To the House of Representatives,

We, the undersigned, call on the Government to implement immediate, temporary relief measures on fuel taxation and pricing to protect New Zealand’s essential economy during the current global fuel disruption.

 
⛽ CONTEXT
New Zealand now operates under a fully import-dependent fuel system following the closure of domestic refining at Marsden Point.

Fuel pricing is no longer locally influenced and is instead determined by international refined product benchmarks, particularly the Singapore benchmark, which directly feeds into domestic pricing models.

These pricing systems are largely automated and respond to global movements in refined fuel markets rather than domestic conditions.

 
⚠️ CURRENT ISSUE
We are now seeing:

• Diesel pricing driven by international refined product markets
• Diesel per-barrel pricing exceeding crude oil benchmarks at times due to refining margins (“crack spreads”)
• Rapid pass-through of international volatility into New Zealand pump prices

At the same time:

• GST is applied proportionally to rising prices
• Road User Charges (RUC) remain in place for diesel users
• Essential sectors (freight, food distribution, infrastructure) are bearing compounding cost pressure

 
IMPACT ON NEW ZEALAND
Diesel is not optional in New Zealand’s economy.

It underpins:

• Food production and distribution
• Freight and logistics
• Construction and infrastructure
• Regional and rural supply chains

Increases in diesel costs directly flow through to the price of food and essential goods.

 
📉 POLICY PROBLEM
Current tax settings amplify global price shocks:

• GST increases automatically as fuel prices rise
• RUCs apply regardless of global price conditions
• There is no mechanism to stabilise costs during external disruptions

 
WHAT WE ARE ASKING
We call on the Government to implement the following interim measures:

1. GST CAP ON FUEL
Introduce a temporary cap on GST applied to fuel, benchmarked against pre-conflict fuel price levels.

This would prevent tax revenue from increasing as a result of international price spikes.

 
2. TEMPORARY SUSPENSION OR REDUCTION OF RUCs
Suspend or significantly reduce Road User Charges on diesel vehicles for the duration of the disruption period, particularly for:

• Freight operators
• Food supply chains
• Essential services

 
3. RECOGNITION OF BENCHMARK-DRIVEN PRICING
Acknowledge that New Zealand fuel prices are now driven by international refined fuel benchmarks (including Singapore pricing), and that domestic policy must respond accordingly.

 
⚖️ PRINCIPLE
This is not a call for permanent tax removal.

It is a call for temporary stabilisation measures during a period where:

• Prices are externally driven
• Domestic control is limited
• Essential sectors are exposed

 
CONCLUSION
New Zealand’s economy runs on diesel.

Without intervention, rising costs will continue to flow directly into:

• Food prices
• Transport costs
• Cost of living

We ask the Government to act pragmatically and provide temporary relief to protect the stability of essential systems.

 
Signed,

Good Oil Committee