How pain at the pump is exacerbated by the govt’s imposts on petrol prices

New Zealanders   are suffering  a  fresh bout  of  “pump pain”,  as  the  price  of  petrol surges past  the $3 mark.  It  has  climbed  40c in  the  last four weeks.

The pump  pain (as  the  NZ  Herald  calls  it)  brings  a glow  to  climate  change  warriors, but  not  to Kiwis who use  their cars  to get to and from work every  day. What makes that  pain worse  is  the  prospect  that it won’t  be eased any  time  soon.

International crude  oil prices  have  risen  steeply  because of Russia’s war   on the  Ukraine,  and  are  now  above $NZ150 a  barrel. The  price  of  Brent crude jumped  from $153  a  barrel last Wednesday to $168  on Thursday.

For the  motorist, the pain  at  the  pump  is  compounded  by  the  knowledge that  more than  half the  cost, 52%, is  creamed off   by  the government, supposedly  for roading improvements.

But it is being  wasted in  many  forms, such as planning for  a new  bridge across the Auckland harbour  for cyclists and pedestrians (since  cancelled) or light  rail,  again  in Auckland,  which  has  been ballooned  out  to $14bn.

Only  37% of  the  price  of  a  litre of petrol is  taken  in  production and shipping  costs.  The  petrol  taxes include the  fuel  excise duty, the emissions  trading scheme levy, and GST.

Aucklanders have to pay an addition al 10c a  litre  in   the  regional  fuel  tax.

High  fuel costs  manifest themselves in  many  ways in  NZ  and  are often  felt most acutely  in provincial towns which  rely on heavy  transport  for their  supplies,  particularly  of groceries.

It  is  likely   the  dislocation in  the  international oil  market  caused  by the Russian onslaught on  Ukraine will  last  for  some time.  Already  Energy Minister  Megan Woods  has  signalled the  release of  fuel  from NZ’s strategic reserves.

Critics  say  the  Ardern  government,  which  has  been  heavily focussed  on the Covid pandemic, has  failed to coordinate  transport  and  fuel policies. It   did  not  intervene   when  the  closure of  the  Marsden Point  oil refinery was announced,  leaving  NZ  dependent on importation of  petroleum  products. That  leaves  NZ  at  the  mercy of international oil companies.

Then  there was  Ardern’s  own “captain’s call”  effectively  to  ban deep sea oil  drilling.

Instead  of  accelerating  roading projects  such  as  the motorway extension from  Otaki  to Levin,  the  Ardern government pushed  many  to  the  backburner. It  has  been  left  lamenting  the  rise  in  the  road toll.

In  a  sense  private enterprise has  succeeded  where  the  government has  failed. The  companies  on  the Kupe gasfield have lifted  production and  this   week OMV says its in-fill drilling campaign at Māui A off the coast of Taranaki has almost doubled 2021 production levels, making it the country’s largest gas field once more, according to  a  Radio NZ report. .

The Austrian-headquartered company says production is back at levels not seen since 2018 when it bought Māui from Shell NZ for $US578m.

The Archer Emerald – a modular offshore drilling rig which has been directly attached to Māui A platform – has now  completed an eight-well drilling programme.

A spokesperson said the target of the campaign has been previously un-drilled areas of gas within the existing Māui field.

“Seven of those wells are now in production, contributing significantly to the overall production of the field.”

The spokesperson said good progress was being made with the eighth well and the development campaign had extended the life of the Māui field until 2030.

“Without investments the field would have been in abandonment by now – the current outlook is until the end of the decade depending on further investments.”

OMV is now turning its attention to a similar in-fill drilling campaign at Māui B utilising the Valaris 249 rig, which will be jacked-up beside the platform.

“OMV has committed to a five-well programme with first production expected later this year,” the spokesperson said.

The  success  of  OMV  at  Maui   is  to be  admired.  The country needs the  gas  and  condensate   from  those  wells.  

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