Arpit Joshi
Recent volatility in the Strait of Hormuz has reopened and reclosed key shipping routes within short periods.[1]That open-shut uncertainty captures the situation New Zealand now finds itself in.
Around 20% of the world’s traded oil flows through that narrow passage between Iran and Oman.[2] Since the US and Israeli strikes triggered its effective closure in early March, petrol queues have formed across Auckland. Fuel prices hit $4/litre in some areas,[3] and diesel, which Prime Minister Christopher Luxon described as “the lifeblood of our economy,”[4] has doubled in price.[5]
This is not the first time Iran has been at the centre of a New Zealand fuel crisis. In 1978 and 1979, the Iranian revolution disrupted oil supplies so severely that New Zealand, which at the time sourced 39% of its oil directly from Iran, introduced the “carless days” scheme to manage the immediate crisis.[6]
Parliament subsequently passed the Petroleum Demand Restraint Act 1981 (PDRA) to give future governments a proper statutory framework, so the next emergency would not require the same ad hoc response.[7]
The PDRA replaced those measures with binding ministerial powers, a formal offence regime and a mechanism for coupon rationing. It was designed to be more coherent and more durable.
It has never been used. Forty-five years later, with Iran once again at the centre of a global oil disruption, ministers looked at the Act closely and found a problem.
Finance Minister Nicola Willis confirmed the government had received legal advice that the PDRA may need to be updated before fuel restrictions could be lawfully implemented.[8] Professor Dean Knight of Victoria University of Wellington publicly flagged that the threshold for activation was genuinely uncertain.[9] Luxon himself acknowledged that the situation could “get worse before it gets better” and warned that “hope is not a plan”.[10]
The government has committed to reviewing the PDRA as part of its Fuel Security Plan.[11]The review is overdue. The strait has already opened and closed again since the commitment was made.
This article identifies three specific legal gaps that practitioners advising fleet operators, logistics companies and fuel businesses need to understand now, as the consequences of the Act’s activation may be disruptive to businesses.
Gap one: Where do EVs fit under the Act?
In the week ending 22 March 2026, electric vehicles accounted for one in five new vehicle registrations across the country.[12] The assumption driving that surge is economically understandable because an EV owner has no exposure at the pump during a fuel shortage. The legal position is less settled.
The vehicle restriction power in section 4 (2)(b) of the PDRA allows regulators to restrict or prohibit the use of “motor vehicles or any class of motor vehicles.”[13] The act does not define the term. Section 22 (10) directs that “motor vehicle” has the meaning given in section 2 (1) of the Land Transport Act 1998, which defines it as “a vehicle drawn or propelled by mechanical power.”[14]
An electric motor converts electrical energy into rotational mechanical energy. On that reading, a battery electric vehicle is propelled by mechanical power.[15] It falls within the LTA definition and, on the plain text of section 4 (2)(b), within the scope of any PDRA vehicle restriction regulation.
The same analysis applies to hydrogen fuel cell vehicles. The fuel cell generates electricity through a chemical reaction between hydrogen and oxygen. That electricity drives an electric motor. The vehicle is propelled by mechanical power. NZ Post has operated a Hyundai XCIENT hydrogen fuel-cell truck commercially between Auckland and Hamilton since 2022, completing over 100,000 kilometres of service.[16] That vehicle uses zero petroleum products. The current drafting of the PDRA could be grounded in regulations designed entirely for petrol rationing.
By contrast, the 1979 carless days scheme expressly limited the vehicle restriction to private petrol-powered motor vehicles weighing less than 2,000 kilograms.[17] The fuel-type qualifier was explicit. The PDRA contains no equivalent. Whether EVs and hydrogen vehicles are exempt from any further restrictions depends entirely on how those regulations are drafted. It is a matter of regulatory choice and not a legal entitlement.
