Fuelling a crisis?
If you have a hint of the obsessive compulsive about you, you might try manipulating the flow of fuel to your car to hit a tidy round figure for the till. It’s hard to do and as you twitchily pump the nozzle to get that ship-shape number on the display, it often over-shoots. Zeros easily get corrupted by stray cents. Of course, that digital spin of figures has just got faster, the fuel got dearer. The Strait of Homuz is on our forecourt.
It’s not the first time we’ve been here. And it’s not the first time that Iran has been centre stage. Remember car-less days – if you have years under your belt? The Muldoon government introduced a mandatory fuel-saving scheme in New Zealand over ten months of 1979 and 1980. Motorists had to nominate one day per week not to go without their vehicle. Cars had to display a coloured sticker signifying the car-less day, or face fines.
There was a precursor to this. Previously, in 1973 the government had implemented other measures to reduce petrol demand. In that October, the Organization of Arab Petroleum Exporting Countries (OAPEC) implemented a radical oil embargo against countries that had supported Israel during the 1973 Yom Kippur War.
The government of that time reduced the speed limit from 100 kmh to 80 kmh in December 1973 and this stayed in place until July 1986. You’ll guess how popular that was – our current government, within this term of office, reversed some speed restrictions imposed by its predecessor, much to the joy of many. There may be irony here!
The Strait of Hormuz has now been closed since 2 March 2026, and the global energy catastrophe worsens incrementally. Last week saw a dramatic escalation with significant attacks on energy infrastructure throughout the region and the current news, as we write, is a threat by the US president to attack critical water and energy sites in Iran. Iran has dismissed Mr. Trump’s ultimatum to reopen the Strait of Hormuz. Tehran has, in tit for tat, said the strait would be “completely closed” if its energy infrastructure is attacked.
And at this distance we seem a little powerless. Alas, almost quite literally.
However, we need to beware doom-scrolling or catastrophising. This is, as we’ve just explored, not new territory and financial markets are actively managed to address issues. This doesn’t mean that there isn’t volatility, but it isn’t a random, self-cannibalising free-for-all.
If you cast your mind back to the height of the COVID crisis (and that chapter has been subject to a bit of rewriting in recent times), the nation’s monetary stimulus was, over a period, accompanied by significant government spending and investment to support people and businesses. The Government’s fiscal response was one of the highest levels of direct fiscal support across advanced economies outside of the United States. The combined health and economic policy response of New Zealand has internationally and to date, been ranked as one of the most effective across a wide range of countries.
Markets and economies are managed. Central Banks (the Reserve Bank here) actively temper global shock. Which isn’t to say that it isn’t felt, but that it isn’t kamikaze. Markets will bounce and drag but they also have a strong instinct for recovery.
The current government has been galvanised to help households through this crisis. Finance minister, Nicola Willis, has her officials canvassing the possibilities.
The minister has rejected calls to make fuel cheaper, pointing out that this would be inefficient and poorly targeted. Nicola Willis has suggested, instead, that any support is likely to be possible through a ‘transfer’ system – through the government’s payments to households. Those can be targeted where they are most needed. Supporting people to still have a fluent and capable household budget keeps money in circulation, keeps us all buoyant.
Our experience isn’t playing out in a vacuum of inactivity. The bumpiness in your financial kete neds your eye but not your agitation – we’re here to help you make confident, well‑informed decisions about your financial future. You can contact us here.
Guest Contributor: Peter Rowlands
Article prepared for Provincial Wealth