplies 181 00:10:26,200 --> 00:10:28,319 Speaker 3: run out, which you know at the moment we've got 182 00:10:28,360 --> 00:10:33,600 Speaker 3: about sixty or seventy days worth. And then it gets 183 00:10:33,679 --> 00:10:38,720 Speaker 3: very serious. 184 00:10:40,520 --> 00:10:43,960 Speaker 4: Well we'll looking the oil prices down. We were artificially 185 00:10:44,040 --> 00:10:48,240 Speaker 4: up because of this excursion into a very positive thing. 186 00:10:48,280 --> 00:10:50,040 Speaker 4: I mean, this was an excursion that a lot of 187 00:10:50,080 --> 00:10:52,920 Speaker 4: people wouldn't have done. I knew oil prices would go 188 00:10:53,000 --> 00:10:56,200 Speaker 4: up if I did this, and they've gone up, probably 189 00:10:56,480 --> 00:10:58,880 Speaker 4: less than I thought they'd go up. But I don't 190 00:10:58,880 --> 00:11:01,720 Speaker 4: think anybody thought we were going to be this quickly successful. 191 00:11:01,880 --> 00:11:06,880 Speaker 4: This was a military success the likes of which people 192 00:11:06,920 --> 00:11:09,360 Speaker 4: haven't said. We have the best military, we have the 193 00:11:09,360 --> 00:11:14,240 Speaker 4: best equipment, we have I believe, the best generals, we 194 00:11:14,320 --> 00:11:14,680 Speaker 4: have the. 195 00:11:14,559 --> 00:11:20,200 Speaker 2: Best What numbers should we be looking at and worrying 196 00:11:20,240 --> 00:11:22,719 Speaker 2: and starting to have that rationing conversation? 197 00:11:22,920 --> 00:11:25,720 Speaker 3: Do you think, yeah, well, we need to know in 198 00:11:25,800 --> 00:11:29,720 Speaker 3: a much more direct and transparent way how much fuel 199 00:11:29,720 --> 00:11:32,880 Speaker 3: we've got left now? The government and NBI said on 200 00:11:33,040 --> 00:11:36,600 Speaker 3: Monday that as of March the first, that was now 201 00:11:36,640 --> 00:11:40,280 Speaker 3: ten days ten to twelve hours ago, we had about 202 00:11:40,800 --> 00:11:46,040 Speaker 3: twenty six days of fuel on shore. Now that is fine, 203 00:11:46,559 --> 00:11:48,520 Speaker 3: but that was eight days ago. You know, we should 204 00:11:48,559 --> 00:11:50,560 Speaker 3: know a lot more and a lot sooner than that, 205 00:11:50,679 --> 00:11:52,840 Speaker 3: particularly if you want people to believe what you're saying 206 00:11:52,880 --> 00:11:55,880 Speaker 3: and not just panic and go on queue and start 207 00:11:56,400 --> 00:12:01,320 Speaker 3: hoarding diesel. So that's something we'd like to see today. 208 00:12:01,520 --> 00:12:04,920 Speaker 3: The government is having its Ministerial oversight meeting and hopefully 209 00:12:04,920 --> 00:12:07,280 Speaker 3: we get some more information out of that, although we 210 00:12:07,360 --> 00:12:11,080 Speaker 3: saw yesterday from Shane Jones and saying if nothing changes, 211 00:12:11,200 --> 00:12:14,720 Speaker 3: the straight stays closed, then you know, by May we're 212 00:12:14,720 --> 00:12:17,520 Speaker 3: in a serious situation. That's when you definitely will be 213 00:12:17,559 --> 00:12:21,760 Speaker 3: talking about rationing, you know, making sure that the fire 214 00:12:21,800 --> 00:12:24,960 Speaker 3: trucks and the ambulances get it first, and the dairy 215 00:12:25,000 --> 00:12:27,520 Speaker 3: tankers and then of course all the trucks that we 216 00:12:27,600 --> 00:12:31,280 Speaker 3: need to fill our supermarkets COVID style, because remember the 217 00:12:31,280 --> 00:12:34,200 Speaker 3: