Not all the current government’s fault, but the arrival of the fuel tax this weekend heralds a number of very sharp rises in what we have to pay in order to run a car.
Oil prices rose on Wednesday as a supply disruption in Canada hit. U.S. officials have told oil importers to stop buying Iranian crude from November. And there are continuing supply risks from Libya and Venezuela that will start to bring barrel prices upward.
For those particularly reliant on Iranian oil supplies such as Japan and South Korea, that is bad news. They will probably get waivers from the U.S., but it’s still a big security item. Between them, China, India, and Turkey account for about half of Iran’s oil exports, and it’s hard to see those countries simply folding to do the U.S.’s bidding against Iran.
And of course the U.S. economy is going gangbusters, which means more and more oil is needed.
All of that affects New Zealand, which imports it all. Transport Minister Phil Twyford has flagged increases of between 3 cents and 4 cents a litre for each of the next three years to fund transport plans. That’s roughly comparable to the fuel tax increases under the previous government.
The New Zealand dollar is falling rapidly, for a bunch of technical reasons. That means it’s getting much more expensive to buy the oil to get refined into petrol and diesel. That too will add to the price at the pump.
At least in Auckland, we now have a fully refreshed bus system to take more of the load as people see it as too expensive to own and operate multiple cars at home.
In time that bus fleet will turn electric. And the passenger rail systems in Auckland and Wellington – which is most of New Zealand’s public transport passengers – are fully electrified. Only a very few company fleets are near-fully electric, but Air New Zealand is one of them.
Yet for the foreseeable future Auckland and New Zealand will remain one of the most petrol and car reliant countries on earth.
Make no mistake this set of rising taxes on a core household and business cost is going to hurt the poor most, so from this weekend onward that we see the political price of the Auckland fuel tax start to bite. It’s also going to be inflationary because it affects freight costs.
To my mind this is a government test between the urban liberal activists pushing higher taxes and more public transport use through price and urban public transport, and social activists who support greater wages and purchasing power for the poor. Electric vehicles will not reduce transport poverty – when transport costs take more and more of the household compared to groceries, electricity, phone and health.
How government and Auckland Council respond to the inevitable media interviews and shots of queues outside petrol stations is going to be quite the political test for this year.
It’s sure hurt before.
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