8. Speed Limit Reduction
8.1 This section outlines initial thinking with regards to a speed limit reduction. The material presented here is "high level" and will be further developed by the Ministry of Economic Development following consultation.
Description
8.2 The government could introduce regulations to reduce the open road speed limit, for example to 80 km/h or 90 km/h, to reduce demand for petroleum in an oil supply disruption.
Purpose
8.3 The rationale for reducing the open road speed limit is that vehicles are more fuel efficient at the lower speed (by about 11 percent for 90 km/h versus 100 km/h11).
Statutory Powers
8.4 The Petroleum Demand Restraint Act (1981) makes provisions for the Governor-General to impose measures for the purpose of restraining the demand for, or reducing the consumption of, petroleum products in New Zealand or for the purpose of ensuring the equitable distribution in New Zealand of petroleum products that are, or are likely to be in short supply in New Zealand or within any specified part of New Zealand. The Act also states that no regulation made under it can be held invalid because it is inconsistent with the Land Transport Act 1998.
8.5 Similarly, the International Energy Agreement Act (1976) authorises the making of regulations in order to fulfil New Zealand's obligations under the International Energy Agreement. This Act provides for regulations to be made to regulate the use of petroleum for the purpose of carrying out such obligations as New Zealand may have, under the International Energy Agreement to restrain demand for, or reduce consumption of, petroleum in New Zealand. The Act also states that no regulation made under the Act shall be held invalid because it is, or authorises any act or omission which is, repugnant to, or inconsistent with, any Act.
8.6 Therefore, the government could introduce regulations under the Petroleum Demand Restraint Act or the International Energy Agreement Act (rather than under the Land Transport Act 1998) to regulate the use of petroleum by reducing the open road speed limit.
Further Implementation Details
8.2 The following table, from a study of New Zealand's available demand restraint options,12 summarises the implementation issues and costs and benefits of a speed limit reduction.
Speed Limits
| Component |
Comment |
| Description |
Reduce the open road speed limit to 90 km/h. Vehicles are more fuel efficient at the lower speed (by about 11% for 90 km/h vs. 100 km/h)13 |
| Legislation required |
See section on statutory powers above. |
| Time to implement |
Could be implemented very quickly if legislation in place (< 1 week) although it would take some time to change road signage which would mean enforcement would not be possible. |
| Investment Required |
Investment would be required to change all road signage (and back after the event) along with increases in enforcement requirement (more speed cameras). There will also be some costs recalibrating equipment. |
| Central/local government |
Central government decision. Police enforcement role. |
| Information Communication |
Need an information campaign to get some impact immediately. However enforcement would need to wait until road signage is in place which is likely to take longer. |
| Perverse Outcomes |
May cause some disgruntlement if it just results in more income in fines. May need to "recycle" any excess income in some way. |
| Expected Costs |
The costs will be reasonably significant given the volume of road signage that would have to be changed. That may rule out this option as a mandatory measure unless it is for a reasonable period (3 months +). A partial benefit might be obtained in the short term from encouragement to reduce speed without the associated enforcement. |
| Expected Benefits |
1.4% saving in aggregate oil demand |
| Time to achieve benefits |
Likely to be phased in as initial savings would only be from voluntary speed reductions. We would estimate it would take a month before signage could be changed and enforcement could begin which would mean full savings would not be obtained until then. |
| Effectiveness over short/long term |
Only effective over a longer term as it is not cost effective in the short term. Overseas experience has demonstrated continued enforcement is necessary to maintain benefits over the longer term. We expect partial benefits could be obtained from a voluntary campaign in the short term. |
| Effectiveness for severity of disruption |
As there could be some public backlash would be most effective for an external disruption event. |
Comment
8.7 A reduced speed limit is likely to be phased in, as initial savings would only be from voluntary speed reductions. It is estimated that 1.4 percent could be saved in aggregate oil demand once the new limits are able to be enforced.14
8.8 Significant expenditure would be required to change all road signage (and back after the event) along with increases in enforcement (for example, more speed cameras). There would also be some costs of recalibrating equipment.
8.9 The significance of the costs relative to the estimated benefits may rule out speed limit reductions as an option unless the supply disruption is expected to last for a reasonable period (e.g. 3 months plus).
Areas for Feedback
This section outlines initial thinking with regards to a speed limit reduction. The Ministry of Economic Development welcomes feedback on any implementation issues, costs, and benefits, of a speed limit reduction.
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