Kaya Selby
RNZ RNZ Pacific journalist
Analysis: During
the fuel crisis, Pacific Island countries have scrambled to
secure their own fuel supply, forcing them to lean on their
wealthy neighbours and multilateral donors.
This
triggered a region-wide economic slowdown and driven a
managed, yet sharp, increase in fuel and electricity costs
throughout the Pacific.
According to fuel price
schedules released by Pacific governments regularly from
February to June, Fiji has doubled the maximum price for
diesel in urban centres in the main island, Viti Levu, such
as Suva and Nadi.
Samoa has lifted its diesel ceiling
by more than two thirds during that time, Tonga by more than
60 percent in Tongatapu.
And quite apart from asking
for budgetary support, Pacific leaders, whenever they had
the chance, appealed for help to build solar panels and
other forms of renewable energy, in hopes of sidestepping a
future calamity.
February
The war
begins.
28 February
Iran begins its blockade
of the Strait of Hormuz after taking heavy fire from US and
Israeli forces. In the coming days, several Pacific-flagged
tankers will be trapped, abandoned or damaged, and their
crews injured or killed. The Palau-flagged Skylight is
abandoned with two crew dead on 1 March. The
Marshalls-flagged MKD Vyom is abandoned with one
death on the same day, and the Safesea Vishnu is set ablaze
ten days later, killing another.
March
Advertisement – scroll to continue reading
It does
not take long before the public grows nervous of fuel and
electricity price hikes. Pacific governments issue certain
reassurances, but panic buying occurs in sporadic
cases.
For Pacific Island countries, which are far
away from the established oil refineries in Singapore and
South Korea, it makes better economic sense to buy from
bulk, rather than to have constant shipments. This means
they have forward orders already secured.
So most
retail prices are kept relatively stable as countries burn
through their existing stocks. The import prices are going
to go up, but the lag means they can bide their
time.
But behind the scenes, governments are
scrambling to secure supply from new sources – and to keep
the public calm. It isn’t a question of if, but
when.
15 March
Christopher Luxon touches down
in Samoa. They discuss energy, but New
Zealand isn’t committing to anything yet. They have
their own crisis brewing. He’ll go to Tonga and say mostly
the same thing.
23 March
The American Pacific
and the free association states don’t have price ceilings,
so their consumers
are paying the market rate, plus the elevated travel
costs. At a Mobil gas station in Saipan, petrol is USD$6.619
per gallon, and diesel $8.789. In Tinian, diesel is
$10.
April
Pacific Island countries begin to
raise their fuel price ceilings. Vanuatu raises diesel by 64
percent, but won’t raise it further for the indefinite
future. In PNG the price is 73 percent higher, in Fiji it’s
35 percent, and in Tonga it’s 43.5 percent.
15
April
Tuvalu’s Energy Minister, Simon Kofe, appears
on RNZ’s Morning Report and reveals that their
fuel supply is “not assured” beyond June. Just days ago,
Tuvalu had declared a state of emergency, allowing the
government to take extraordinary measures to cut back on
power usage. They’re experiencing rolling blackouts. The
country spends more than a quarter of their GDP on petroleum
imports.
17 April
In the Marshall Islands,
government departments are shutting down at 3pm. They’re using
their universal basic income to help consumers and
adding a subsidy to their state-owned power
company.
Marshall Islands Finance Minister David Paul
will later reveal to RNZ Pacific that their singular
supplier, ExxonMobil, is using force
majure provisions in their supply contracts to balloon
import prices.
May
Samoa and Solomon Islands
both lift their diesel caps by 46 percent. Fiji and the Cook
Islands climb as well. Fuel at the pump in Port Moresby is
slashed by 42 percent after the government uses its windfall
revenue from LNG exports, which have spiked dramatically in
value, to subsidize consumer prices. Tonga cuts their
electricity surcharge and reinvests more into welfare
payments for pensioners. Pacific leaders are
meeting.
6 May
Fiji’s Finance Minister defies
an international travel ban for Ministers to go to
Uzbekistan for an Asian Development Bank AGM. He walks away
with a US$200 million loan in his pocket.
Meanwhile,
Australia hands Fiji AUD$30 million. Foreign Minister Penny
Wong calls it a “targeted budget support” to support Fiji’s
efforts to be a regional fuel hub.
At this point,
Anthony Albanese is in Southeast Asia, key points along the
energy supply chain, trying to get Singapore, Malaysia and
South Korea to give them preference if they have to make
tough decisions over their own stocks. Wong says that they
will keep the Pacific in mind, but they have to put
themselves first.
New Zealand chips in NZD$8
million.
8 May
Pacific Islands Forum leaders
officially invoke
the Biketawa Declaration. It’s a framework for a
regional crisis response, where leaders are compelled to
come together, share their resources and expertise, and
arrange some kind of plan together. It was last used during
Covid pandemic.
Jeremiah Manele jumped the gun last
month and said that they would, before any Pacific leaders,
including Australia or New Zealand, could even consider
it.
29 May
ADB Pacific Lead Emma Veve tells
RNZ Pacific that help requests from Pacific Island
governments have
begun only recently. She calls this a credit to their
resilience.
Help requests at this point have come from
Solomon Islands, Vanuatu, Tonga, Samoa and Nauru. Veve says
they have freed up hundreds of millions in both loans and
grants. Support for each country will range from $10m to
$100m, depending on their size.
June
Peace
will appear on the horizon at the end of the month, but
there’s no indication of it. By now Viti Levu’s diesel price
ceiling has more than doubled since February. PNG’s fuel
subsidy helped for a little while, but this month’s increase
has exceeded last month’s decrease, and then some. Nauru and
Niue, with their singular islands and tiny populations, have
had to increase theirs, too.
5 June
Samoa
triggers an “amber alert”, which would indicate they have
less than 30 days of fuel stocks left in country. They deny
this is the case, and just call it a “precautionary
measure.”
12 June
Fuel price caps rise in the
Cook Islands – diesel in Rarotonga hits NZ$3.84 per litre,
and LPG hits $5.06 per kilo. In Aitutaki: diesel is $6.24
per litre. In New Zealand, diesel prices only ever briefly
passed $4 in some rural
areas.
New Zealand’s public broadcaster, providing comprehensive NZ news and current affairs, specialist audio features and documentaries.
Radio New Zealand is a Crown entity established under the Radio New Zealand Act 1995. Radio New Zealand News are vital elements in our programming, providing impartial news and information to New Zealanders every day. Radio New Zealand (RNZ) provides listeners with exciting and independent radio programmes in accordance with the Radio New Zealand Charter.