Parliament recognised electric vehicles as a distinct category in transport regulation in 2017, inserting an express definition of “electric vehicle” into the Land Transport (Road User) Rule.[18] It never extended that recognition to the PDRA. The Motor Vehicle Register’s existing engine-type classifications provide the administrative infrastructure to implement an exemption immediately. Whether that implementation will be used is a drafting question that has not yet been answered.
Gap two: Fleet owners face a presumption that may not survive a rights challenge
Section 22 (3) of the PDRA provides that the registered owner of a vehicle used in breach of the Petroleum Demand Restraint Regulations is conclusively presumed to have been the driver at the material time.[19]
This is not an evidential burden-shifter. It is a conclusive presumption. The registered owner cannot disprove it, regardless of the evidence. The only available defence under section 22 (5) requires proof of three cumulative conditions: that the vehicle was not in the owner’s lawful possession at the time; that the owner took every reasonable step to identify the actual driver.[20] All three must be established. Failure on any one of them leaves the registered owner liable.
For fleet operators, including logistics companies, rural contractors, freight businesses, and hire operators, this creates significant exposure. A vehicle registered to a company could be driven in breach of PDRA regulations by an employee, subcontractor, or someone who has taken the vehicle without authorisation. Under s 22(3), the registered owner bears liability unless all three conditions of the statutory defence are satisfied.
The PDRA has never been invoked, so this provision has never been evaluated against the New Zealand Bill of Rights Act 1990, which came into force nine years after the PDRA was enacted. Section 25 (c) of the NZBORA affirms the right to be presumed innocent until proved guilty according to law.[21]
Whether the conclusive presumption in section 22 (3) is consistent with that right depends on whether proceedings under the PDRA have a criminal character. The Supreme Court’s framework in Hansen v R [2007] NZSC 7 directs attention to the nature of the offence, the available penalty, and the degree of stigma associated with liability.[22] PDRA proceedings can attract fines up to $10,000 and concern compliance with a coercive regulatory regime backed by criminal enforcement.[23] Those features are capable of supporting a criminal characterisation.
If the presumption engages s 25 (c), the question becomes whether it is a justified limit under section 5 of the NZBORA.[24] The objective of ensuring compliance with fuel restrictions in an emergency is legitimate. However, a conclusive presumption that forecloses any direct challenge to the central factual issue may go further than is reasonably necessary. A rebuttable presumption, differently calibrated, might achieve the same object with less intrusion on the protected right. This question has never been judicially considered.
Gap three: A 45-year gap in constitutional review
The PDRA has never been assessed against the constitutional framework that has developed around it since 1981. Two developments are particularly significant.
The first is the NZBORA itself. Every regulation made under the PDRA must now be justifiable as a reasonable limit on protected rights under section 5. Regulations are subject to pre-promulgation vetting for NZBORA consistency and to subsequent parliamentary confirmation under the confirmability mechanism introduced by the Legislation (Confirmable Instruments) Amendment Act 2015.[25] Both processes operate after the fact. A regulation may therefore take effect before its proportionality is evaluated through either mechanism.
The second is the closure of the Marsden Point Refinery. Refining ended on 31 March 2022, and the site was decommissioned in April of that year.[26]
New Zealand now imports every drop of its refined fuel, sourced mainly from refineries in Singapore. South Korea and China, which themselves depend on crude oil travelling through the Strait of Hormuz.[27]
In 1981, there was a domestic refinery that provided a structural buffer against supply shocks. The Act was designed for that world. It is now the primary legal instrument for a country with full import dependency and no buffer at all.
The government has committed to reviewing the PDRA as part of its Fuel Security Plan, covering whether the Act enables effective responses to fuel disruptions and emergencies.[28] That review should address all three gaps identified here: an express exemption for zero-petroleum vehicles; a procedural rights requirement before ministerial directions are issued under s 7, which the s 27 NZBORA right to natural justice already implies[29] and a statutory obligation to review the Act on a regular basis.
