Minister replies to ‘The Press’

Press, 28 March 1979, Page 3

Minister replies to ‘The Press’

Parliament reporter The Minister of EnergyResources (Mr Birch) has replied to the editor of “The Press” as follows: Your editorial of March 27 raised the question of the nature of the oil crisis. Opposition members of Parliament have accused the Government of manipulating the crisis for economic reasons but objective scrutiny will show them to be wrong. Indeed. the Government throughout the oil crisis has been frank and open with the public of New Zealand. The fact that the crisis is a two-pronged one of both supply and price has been explained a number of times.

Immediately there were signs that our supplies were in jeopardy', I discussed continuity with all the major oil companies, to secure our position insofar as it was possible. When the major oil companies announced their ‘force majeure,’ the impact on New Zealand was calculated and our supply position, based on confirmed shipping arrangements, was assessed and compared with normal consumption rates.

It was clear that there would be a steady rundown in supplies to a point when, in early May, the position would become critical, particularly with motor gasoline. To avoid damage to our economy, demand restraint measures were introduced. Precise details were explained to the news media in a special briefing at Parliament Buildings on March 7, where those present had ample scope to question officials, oil industry spokesmen, and myself. The Government had the opportunity to buy highpriced oil on the spot mar'kets but declined to do so. It

is now clear that that was a correct decision. To have done otherwise would have involved very substantial payments in overseas funds, over and above our contractual purchasing requirements. Such price increases would have built into the transport sector of our economy strong inflationarypressures. The indications are that spot market prices are in retreat and that a closer relationship with O.P.E.C. pricing will be established, although price rises of substance are very likely. As soon as the continuity of supplies to New Zealand is secured and stocks have been restored to reasonable levels, and price stability in the Middle East is reached, the Government will be able to relax the demand restraint measures.

The supply position insofar as home heating oil is concerned deserves special mention. This oil is part of the total supply of diesel fuel used in transport, industry and for domestic purposes. Because the Government is unwilling to disrupt transport or industry, there is severe pressure for restrictions on home use. Initially, the supply position for this product was uncertain and an arbitrary allocation of 400 litres (i.e. sufficient to supply a further tankful of fuel) was agreed to. I hope that a more equitable basis of supply of home heating oil, such as precentage allocations based on last year’s consumption, can be arranged at an early date.

Our experience in this crisis, as during 1973-74, underlines the need for rapid progress in a switch to alternative fuels. Z