Pain at the pump set to continue

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

Petrol prices are adding to the cost of living in this country and have the potential to reach new records in the coming months. This will be a blow to the whole country especially in this district where the key economic drivers need long travel distances.

In just four years the average price of petrol in the country has risen from just under $2 a litre to more than $3.

The bad news is that the outlook is for the price to rise even higher.

Terry Collins, AA principal adviser for motoring affairs, said the cost of a barrel of crude oil had increased by $10 in the past two weeks which should flow through to 10 cents increase per litre at the pump.

The oil price has increased by more than $20 a barrel since the fuel excise tax cut ended and he expected it could hit $100.

It was hard to predict at what point the prices would stop rising.

“I expect every week there will be a slow increase for at least the next month or maybe longer,” he said.

There would be a flow-on effect from the northern hemisphere and how much demand there was for fuel for heating, Mr Collins said.

One of the main reasons for the present lift is that the Government’s 25 cents a litre tax cut imposed in March 2022 ended on June 30 this year.

Originally intended to last for three months to reduce pressure on households, the cut was extended several times but the Government says it is no longer sustainable.

The end of the excise tax cut immediately added up to 29 cents a litre on petrol.

Gaspy, the New Zealand app that tracks prices throughout the country, says the New Zealand dollar is not helping.

Spokesman Mike Newton said the average petrol price has risen by $2 a litre for 91 grade petrol to more than $3 in most parts of the country.

He said the things that seemed to be pushing up prices were the NZ dollar and the cutback in supply from OPEC. These things were out of our control.

Who knows where or when things are going to turn around? We are approaching the point where the fuel excise was first removed in March last year.

For this district fuel increases quickly translate to other price increases in the rurally based economy.

The timing of the increases could not have come at a worse time for the Government, just over three weeks from the election.

Whoever wins, the pain at the pump is going to continue.