What this means for the practitioners and why it cannot wait
If the PDRA is invoked, the legal consequences will be immediate. Fleet operators will need to understand their exposure under the registered owner liability regime in s 22. Businesses managing petroleum products will need to understand the direction power in s 7 and the statutory indemnity framework in s 8. Rural contractors, farmers, and freight operators face the greatest operational exposure because diesel has more than doubled in price since the crisis began[30] and the Act currently offers them the least formal protection.
The government’s review of the PDRA is underway, but it will not be finished before the next escalation. The three gaps identified here are not hypothetical. The government’s own legal advice confirmed the Act may need updating before it can be lawfully relied upon, and the strait remains open only at Iran’s discretion. Practitioners advising fuel-dependent clients cannot afford to wait for the review to conclude.
Arpit Joshi
Arpit Joshi is a former automative engineering lecturer who is completing an LLB at the University of Auckland
Footnotes:
1 Al Jazeera “Iran closes Strait of Hormuz again over US blockade of its ports” Al Jazeera (online ed, 18 April 2026); CNBC “Iran declares Strait of Hormuz open to shipping, but Trump says US blockade still active” CNBC (online ed, 17 April 2026).
2 Dallas Federal Reserve “What the closure of the Strait of Hormuz means for the global economy” Dallas Fed Economics <dallasfed.org> (20 March 2026).
3 Julia Gabel “Fuel prices: Government to announce support package for families under the pump as petrol hits $4 a litre in some areas” NZ Herald (online ed, Auckland, 23 March 2026).
4 RNZ “New Zealanders will understand government can’t support everyone during fuel crisis” RNZ (online ed, Wellington, April 2026).
5 Science Media Centre “Diesel shortages squeeze primary industry: Expert Reaction” <sciencemediacentre.co.nz> (17 April 2026).
6 “Carless days in New Zealand” Wikipedia <en.wikipedia.org> (accessed 21 April 2026). Note: for the NZLJ submission, replace with DigitalNZ “Flashback to carless days” <digitalnz.org> which carries the same 39% figure from primary sources.
7 Petroleum Demand Restraint Act 1981 (NZ) (PDRA), long title.
8 Thomas Coughlan “Government considering rapid legislation, as concerns raised fuel restrictions may not be legal without it” NZ Herald (online ed, Auckland, 23 March 2026).
9 ibid
10 RNZ “Fuel situation could get worse before better, says Christopher Luxon” RNZ (online ed, Wellington, 19 March 2026).
11 Russell McVeagh “New Zealand’s Draft Fuel Security Plan: A Step Towards Resilience” Russell McVeagh Insights <russellmcveagh.com> (2025).
12 Aziz Al Sa’afin “EVs selling ‘off the boat’ before they even arrive in NZ” 1News (online ed, Wellington, 26 March 2026).
13 PDRA, s 4(2)(b).
14 PDRA, s 22(10); Land Transport Act 1998 (NZ) (LTA), s 2(1).
15 LTA, s 2(1); Legislation Act 2019 (NZ), s 10.
16 EECA “Hydrogen hauliers: how heavy transport is lowering its emissions” <eeca.govt.nz> (accessed 27 March 2026); NZ Post “NZ’s first hydrogen truck hits 100,000km milestone delivering for NZ Post” <nzpost.co.nz> (accessed 27 March 2026).
17 Economic Stabilisation (Conservation of Petroleum) Regulations 1979 (NZ), reg 2.
18 Land Transport (Road User) Amendment Rule 2017 (LI 2017/171), cl 1.6.
19 PDRA, s 22(3).
20 PDRA, s 22(5)(a)-(c).
21 New Zealand Bill of Rights Act 1990 (NZ) (NZBORA), s 25(c).
22 Hansen v R [2007] NZSC 7, [2007] 3 NZLR 1 at [123] per Tipping J.
23 PDRA, s 4(2)(n).
24 NZBORA, s 5.
25 Legislation (Confirmable Instruments) Amendment Act 2015 (NZ); PDRA, s 6A.
26 Wikipedia “Marsden Point Oil Refinery” <en.wikipedia.org> (accessed 21 April 2026); Engineering New Zealand “Marsden Point Oil Refinery” <engineeringnz.org> (accessed 21 April 2026).
