Petrol: 'It should be below $2 a litre'

A Mobil petrol station in the Auckland CBD, 3 June 2011. Photo / Dean Purcell

Petrol price cuts delivered to motorists yesterday did not go far enough, the Automobile Association says.

Z Energy, formerly Shell, and BP dropped 91 octane 2c a litre to $2.06 and diesel 5c a litre to $1.46 yesterday.

AA petrol price analyst Mark Stockdale said fuel companies could cut prices another two cents and retain a good margin of profit.

"The reduction has not been fully passed on. There is room for further movement.

"They have been a bit conservative. The fuel company margins are still at a good level... More aggressive pricing is needed when there's an opportunity to pass on the reduction."

The lower-than-expected cuts were part of a wider trend towards the companies acting conservatively in the New Zealand market, Mr Stockdale said.

Only two multi-national companies - BP and Mobil - remained in New Zealand and Mobil's outlets were for sale, he said.

He claimed that meant fuel prices would be quicker to increase and slower to decrease in future.

"In the past we would have seen more aggressive fuel reductions. We would have seen four cent cuts yesterday if this was two years ago.

"The fuel companies are saying things have been tough the last few years and that's why they're trying to keep their profits at a more sustainable level.

"Their operations are no longer being subsidised by their international operations."

Mr Stockdale said the price of crude oil had dropped $15 a barrel in the last fortnight, while the price of refined oil had only dropped $5.

Further petrol price cuts were likely in New Zealand when the refined price dropped to match that of the crude product, he said.

"It should be dropping below $2 a litre."