Free Markets: 1, Government Intervention: 0.

The Haps

ACT has been unlocking New Zealand’s potential. Last week David Seymour opened up the New Zealand market to European and American certified toys. Having separate toy standards for five million people was silly, toy importers are thrilled, and soon kids will be too.

The Real Estate Authority’s five year suspension of Janet Dixon for refusing Treaty indoctrination was a disgrace. Late on Friday, ACT’s Nicole McKee passed legislation that would prevent them issuing such a sentence ever again.

The Party also launched two policies that were widely welcomed.

Accrediting security guards with greater powers to stop thieving and nuisance behaviour (but also greater training and responsibility) would fill a gap between ordinary security guards and police. Welcomed by retailers and business associations up and down the country.

ACT would also criminalise abusing pets to control victims of domestic abuse. It’s a far bigger problem than we realise, sadly, and ACT would make it a crime to ‘coerce by animal abuse,’ with up to seven years’ penalty. Welcomed by Pet Refuge and the SPCA.

That’s five days of ACT making and proposing changes to improve New Zealand. None of them are revolutions, but they are all achieved or achievable, and have made or will make this country a better place. That’s why we at Free Press are proud cheerleaders for ACT.

Free Markets: 1, Government Intervention: 0.

It’s hard to see Adam Smith’s invisible hand of the market, perhaps that’s why media don’t report on its many successes. They’re first to complain when things go wrong, but who’s around to praise the market when it works? Free Press, that’s who, and this week we look at the crisis that wasn’t.

So, what happened to the fuel crisis? Only two months ago, it felt like we could be digging in for a COVID-level crisis. Shock jock commentators seemed to hope so, as they made scarier forecasts and called for deeper Government interventions.

Former Herald columnist Matthew Hooton wrote that we were entering a Mad Maxscenario, and the Prime Minister should go overseas and trade food for diesel, immediately. Westpac Chief Economist Kelly Eckhold appeared to be auditioning for the role of Michael Baker for this crisis, calling for dramatic controls on diesel and forecasting $150/bbl oil.

At various times the opposition stood up in Parliament and demanded the Government copy the most extreme version of every rationing or subsidising policy they could find overseas. There was some wild stuff to find.

The Australians made public transport free and halved fuel excise taxes. Various countries started down the path of rationing, others got into buying fuel by the billions.

In New Zealand we refurbished a tank, bought nine days’ diesel to fill it, just in case. We also raised per-kilometre reimbursement rates for low-income care workers who need to drive from house to house.

We gave low-income working households with kids $50 extra per week on the Earned Income tax Credit. The $50 will cease when petrol is back under $3 for a month – an ACT idea – that will probably save the taxpayer $250 million.

And the crisis? Now on Auckland’s Manukau Road, the super competitive strip of upstart fuel retailers, Unleaded 91 is going for $2.75. Diesel has been spotted at $2.10. The market has worked, but the media won’t thank it.

High prices stimulated supply. Ships started travelling new routes as Asian refineries started buying feedstock from Africa and the Americas, instead of the Middle East. Canadians started pumping their oil sands like there was no tomorrow (which could be true for them, now oil is back to $72). The price stabilised.

Prices also put political pressure on those fighting. Trump couldn’t do a summer before mid-terms with gas over $5 USD per gallon. The futures price dropped through May and June as it became clear everyone needed a deal.

What about the New Zealand Government plans to restrict fuel use or go up a ‘level’ in COVID fashion? Well, they just melted away without ever really seeming like a serious possibility. Prices were already giving people more reason to save than bureaucratic rules ever could, so it got hard to see the point.

None of this denies high prices caused financial pain. It hurt when yet another light at the end of the tunnel went dim before we could even see it properly. The lift in mood since energy prices fell back has been noticeable lately.

It would be better if the Iranian Government wasn’t run by mad men fixed on destroying everything beautiful in the world. But they were, and the American/Israeli response stopped them from destroying more.

But, the crisis happened, and the invisible hand sprung into action. We never ran out because prices raised new supply, and the prices shrunk as soon as the problem reversed. It’s almost a miracle that will never get any attention from the press because it didn’t involve the drama of Governments telling people what to do.

Here at Free Press, though, we are thankful the market was allowed to work.