government's already been advised on this. Last year Castalia did 218 00:12:34,200 --> 00:12:37,680 Speaker 3: a fuel security study and recommended to the government that 219 00:12:37,760 --> 00:12:41,320 Speaker 3: we increase our supplies of diesel from twenty one days 220 00:12:41,320 --> 00:12:45,080 Speaker 3: on average to twenty eight and that we think of 221 00:12:45,320 --> 00:12:47,440 Speaker 3: a crisis like the closing of the Strait of hor 222 00:12:47,520 --> 00:12:51,240 Speaker 3: Moves is very similar to a COVID style event because 223 00:12:51,320 --> 00:12:55,200 Speaker 3: it's actually worse than Ukraine situation. We will remember those 224 00:12:55,440 --> 00:12:59,120 Speaker 3: spikes and petrol prices three dollars a liter plus when 225 00:13:00,160 --> 00:13:04,320 Speaker 3: Russia invaded Ukraine. But if you look at the scale 226 00:13:04,440 --> 00:13:07,400 Speaker 3: of the blockage, we're talking twenty percent of the world's 227 00:13:07,440 --> 00:13:10,439 Speaker 3: oil rather than two or three percent of the world's oil. 228 00:13:10,600 --> 00:13:13,480 Speaker 3: And so the risk is that the spiking prices that 229 00:13:13,520 --> 00:13:17,679 Speaker 3: we have if the Strait of Hormus remains closed is 230 00:13:17,880 --> 00:13:21,520 Speaker 3: significantly more than the spike we saw during the Ukraine crisis, 231 00:13:22,040 --> 00:13:27,240 Speaker 3: and just the sheer physical volume of fuel that we 232 00:13:27,360 --> 00:13:32,000 Speaker 3: don't have. And remember back twenty two twenty three, Muslim 233 00:13:32,000 --> 00:13:35,800 Speaker 3: Point was still just finishing, so there was still quite 234 00:13:35,800 --> 00:13:38,960 Speaker 3: a bit of stuff happening. Now it's gone and we 235 00:13:39,040 --> 00:13:41,040 Speaker 3: have to survive on our own and get our hands 236 00:13:41,080 --> 00:13:44,520 Speaker 3: on that diesel from a refinery in Korea that may 237 00:13:44,520 --> 00:13:48,960 Speaker 3: have stopped exporting, or China which has definitely stopped exporting. 238 00:13:49,000 --> 00:13:52,040 Speaker 1: In Singapore. We fall in love with the Singaporeans. 239 00:13:52,080 --> 00:13:58,040 Speaker 2: I think has the closing of Marsden Point exacerbated the 240 00:13:58,080 --> 00:14:00,319 Speaker 2: situation that we are currently. 241 00:14:00,679 --> 00:14:04,560 Speaker 3: Yes, because we had more storage and more control of 242 00:14:05,800 --> 00:14:08,240 Speaker 3: crude oil when we could refine it ourselves. It was 243 00:14:08,240 --> 00:14:10,480 Speaker 3: one of the reasons it was built to start with. 244 00:14:10,559 --> 00:14:12,640 Speaker 3: It was one of the great projects post Second World 245 00:14:12,720 --> 00:14:15,360 Speaker 3: War when people did worry about this stuff a lot. 246 00:14:15,400 --> 00:14:18,960 Speaker 3: They've been through an immediate experience during wars where you know, 247 00:14:19,040 --> 00:14:21,000 Speaker 3: ships couldn't get through they keep getting tall. 248 00:14:20,840 --> 00:14:23,560 Speaker 2: Be day well, even the Suez Crisis in the fifties 249 00:14:23,560 --> 00:14:25,120 Speaker 2: as well, exactly so. 250 00:14:25,360 --> 00:14:28,040 Speaker 3: And then through the seventies there were various christs including 251 00:14:28,080 --> 00:14:31,840 Speaker 3: the Irana Raq War, the Golf War. So this is 252 00:14:31,920 --> 00:14:35,080 Speaker 3: in living memory for a bunch of people. Carlos Days, 253 00:14:36,200 --> 