9. Rationing
9.1 This section outlines initial thinking with regards to a rationing scheme. The material presented here is "high level" and will be further developed by the Ministry of Economic Development following consultation.
Description
9.2 If, during an oil supply disruption, there is a real risk of petroleum supplies running out, a regulation could be entered into force under the Petroleum Demand Restraint Act (1981) or International Energy Agreement Act (1976) to ration petroleum products. Rationing would only be considered where there is a real threat of widespread and sustained physical shortages and a fixed sales requirement is considered insufficient to manage this threat.
Purpose
9.3 The purpose of a rationing scheme would be to prevent petroleum products from running out and/or to distribute a limited supply of fuel.
Further Implementation Details
9.4 The choice of rationing approach would differ depending on the expected severity and duration of supply disruption. Options include simple maximum and/or minimum sales limits, allocation to priority uses only, and tradable rationing. For further information on potential rationing schemes, please refer to the report: Oil Demand Restraint Options for New Zealand.
9.5 The Ministry does not favour car-less days as a method of rationing fuel consumption. Previous experience with car-less days in New Zealand had limited success. Furthermore, the Ministry considers that other measures are likely to be more successful and cost-effective.
9.6 The following table, from a study of New Zealand's available demand restraint options,15 summarises implementation issues, costs, and benefits of a rationing scheme.
Rationing
| Component |
Comment |
| Description |
Reduced volumes of petrol and diesel are made available for sale. Quantities are allocated via: a priority list and registration system or through a simple reduced maximum quantity made available. An alternative method provides individuals with a tradable right to obtain fuel. |
| Legislation required |
Can be undertaken under the Petroleum Demand Restraint Act 1981 but requires a regulation to be drafted |
| Time to implement |
A simple allocation (maximum sale for each visit) would require little time to establish. Priority list categories should be established in advance. Some time (2 weeks) will be required for individuals to register as being eligible and for establishment of registration centres. Trading approaches are likely to take longer to establish, requiring public education, printing and distribution of coupons and ensuring that adequate trading platforms exist. |
| Investment Required |
Publicity campaign, printing of coupons |
| Central/local government |
Central government will need to establish rules, including priority lists. Local government would be required to register companies/individuals under a priority use scheme |
| Information Communication |
Public information/education campaign, which can be pre-prepared |
| Expected Costs |
Costs of lost trips, which will be higher if there is inefficient rationing (no trading). Administrative costs (priority users, coupon distribution) |
| Expected Benefits |
Rationing can be used to achieve any targeted level of fuel use or to distribute any limited supply level. |
| Time to achieve benefits |
Benefits will be limited by the time taken to establish a rationing scheme. Vehicles will start with some fuel already but this is unlikely to take long to draw down |
| Effectiveness over short/long term |
More effective over the long term |
| Effectiveness for severity of disruption |
A necessary component for severe disruptions |
Comment
9.7 As stated above, rationing would only be considered where there is a real threat of widespread and sustained physical shortages and a fixed sales requirement is considered insufficient to manage this threat. Specific benefits would depend on the choice of rationing scheme, but generally rationing can be used to achieve any targeted level of fuel use or to distribute any limited supply level (for example, to emergency services and utilities only). Benefits would be limited by the time taken to establish a rationing scheme.
9.8 Costs would also depend on the choice of rationing scheme. There would be significant administrative costs associated with setting up and running a rationing scheme. For example, administrative costs could include: coupon printing and distribution; publicity and information provision; and costs of increased petrol station security. There is also a cost of lost trips to consumers who would otherwise choose to consume more fuel than their allocation. This cost would be higher if the rations could not be traded.
Areas for Feedback
This section outlines initial thinking with regards to a rationing scheme. The Ministry of Economic Development welcomes feedback on any implementation issues, costs, and benefits, of a rationing scheme.
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