Rising diesel demand could point to economic rebound

A 5 percent rise in diesel demand in the December quarter from a year earlier could indicate a rebounding economy.

The New Zealand Energy Quarterly, published today by the Ministry of Economic Development, said diesel demand rose to 27.5 petajoules (Pj) in the December quarter from 26.2 a year earlier. Petrol demand was up 2 percent to 28.8Pj.

"This diesel demand increase may well indicate a significant rebound in economic activity as it follows two quarters where consumption was well below the previous year's level," the report said.

"The commercial vehicle fleet and also off-road uses in agriculture, mining and construction is responsible for most of New Zealand's diesel use."

A 6 percent drop in demand for diesel for the whole of calendar year 2009 would seem to largely reflect the economic conditions of the recession period, the quarterly said.

Oil production fell 8.6 percent from the September quarter to 30.8Pj in the latest period.

During the December quarter production started from the Kupe oil and gas field, while production from the Maari field started in February last year. Output from the Tui field is declining.

Gas production for the 2009 year was at its highest level since 2003, but the year also had the highest losses and own use on record, while flaring continued at high levels due to most of the gas at Maari being flared and continued flaring at Tui, the report said.

From 47.8Pj of gas produced in the December quarter, the gas supply was put at 40.7Pj after subtracting reinjected gas, LPG extraction, flaring, losses and own use.

Coal production plummeted during the latest quarter mainly due to strike action involving 1000 Solid Energy miners.

The 819,000 tonnes of coal produced in the three months was 34 percent down on the September quarter and 13 percent down from a year earlier, the quarterly said.

For a second consecutive quarter, electricity generated from wind was at a record level, with the completion in December of Meridian Energy's West Wind project near Wellington taking wind generation to 511 gigawatt hours (GWh), or 4.9 percent of total electricity generated.

Electricity production was up 3.7 percent from a year earlier to 10,453 in the December quarter, when 76 percent of electricity came from renewable sources, the highest share renewables have had for more than five years, the report said.

For the 2009 calendar year, renewables accounted for 73 percent of generation, the highest percentage since 2004.

Total annual consumption of electricity in 2009 was the lowest since 2005, with much of the drop following a transformer failure at the Tiwai Pt aluminium smelter which led to the shutdown of a pot-line during the first five months of the year.