8 Nov 2017

Latest petrol increase 'not justified' as price hits new high

8:20 pm on 8 November 2017

Petrol prices have hit a three-year high, with four price jumps totalling 10-cents a litre over the past 10 days.

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Petrol prices have been increased four times in the past 10 days. Photo: AFP

The Automobile Association (AA) said a combination of rising global commodity prices and a drop in the exchange rate were behind the increase.

However, petrol spokesperson Mark Stockdale said those factors were not behind yesterday's 3-cents rise.

"The AA believes that the latest increase is not justified.

"Our exchange rate has actually stabilised, it's been pretty stable for the last week really.

"While the commodity prices has increased a little bit, not enough to explain the 3-cent increase that we saw yesterday."

Mr Stockdale said the AA has been calling for a more thorough investigation into how petrol companies set their prices.

Price at the pump for 91 since August.

Price at the pump for 91 since August. Photo: Gaspy

Larry Green runs a crowd sourcing app called Gaspy which has about 60,000 users, entering the price they pay at the pump.

It paints an accurate picture of fuel prices around the country, and shows people in Wellington and the South Island generally pay more at the pump.

Mr Green said the disparity in pricing often made no sense.

"Some of the obscurities are nonsensical. There's no real reason why the prices are more expensive on one block then the next block"

Petrol companies respond

A spokesperson for BP said it reviewed pricing for company owned sites on a daily basis.

"The recent changes have been driven largely by a combination of a drop in the exchange rate and a change in cost of product, with the barrel price now at a two-year high. Additional influencing factors which impact pricing across the country include logistical and local operating costs."

Z Energy spokesperson Jonathan Hill also pointed to the price of Brent crude oil, which is the New Zealand crude oil benchmark on global markets, being at a two-and-a-half year high. He said the exchange rate had also impacted the price of petrol.

"The NZ dollar against the US is around 69-cents now whereas only in August this year it was 75-cents. These are the two primary factors that set fuel prices, outside of tax.

"So as the price of oil increases it obviously costs more for us to buy, and the price of petrol and diesel increase in line with that.

"When the New Zealand dollar is weaker against the US it costs us more Kiwi dollars to buy the same volume. So there is a double impact here - steadily rising international crude oil and refined fuel prices and a weaker NZ dollar both putting upward pressure on prices.

"As a rough rule of thumb, a one-cent movement in the exchange rate equates to a one-cent movement in pump prices, so the weakening of the Kiwi dollar equates to approximately six-cents per litre," Mr Hill said.

Mobil NZ spokesperson Andrew McNaught said its prices were influenced by a number of factors:

"... Including product cost, exchange rates, transportation, retailing costs and local market competition. Setting retail prices is thus a balancing act between the immediate effects and influences of the market, versus the longer-term outlook for our business and the industry.

"New Zealand continues to be a very tough, competitive petroleum market and within New Zealand, motorists are increasingly benefiting from discounts off the advertised board price, such as those offered via in-store promotions and supermarket vouchers."

Earlier this year a report into petrol pricing, commissioned by the Ministry of Business, Innovation and Employment was released, but the investigation was hindered by several companies which refused to supply information.

At the time of the investigation, Labour said it would amend legislation if elected to allow the Commission to properly investigate petrol companies.

The new Minister of Energy and Resources, Megan Woods, said in a statement:

"I appreciate the recent petrol price increases are causing pain for motorists at the pump, particularly for those already struggling to make ends meet.

"I have received an initial briefing from officials at MBIE about this pricing issue, after seeking it as a matter of priority. They are due to provide a detailed report to me by the end of November.

"I am currently taking advice on next steps, including what the process would be for referral to the Commerce Commission.''

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