27 The Conversation “Distant conflict, local crisis: is this oil shock the wake-up call NZ needed?” The Conversation (online ed, April 2026).
28 Russell McVeagh, above n 11. 29 NZBORA, s 27(1). 30 Science Media Centre, above n 5.
[1] Al Jazeera “Iran closes Strait of Hormuz again over US blockade of its ports” Al Jazeera (online ed, 18 April 2026); CNBC “Iran declares Strait of Hormuz open to shipping, but Trump says US blockade still active” CNBC (online ed, 17 April 2026).
[2] Dallas Federal Reserve “What the closure of the Strait of Hormuz means for the global economy” Dallas Fed Economics <dallasfed.org> (20 March 2026).
[3] Julia Gabel “Fuel prices: Government to announce support package for families under the pump as petrol hits $4 a litre in some areas” NZ Herald (online ed, Auckland, 23 March 2026).
[4] RNZ “New Zealanders will understand government can’t support everyone during fuel crisis” RNZ (online ed, Wellington, April 2026).
[5] Science Media Centre “Diesel shortages squeeze primary industry: Expert Reaction” <sciencemediacentre.co.nz> (17 April 2026).
[6] “Carless days in New Zealand” Wikipedia <en.wikipedia.org> (accessed 21 April 2026). Note: for the NZLJ submission, replace with DigitalNZ “Flashback to carless days” <digitalnz.org> which carries the same 39% figure from primary sources.
[7] Petroleum Demand Restraint Act 1981 (NZ) (PDRA), long title.
[8] Thomas Coughlan “Government considering rapid legislation, as concerns raised fuel restrictions may not be legal without it” NZ Herald (online ed, Auckland, 23 March 2026).
[9] ibid
[10] RNZ “Fuel situation could get worse before better, says Christopher Luxon” RNZ (online ed, Wellington, 19 March 2026).
[11] Russell McVeagh “New Zealand’s Draft Fuel Security Plan: A Step Towards Resilience” Russell McVeagh Insights <russellmcveagh.com> (2025).
[12] Aziz Al Sa’afin “EVs selling ‘off the boat’ before they even arrive in NZ” 1News (online ed, Wellington, 26 March 2026).
[13] PDRA, s 4(2)(b).
[14] PDRA, s 22(10); Land Transport Act 1998 (NZ) (LTA), s 2(1).
[15] LTA, s 2(1); Legislation Act 2019 (NZ), s 10.
[16] EECA “Hydrogen hauliers: how heavy transport is lowering its emissions” <eeca.govt.nz> (accessed 27 March 2026); NZ Post “NZ’s first hydrogen truck hits 100,000km milestone delivering for NZ Post” <nzpost.co.nz> (accessed 27 March 2026).
[17] Economic Stabilisation (Conservation of Petroleum) Regulations 1979 (NZ), reg 2.
[18] Land Transport (Road User) Amendment Rule 2017 (LI 2017/171), cl 1.6.
[19] PDRA, s 22(3).
[20] PDRA, s 22(5)(a)-(c).
[21] New Zealand Bill of Rights Act 1990 (NZ) (NZBORA), s 25(c).
[22] Hansen v R [2007] NZSC 7, [2007] 3 NZLR 1 at [123] per Tipping J.
[23] PDRA, s 4(2)(n).
[24] NZBORA, s 5.
[25] Legislation (Confirmable Instruments) Amendment Act 2015 (NZ); PDRA, s 6A.
[26] Wikipedia “Marsden Point Oil Refinery” <en.wikipedia.org> (accessed 21 April 2026); Engineering New Zealand “Marsden Point Oil Refinery” <engineeringnz.org> (accessed 21 April 2026).
