AA claims petrol price rises premature

Oil companies are again having to defend their price rises, with the Automobile Association accusing them of reacting too fast to Hurricane Katrina.

The association said the jump in oil prices caused when Gulf of Mexico production rigs were abandoned in the path of Katrina should not have reached New Zealand for several weeks.

"Petrol sold here today is from oil purchased several weeks ago - it is simply not credible to blame this week's disaster in the United States ... " said spokesman Greg Hunting.

But BP spokeswoman Diana Stretch, whose company was the first to raise petrol and diesel prices by 5c a litre on Wednesday, said her industry was attuned globally to the immediate replacement cost of oil.

She said refined product prices were set internationally and had rocketed by more than US$11 this week to US$89.50 ($126.46c) a barrel, despite US President George W. Bush releasing part of his country's strategic reserve.

Oil companies largely blame limited refining capacity for retail price rises, even though they own the refineries and are reaping large profits from the tight margin between supply and demand.

Statistics New Zealand figures issued to the Herald yesterday show that although the volume of motor fuel sales slumped by 2.6 per cent in the three months to June 30, compared with the March quarter, they increased by 3.1 per cent in monetary value.