00:14:42,560 Speaker 3: my family's day was Wednesday, Aunt Carlos Day. Now people, 254 00:14:42,640 --> 00:14:44,920 Speaker 3: a lot of younger people haven't really thought about this. 255 00:14:44,960 --> 00:14:47,800 Speaker 3: We just assume the market will provide. You know, it's 256 00:14:47,840 --> 00:14:51,560 Speaker 3: amazingly resilient and you know, it's amazing how things get 257 00:14:51,600 --> 00:14:55,960 Speaker 3: rerouted and the market works well. In this case, there 258 00:14:56,040 --> 00:14:59,680 Speaker 3: isn't a lot of, as they say, elasticity in this market. 259 00:15:00,760 --> 00:15:03,680 Speaker 3: We need oil and diesel to get to work. Do 260 00:15:03,720 --> 00:15:06,800 Speaker 3: we don't have an alternative? Now, some people have got 261 00:15:06,840 --> 00:15:10,040 Speaker 3: themselves an alternative, particularly moving to electric, but that has 262 00:15:10,080 --> 00:15:12,000 Speaker 3: slowed down the last couple of years as the government 263 00:15:12,080 --> 00:15:15,240 Speaker 3: changed its policies and so. In fact, one of the 264 00:15:15,240 --> 00:15:20,120 Speaker 3: recommendations from the Castalia Report was that we aggressively moved 265 00:15:20,120 --> 00:15:23,120 Speaker 3: to electrify our transport fleet as fast as we can. 266 00:15:23,280 --> 00:15:26,520 Speaker 3: It's actually the cheapest and fastest way to reduce our 267 00:15:26,560 --> 00:15:30,160 Speaker 3: vulnerability to a strait of hormus crisis. It also looked 268 00:15:30,200 --> 00:15:34,400 Speaker 3: at the option of restarting massen Point or building brand 269 00:15:34,400 --> 00:15:39,200 Speaker 3: new refineries, particularly in Taranaki, because we have a little 270 00:15:39,200 --> 00:15:41,960 Speaker 3: bit of oil that we produce ourselves. Now turning it 271 00:15:42,000 --> 00:15:44,480 Speaker 3: into actually something we can use might not be easy, 272 00:15:44,480 --> 00:15:48,080 Speaker 3: but we can get these so called mini refineries and 273 00:15:48,680 --> 00:15:51,960 Speaker 3: then there's other things that we could use, include bio diesel, 274 00:15:52,200 --> 00:15:58,440 Speaker 3: but really the most immediate, best, fastest, cheapest option is 275 00:15:58,480 --> 00:16:00,760 Speaker 3: for as many people to go electric as fast as 276 00:16:00,760 --> 00:16:03,560 Speaker 3: we can, to move the buses away from diesel to 277 00:16:03,640 --> 00:16:07,920 Speaker 3: electric and reduce the amount of strain on the system 278 00:16:08,360 --> 00:16:10,680 Speaker 3: from people driving cars and double. 279 00:16:10,400 --> 00:16:13,520 Speaker 1: Cab utes around. There are a lot of fully. 280 00:16:13,280 --> 00:16:16,760 Speaker 3: Electric cars and double cab utes right now, and the 281 00:16:16,960 --> 00:16:20,560 Speaker 3: electric buses coming from China, ironically are you know, some 282 00:16:20,600 --> 00:16:22,880 Speaker 3: of the cheapest and if you can see in Auckland, 283 00:16:23,360 --> 00:16:25,440 Speaker 3: upwards of fifteen percent of the fleet will soon be 284 00:16:25,560 --> 00:16:29,480 Speaker 3: totally electric. That's where we've got the best opportunity to 285 00:16:29,520 --> 00:16:32,920 Speaker 3: increase our resilience and reduce our risks and reduce the 286 00:16:33,000 --> 00:16:37,040 Speaker 3: costs because this oil is not going to get cheaper. 