Source: Radio New Zealand
RNZ / Dan Cook
The price of 95 petrol has hit $3 in some parts of the country as conflict in the Middle East pushes up oil prices.
Motorists contacted RNZ upset at being asked to pay more than $3 in Kapiti outlets.
On Friday morning, Z Kapiti Road was recording $3.019 for 95 and g.a.s Waikanae $3.059 for 95, according to the fuel price monitoring app Gaspy.
Mike Newton, spokesperson for Gaspy, said other more isolated parts of the country were also at or near that level.
NPD Fox Glacier was $3.089 for 95. Greymouth stations were also around the $3 level.
“We’re definitely seeing more and more stations getting closer to that mark,” Newton said.
“I think while there’s so much uncertainty we’re just going to keep seeing prices rise.
“If you compare this to when Russia first invaded Ukraine, we saw huge price increases after that. There’s probably a lot more uncertainty here because of the fact that Iran wasn’t actually allowed to export oil to the world.
“There’s a lot of uncertainty about where it’s going to go, how long it’s going to last … there’s definitely a feeling that prices are going to rise.”
After the Russian invasion of Ukraine, the price of 91 increased past $3, the government responded by temporarily halving the fuel excise tax.
Newton said the national average for 91 was now $2.66 a litre.
“It’ll be interesting to see how rapidly prices ramp up. The oil companies are pricing in expected increases, they’re not buying oil at the more expensive rates yet but they expect they will be.”
He said Kapiti stations had recorded increases of between 8c and 15c in the past week, above the national and regional average.
The Wellington region was up 4c over the same period.
“A lot of that could be driven by the discount retailers. I noticed that Paraparaumu has a NPD station which has only gone up 6c so the discount retailers are maybe not moving as quickly and in some places everybody else follows the lead of the discount retailers but in Paraparaumu that doesn’t appear to be the case.”
He said Nelson had experienced an increase of 6c on average, whereas 3c to 4c was the norm for most other regions.
‘Can’t see it getting cheaper in March’
AA policy adviser Terry Collins said he had been able to fill up in Wellington on Tuesday at $2.34 a litre for 91, which he said still seemed good value. “Today, $2.48, $2.50 is looking like a good deal.”
He said, for 91, about $2.70 was the top end in the Wellington region. Gaspy noted Mobil Karori at $2.79 and Z Taranaki St at $2.85.
Collins said oil futures for April had reached US$85 a barrel, about 12c more than a week ago.
“I said at the beginning of the week we will be at US$80 by the end of the week, we’re at US$85. The longer the fighting continues the more the upward trajectory in price.”
In previous times of disruption, the price of a barrel had hit US$120.
“US$100 wouldn’t surprise me. These geopolitical events take time to readjust the supply chains.
“All I know is I’m confident I bought some fuel on Monday knowing that I wasn’t going to get it cheaper for a little while. I can’t see it getting cheaper in March, I think it’s on an upward trajectory.”
Infometrics chief executive Brad Olsen said 95 reaching the $3 benchmark was a sign of the wider trend.
RNZ / Samuel Rillstone
“The latest MBIE reporting for the week of February 27 had average 91 prices at something like $2.53. We estimated that given where oil prices were yesterday, we could se something like a 30c-plus per litre increase over the next week or so.”
He said if oil prices reached US$100 a barrel, it could push 95 up to $3.20 or $3.30.
“The hit is starting to come through and we feel the risk of it going further is high.”
Olsen said fuel already in New Zealand was helping to moderate prices.
“The challenge is that you see fuel prices go up quicker than they come down the other side. Part of that is because you often see people that buy fuel during times of challenge at the moment because you’re not sure when you can get the next big shipment of fuel in.
“So you buy it at the higher price and you have to sell it at the higher price because you don’t know when the conflict’s going to end. Towards the end of the conflict it may well be that oil prices start to come down but you’ve already ordered another shipment’s worth at the higher price and need to sell it.”
He said it was also worth noting that diesel prices would also rise, which would affect the commercial sector and put pressure on inflation.
“If you’ve got transport costs the board that have gone up, if businesses start to pass on those higher operating costs on their prices, that’s where there would be some worry.
“Even at the moment, the whole aim to get inflation back within the band and then driving down towards 2 percent … that goal will likely have to be pushed out because of this increase in oil prices.”
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