Government inaction on refinery closure sparks shortages

26 June 2022

by Chris Leitch, Leader

Food shortages are likely as a result of the government’s failure to take action to stop the Marsden Point oil refinery from closure.

The refinery was a major supplier of carbon dioxide to NZ industry but its closure in March has put severe pressure on a wide range of businesses.

CO2 is used widely in the food industry – in packaging and to preserve the shelf life of cheese, preserved meats, some chicken products, and in ready-to-eat meals, sparkling wine, fizzy drinks, and beer.

Significant uses are also in the health care industry, the fabrication of metal, cooling, fire suppression, in greenhouses to stimulate plant growth, for water treatment and in the production of fertiliser.

Many of those users are only getting 50 percent of their needed requirements from the country’s only other supplier and are facing either having to cut production or costly CO2 imports which would push prices for their products higher.

For shoppers that means shortages on supermarket shelves, higher prices, or both.

In the paper presented by Minister of Energy Megan Woods to cabinet last September (written by the Ministry of Business, Innovation, and Employment) carbon dioxide gets only one brief paragraph -  “Food-grade liquid carbon dioxide, used in the food and beverage sector and in some water treatment plant, is currently produced at the refinery and at the Kapuni gas processing plant in Taranaki…….. Closure of the refinery will challenge the CO2 supply chain – particularly a short lead time to make necessary investments or relocate plant”.

Another by-product of the refining process was sulphur which is widely used in the fertiliser industry to make up for New Zealand soils sulphur deficiency.

Sulphur is not even mentioned in the report.

Government attention appears to have been only on the possibility of fuel supply disruption and that is now being sorely tested with the price of fuel skyrocketing.

Consideration of the wider consequences of the refinery closure appears to have been lacking, and those consequences are now starting to rear their ugly heads.

It’s still not too late for the government to act and take ownership of the refinery to get it back into working order.