287 00:16:37,320 --> 00:16:39,960 Speaker 1: You know, these wars aren't just suddenly going to stop. 288 00:16:40,600 --> 00:16:43,120 Speaker 3: And you know, one of the themes of the last 289 00:16:43,120 --> 00:16:45,880 Speaker 3: decade really is as we get closer to the point 290 00:16:45,920 --> 00:16:50,160 Speaker 3: we're extracting oil costs more than we want and a 291 00:16:50,160 --> 00:16:53,200 Speaker 3: lot more people are moving away into renewable we should 292 00:16:53,280 --> 00:16:56,720 Speaker 3: be thinking about that too. Unfortunately, the current government is 293 00:16:57,320 --> 00:16:59,840 Speaker 3: not moving in that direction. But maybe this will be 294 00:16:59,880 --> 00:17:02,920 Speaker 3: a wake up call and also a reminder that if 295 00:17:02,960 --> 00:17:07,360 Speaker 3: we introduce this LNG import facility, we are effectively tying 296 00:17:07,520 --> 00:17:12,560 Speaker 3: our energy costs directly to the price of LNG, which 297 00:17:12,720 --> 00:17:15,359 Speaker 3: is dominated by one big plant in Kuwait which is 298 00:17:15,400 --> 00:17:18,760 Speaker 3: currently closed. So this is something we need to think about. 299 00:17:18,760 --> 00:17:21,720 Speaker 3: We forget that we're part of a global system of markets, 300 00:17:22,160 --> 00:17:24,359 Speaker 3: and one way to reduce that is to have a 301 00:17:24,359 --> 00:17:27,760 Speaker 3: whole bunch of panels and batteries and electric vehicles. Where 302 00:17:28,240 --> 00:17:30,520 Speaker 3: the ships don't come, we can still move around. 303 00:17:30,760 --> 00:17:33,280 Speaker 2: Well, we're not Fortress New Zealand anymore, are we? We 304 00:17:33,320 --> 00:17:37,080 Speaker 2: are very reliant on other you know, international what's happening internationally. 305 00:17:43,480 --> 00:17:46,399 Speaker 2: What price is too much for your average key we 306 00:17:46,520 --> 00:17:47,560 Speaker 2: family to afford. 307 00:17:47,880 --> 00:17:50,439 Speaker 5: Well, we are very conscious of that, and that is 308 00:17:50,560 --> 00:17:53,680 Speaker 5: why as a government, when we came in, we froze 309 00:17:53,760 --> 00:17:56,760 Speaker 5: and tended futurl tax increases. We said this is not 310 00:17:56,920 --> 00:18:00,800 Speaker 5: the time to be continuing to increase prices though they'd 311 00:18:00,840 --> 00:18:05,199 Speaker 5: fallen behind inflation, because we recognized the impact that has 312 00:18:05,520 --> 00:18:08,800 Speaker 5: on Kiwis and we will continue to judge that very carefully. 313 00:18:08,880 --> 00:18:11,280 Speaker 5: I'm not going to give you a number today. I'm 314 00:18:11,320 --> 00:18:15,480 Speaker 5: conscious that we're still experiencing significant volatility and we will 315 00:18:15,520 --> 00:18:18,159 Speaker 5: be monitoring it. 316 00:18:18,160 --> 00:18:21,679 Speaker 2: It could the war whether on push more countries towards 317 00:18:21,760 --> 00:18:22,720 Speaker 2: clean energy. 318 00:18:22,880 --> 00:18:24,280 Speaker 1: I suppose once. 319 00:18:24,119 --> 00:18:25,639 Speaker 2: The dust settles. 320 00:18:25,960 --> 00:18:29,199 Speaker 3: Yeah, And China has a very strategic approach to this, 321 00:18:29,359 --> 00:18:33,080 Speaker 3: and they've been madly not just moving to electric as 322 00:18:33,080 --> 00:18:35,560 Speaker 3: fast as they can. That's why they've got the world's 323 00:18:35,560 --> 00:18:41,000 Speaker 3: most productive and efficient electric car and truck building sector. 