[27] The Conversation “Distant conflict, local crisis: is this oil shock the wake-up call NZ needed?” The Conversation (online ed, April 2026).
[28] Russell McVeagh, above n 11.
[29] NZBORA, s 27(1).
[30] Science Media Centre, above n 5.
[1] Al Jazeera “Iran closes Strait of Hormuz again over US blockade of its ports” Al Jazeera (online ed, 18 April 2026); CNBC “Iran declares Strait of Hormuz open to shipping, but Trump says US blockade still active” CNBC (online ed, 17 April 2026).
[1] Dallas Federal Reserve “What the closure of the Strait of Hormuz means for the global economy” Dallas Fed Economics <dallasfed.org> (20 March 2026).
[1] Julia Gabel “Fuel prices: Government to announce support package for families under the pump as petrol hits $4 a litre in some areas” NZ Herald (online ed, Auckland, 23 March 2026).
[1] RNZ “New Zealanders will understand government can’t support everyone during fuel crisis” RNZ (online ed, Wellington, April 2026).
[1] Science Media Centre “Diesel shortages squeeze primary industry: Expert Reaction” <sciencemediacentre.co.nz> (17 April 2026).
[1] “Carless days in New Zealand” Wikipedia <en.wikipedia.org> (accessed 21 April 2026). Note: for the NZLJ submission, replace with DigitalNZ “Flashback to carless days” <digitalnz.org> which carries the same 39% figure from primary sources.
[1] Petroleum Demand Restraint Act 1981 (NZ) (PDRA), long title.
[1] Thomas Coughlan “Government considering rapid legislation, as concerns raised fuel restrictions may not be legal without it” NZ Herald (online ed, Auckland, 23 March 2026).
[1] ibid
[1] RNZ “Fuel situation could get worse before better, says Christopher Luxon” RNZ (online ed, Wellington, 19 March 2026).
[1] Russell McVeagh “New Zealand’s Draft Fuel Security Plan: A Step Towards Resilience” Russell McVeagh Insights <russellmcveagh.com> (2025).
[1] Aziz Al Sa’afin “EVs selling ‘off the boat’ before they even arrive in NZ” 1News (online ed, Wellington, 26 March 2026).
[1] PDRA, s 4(2)(b).
[1] PDRA, s 22(10); Land Transport Act 1998 (NZ) (LTA), s 2(1).
[1] LTA, s 2(1); Legislation Act 2019 (NZ), s 10.
[1] EECA “Hydrogen hauliers: how heavy transport is lowering its emissions” <eeca.govt.nz> (accessed 27 March 2026); NZ Post “NZ’s first hydrogen truck hits 100,000km milestone delivering for NZ Post” <nzpost.co.nz> (accessed 27 March 2026).
[1] Economic Stabilisation (Conservation of Petroleum) Regulations 1979 (NZ), reg 2.
[1] Land Transport (Road User) Amendment Rule 2017 (LI 2017/171), cl 1.6.
[1] PDRA, s 22(3).
[1] PDRA, s 22(5)(a)-(c).
[1] New Zealand Bill of Rights Act 1990 (NZ) (NZBORA), s 25(c).
[1] Hansen v R [2007] NZSC 7, [2007] 3 NZLR 1 at [123] per Tipping J.
[1] PDRA, s 4(2)(n).
[1] NZBORA, s 5.
[1] Legislation (Confirmable Instruments) Amendment Act 2015 (NZ); PDRA, s 6A.
[1] Wikipedia “Marsden Point Oil Refinery” <en.wikipedia.org> (accessed 21 April 2026); Engineering New Zealand “Marsden Point Oil Refinery” <engineeringnz.org> (accessed 21 April 2026).
[1] The Conversation “Distant conflict, local crisis: is this oil shock the wake-up call NZ needed?” The Conversation (online ed, April 2026).
[1] Russell McVeagh, above n 11.
[1] NZBORA, s 27(1).
[1] Science Media Centre, above n 5.
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