20 Sep 2023

Soaring fuel prices likely to hit summer holiday road trips

7:04 pm on 20 September 2023
A person filling up petrol

There are predictions that petrol prices could soar as high as $3.50 a litre for 91 by Christmas. Photo: Marika Khabazi

Fuel company Waitomo says higher fuel prices will "definitely" have an impact on Kiwis' summer road trips.

There are predictions that petrol prices could soar as high as $3.50 a litre for 91 by Christmas.

Brent Crude is edging towards $95 US per barrel.

Waitomo managing director Jimmy Ormsby told Morning Report that global events were having an impact on prices.

"Obviously the Saudis have restricted supply, they like the barrel to be up in that 90 to 100 dollar range which it now is, so hopefully that's enough for them and they let the product flow a bit more so that'll be reflected in the price of a barrel," he said.

"There's also been quite a few refinery shut-downs in the region so it's just a catch up from post-Covid.

"Good news is that data out this week is that the Chinese refineries have doubled their output over June and July. June and July were low months, it's back up to something like 1.2 million tonnes, so that's really positive."

Ormsby described the forecast as a "bit of doomsday" and said there were a whole range of other factors coming into play too.

"It's what's happening at OPEC, what's happening with refineries, supply and demand, and then obviously we've got a few things we can control at our end like the taxes and what's happening with ETS, so ETS has had a bit of a bounce, obviously, so we're up to 18 cents a litre for diesel and 16 for petrol ... depending on who wins the election, what taxes that go on.

"Labour's committed to putting on 12 cents a litre ... in the leaders' debate they talked about that last night, National on the other hand have said they'd remove the Auckland regional tax and not put the 12 cents on."

As for summer road trips and travelling over the break, Ormsby said motorists would feel the pain.

"It's pretty elastic; the price goes up and that is reflected in demand at the pump, obviously there's a few people in tough economic circumstances out there at the moment.

"We will ultimately see that at the pump and also, we've seen ... a bit of a flat curve in terms of the demand for diesel, which just reflects economic activity."

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