324 00:18:41,760 --> 00:18:45,960 Speaker 3: And they've got the fastest rollout of electric panels and 325 00:18:46,119 --> 00:18:51,159 Speaker 3: batteries and grid infrastructure in the world, which reallydoing it 326 00:18:51,200 --> 00:18:54,560 Speaker 3: five or six times faster than the United States. And 327 00:18:54,920 --> 00:18:57,320 Speaker 3: they have been building up their stocks of oil like 328 00:18:57,520 --> 00:18:59,120 Speaker 3: mad for a couple of years. 329 00:18:59,680 --> 00:19:00,639 Speaker 1: They've been thinking. 330 00:19:00,760 --> 00:19:03,000 Speaker 3: They've been knowing that there is a risk of something 331 00:19:03,119 --> 00:19:04,760 Speaker 3: like this, and so they've prepared well. 332 00:19:04,800 --> 00:19:07,040 Speaker 2: They've been thinking not twenty eight days ahead, they've been 333 00:19:07,040 --> 00:19:08,639 Speaker 2: thinking a couple of years ahead. 334 00:19:08,440 --> 00:19:11,320 Speaker 3: Right, And they're prepared to say to whoever owns the 335 00:19:11,359 --> 00:19:14,400 Speaker 3: refineries and actually most of those are state owned, to say, 336 00:19:14,760 --> 00:19:18,800 Speaker 3: you know what, markets, sh markets, we need to protect 337 00:19:19,240 --> 00:19:24,120 Speaker 3: China's economy. You cannot export that stuff. It's for the 338 00:19:24,240 --> 00:19:29,600 Speaker 3: nation of China and the nation Trump's the markets. And 339 00:19:30,680 --> 00:19:34,000 Speaker 3: New Zealand is still pretty much the market's trump the 340 00:19:34,080 --> 00:19:37,000 Speaker 3: nation type of place, and I think. 341 00:19:36,920 --> 00:19:40,520 Speaker 1: With the global rule of law. 342 00:19:40,400 --> 00:19:45,080 Speaker 3: And the sort of markets dominance of global affairs ebbing away, 343 00:19:45,640 --> 00:19:48,080 Speaker 3: we need to revisit that and rethink what are the 344 00:19:48,200 --> 00:19:51,719 Speaker 3: risks of relying on you know, these global rules and 345 00:19:51,880 --> 00:19:55,600 Speaker 3: global markets to provide when everyone else is pretty much 346 00:19:55,600 --> 00:20:00,000 Speaker 3: given up on it and every man's slash women's life 347 00:20:00,040 --> 00:20:01,960 Speaker 3: ah country for themselves. 348 00:20:02,040 --> 00:20:04,240 Speaker 2: Well, that doesn't put us in a very good position. 349 00:20:04,400 --> 00:20:08,000 Speaker 2: So like in the list of people who are to 350 00:20:08,119 --> 00:20:10,879 Speaker 2: put their hand up and ask for something, we're probably 351 00:20:11,240 --> 00:20:14,080 Speaker 2: very far down and getting what we want. So is 352 00:20:14,119 --> 00:20:16,639 Speaker 2: that why should we come out with some kind of 353 00:20:17,080 --> 00:20:20,840 Speaker 2: Asia Pacific alliance or something like that as to you know, 354 00:20:21,359 --> 00:20:23,560 Speaker 2: have a bigger voice in the game. 355 00:20:23,880 --> 00:20:27,000 Speaker 3: Yeah, we sort of already have a type of alliance 356 00:20:27,080 --> 00:20:30,879 Speaker 3: like that with Australia, I mean seer as effectively our 357 00:20:30,960 --> 00:20:34,800 Speaker 3: version of the EU, even to the extent that we 358 00:20:34,840 --> 00:20:37,439 Speaker 3: have freedom of movement for workers, which is great and 359 00:20:37,440 --> 00:20:41,920 Speaker 3: that essentially increases the size of our economy from five 360 00:20:42,000 --> 00:20:45,159 Speaker 3: million people to thirty million people, which is great. We 361 00:20:45,240 --> 00:20:48,399 Speaker 3: have lots of agreements, you know, some of them with 362 00:20:48,440 --> 00:20:52,399 Speaker 3: the Middle East at the moment, which aren't very good. Incidentally, 363 00:20:52,400 --> 00:20:54,400 Speaker 3: a big ship had to turn around with a bunch 364 00:20:54,400 --> 00:20:56,400 Speaker 3: of meat that was going to the Middle East because 365 00:20:56,400 --> 00:20:57,160 Speaker 3: it can't get. 366 00:20:56,960 --> 00:20:58,120 Speaker 1: Through the Strait of hor moves. 