In an effort to address potential petrol shortages, the New Zealand government is contemplating the reintroduction of car-free days. This strategy, reminiscent of measures taken nearly fifty years ago during the Muldoon era, is being evaluated as fuel prices soar above $3 per litre.

While New Zealand grapples with this decision, Australian officials remain uncertain about adopting similar restrictions. The situation has been exacerbated by the geopolitical tensions between the US and Israel with Iran, which have led to the closure of a vital shipping route responsible for transporting about 20% of the world’s crude oil. This disruption has significantly driven up fuel prices across Australia.

In response to the escalating crisis, the Australian federal government announced a temporary relaxation of national fuel quality standards. This adjustment will facilitate the redirection of 100 million litres of petrol to regional areas suffering from shortages.

The relaxation, set to last for 60 days, will permit the use of higher-sulphur petrol, originally intended for export, within the country. Energy Minister Chris Bowen emphasized that this measure is designed to assist independent suppliers and regions currently facing heightened supply challenges.

It will ease fuel standards for 60 days so higher‑sulphur petrol meant to be exported can be used locally instead.

Energy Minister Chris Bowen said the move will support independent suppliers and regions currently under increased supply pressure.

‘This will allow around 100million litres a month of new petrol supply that would otherwise have been exported to be blended into Australian domestic supply,’ he said during a fiery Question Time on Thursday.

‘Ampol Australia has committed to ensure this redirected supply will be prioritised for regions of shortage and for the wholesale spot market that supports independent distributors and harvesters.’

Energy Minister Chris Bowen is yet to comment on whether Australia will follow New Zealand’s lead and consider imposing car-less days

Service stations around Australia are running out of fuel

Car-less days are yet to be floated in Australia. Pictured are cars at Bondi Beach

Bowen confirmed that the National Coordination Mechanism had been convened to tackle ‘supply chain issues and bottlenecks’.

Hours later, the minister he had announced he tweaked national fuel stockpile requirements in a bid to ease mounting shortages in regional Australia.

Under the emergency changes, fuel companies will be required to hold less fuel in reserve. Mandatory diesel stockpiles will be cut from 2.7 billion litres to 2.2 billion litres, while petrol reserve requirements will drop from 1 billion litres to 700 million litres.

Bowen said the move would allow fuel companies to direct stock towards regional areas.

‘The minimum stock obligation, which was introduced by the Albanese government in 2023 for this purpose, for, if you like, the rainy day, is now necessary,’ Bowen said.

‘This will enable the fuel companies to more flexibly manage their supply chain. This fuel will not be released immediately.

‘I will be having conversations, and have had conversations over the last 24 hours, and we’ll have more with the fuel companies about ensuring that this flows to regional Australia.’

Bowen said there could be threats to future supply if the conflict in the Middle East continues.

The NZ government  is considering  legislation which was used to ration fuel during the Robert Muldoon government in the early 1980s

Iranian boats appear to have struck two fuel tankers in the Strait of Hormuz, setting them ablaze and killing one crew member

The NZ Government will consider legislation which was used to ration fuel during the Robert Muldoon (above) government in 1979-80

‘Will there be further threats to fuel supply if the international circumstances continue to worsen? Of course, that is a realistic thing, which governments should prepare for,’ he said.

When pressed on potential fuel rationing, Bowen said the Fuel Emergency Act gives him various powers, but said rationing was not being contemplated ‘at this point’.

However, Bowen and other Australian officials are yet to comment on whether they will look into a potential car-less days initiative similar to the one the NZ government is considering.

The NZ Government’s Ministerial Economic Security and Supply Chains Group met this week to consider legislation which was used to ration fuel during the Robert Muldoon government in the early 1980s. 

The legislation was first introduced after the Iranian Revolution in 1979, when global oil markets were severely disrupted.

Kiwi motorists had to nominate one day per week when they would not use their vehicle and received hefty fines if caught behind the wheel.

Commonly referred to as ‘carless days’, the policy ran from July 1979 to May 1980.

The Petroleum Demand Restraint Act, gives NZ ministers the power to force car-less days, limit the sale of petrol, or provide fuel coupons to ration access.

NZ Finance Minister Nicola Willis said car-less days will only be implemented if petrol supply is depleted

In Australia, national fuel quality standards will be temporarily relaxed to allow 100million litres of petrol to be redirected into shortage-stricken regional areas

‘Those steps would only be necessary if we were seeing genuine disruption to our ability to get fuel beyond the 50 days of storage that we currently have,’ NZ finance minister Nicola Willis said.

NZ Associate Energy Minister Shane Jones said the government had started ‘policy work’ to nail down a plan if the Middle East conflict went on.

Jones said NZ ministers had asked the treasury to consider ‘all the options’ when asked if they will activate car-less days.

‘Those will only kick in, in the event that this situation deteriorates further. We do have up to 50 days worth of fuel either on the water or here in country,’ he said.  

The news comes as oil markets were rocked by escalating conflict in the Middle East, with Brent crude surging above $100 a barrel after reports Iran had laid mines in the Strait of Hormuz. 

The waterway is a crucial shipping route that carries about 20 per cent of the world’s oil and gas.

Images showed burning tankers in the region after apparent Iranian attacks, after Iran declared it would not allow ‘one litre of oil’ to be shipped from the Middle East if US and Israeli attacks continue.

‘The lever of blocking the Strait of Hormuz must continue to be used,’ Iran’s new Supreme Leader Mojtaba Khamenei said on Thursday.

Meanwhile, some petrol stations in Australian regional areas have resorted to limiting drivers to only $20 worth of fuel to ensure locals can fill up in an emergency, while some have run out completely.

Bowen said shortages in regional areas were being driven by surging demand rather than a lack of overall supply, with panic buying placing extreme pressure on distribution networks.

‘I ask Australians, buy as much fuel as you need: no more, no less,’ he said.

Bowen said some bulk customers were purchasing up to four times their usual fuel volumes.

‘I’ve seen people on Facebook marketplace filling up jerry cans, Bunnings running out of jerry cans … going on Facebook marketplace, selling fuel at inflated prices – that is un-Australian.

‘It’s dangerous. It shouldn’t be done.

‘We recognise fully that in regional areas in particular there are shortages in certain locations, and that the supply chain is under huge pressure as we have seen a massive increase in demand.

‘The rush to buy fuel is unprecedented, outstripping the surge at the outbreak of the Russia-Ukraine war in 2022.’