367 00:20:59,080 --> 00:21:01,760 Speaker 3: But Singapore, we have a Singapore right now is pretty 368 00:21:01,760 --> 00:21:07,600 Speaker 3: bloody useful. But we also have an opportunity here. We 369 00:21:07,880 --> 00:21:11,800 Speaker 3: are the only country in the world, literally the only 370 00:21:11,840 --> 00:21:15,119 Speaker 3: country in the world where you cannot get on a 371 00:21:15,200 --> 00:21:20,160 Speaker 3: rubber dinghy and just come here. We're the only place 372 00:21:20,160 --> 00:21:21,880 Speaker 3: in the world where actually it will be just too 373 00:21:21,880 --> 00:21:26,400 Speaker 3: expensive and difficult to invade, as the Japanese discovered, and 374 00:21:27,840 --> 00:21:30,320 Speaker 3: you know, you actually need a proper ocean going ship 375 00:21:30,320 --> 00:21:33,240 Speaker 3: to get here. It's not easy to get here. You 376 00:21:33,280 --> 00:21:36,399 Speaker 3: can stop planes from landing and taking off pretty easily, 377 00:21:36,880 --> 00:21:40,120 Speaker 3: but the ships are you know, they're hard to get here. 378 00:21:40,200 --> 00:21:42,960 Speaker 3: So we when we talk about fortress in New Zealand, 379 00:21:42,960 --> 00:21:44,720 Speaker 3: we're the one place in the world that really could 380 00:21:44,720 --> 00:21:50,000 Speaker 3: do fortress, and particularly when it comes to migration and 381 00:21:50,040 --> 00:21:54,280 Speaker 3: people movements, where the place where the only place in 382 00:21:54,320 --> 00:21:56,359 Speaker 3: the world where you literally cannot get on a rubber 383 00:21:56,400 --> 00:22:01,879 Speaker 3: dingy and go there. We're also incredibly well resourced with 384 00:22:02,640 --> 00:22:08,000 Speaker 3: water and with energy sunshine, and we should be using 385 00:22:08,040 --> 00:22:10,000 Speaker 3: that and at the moment, we're not We're just relying 386 00:22:10,040 --> 00:22:13,639 Speaker 3: on markets sh markets and we need to be much 387 00:22:13,800 --> 00:22:17,560 Speaker 3: better at using in our own resources and you know, 388 00:22:18,000 --> 00:22:21,879 Speaker 3: just realizing that market sh markets is a thing of 389 00:22:21,920 --> 00:22:22,320 Speaker 3: the past. 390 00:22:22,440 --> 00:22:28,520 Speaker 2: Thanks for joining us, Bernard Jeers. That's it for this 391 00:22:28,600 --> 00:22:31,879 Speaker 2: episode of The Front Page. You can read more about 392 00:22:31,920 --> 00:22:36,199 Speaker 2: today's stories and extensive news coverage at enzidherld dot co 393 00:22:36,400 --> 00:22:39,680 Speaker 2: dot enz The Front Page is hosted and produced by 394 00:22:39,760 --> 00:22:44,720 Speaker 2: me Chelsea Daniels. Caine. Dicky is our studio operator, Richard Martin, 395 00:22:44,880 --> 00:22:49,200 Speaker 2: our producer and editor, and our executive producer is Jane Ye. 396 00:22:49,560 --> 00:22:52,480 Speaker 2: Follow the Front Page on the iHeart app or wherever 397 00:22:52,520 --> 00:22:55,639 Speaker 2: you get your podcasts, and join us next time for 398 00:22:55,680 --> 00:22:58,000 Speaker 2: another look beyond the headlines.