AA predicts soaring petrol price will take toll on summer holidays

At almost $2 a litre, fuel is at its highest in more than two years. Photo / Peter Meecham

Petrol prices close to $2 a litre may force some families to stay close to home during the summer break, says the Automobile Association.

A succession of price rises in the past fortnight has pushed regular 91-octane petrol up 11c to $1.96 a litre at most city pumps - the highest for more than two years - and premium fuel has passed the $2 line.

The big oil companies were selling 95-octane petrol for $2.03 last night and BP's 98-octane blend was up at $2.11.

Only independently owned Gull was holding out against the latest 3c increase on petrol and 4c on diesel, saying it would wait until Monday before reviewing schedules.

AA spokesman Mark Stockdale said motorists had become accustomed to fairly stable prices until recently, and tax rises - including the new emissions trading scheme levy - were responsible for 10c of a net 20c increase since January.

The AA accepted the need for the latest petrol price rises, as they did not completely cover import cost increases amounting to 12c a litre, although it believed diesel should have gone up by only 2c a litre to maintain a fair profit margin.

But Mr Stockdale said the rises - caused mainly by a high demand for heating fuel in a bitterly cold Northern Hemisphere winter - had come at a bad time of year for New Zealand families looking forward to their annual holidays.

"Some people will be concerned about how much it's going to cost them and whether they can travel as far as they can and visit as many people as they hoped," he said.

"Now the price is knocking on the door of $2 they will start thinking of what they can do to reduce their fuel bill.

"They might still go away for their holidays, but perhaps they won't do day trips or sightseeing to different beaches."

Prices are still some way off a record high of $2.19 a litre for 91-octane petrol in early July 2008.

That caused noticeable reductions in traffic as commuters crammed into buses and trains.

Within weeks, the Transport Agency recorded a 5 per cent drop in traffic immediately south of the Auckland Harbour Bridge.

The price crashed to $1.33 a litre before the end of 2008.

Mr Stockdale said that although some motorists would have reverted to old habits then, others would have persisted with behavioural changes such as running smaller cars, taking advantage of fuel-saving driving tips and making greater use of public transport.

Tips on the AA's website include smoother driving, keeping within speed limits, reducing the use of air-conditioning, and removing unnecessary items such as golf clubs or bicycle racks from car boots.

Gull general manager Dave Bodger said that although he was concerned that the fuel rises were taking money from people's pockets, his company was "all for" customers reviewing their driving habits even at the cost to it of lighter sales.

"We believe that people if you can should take the bus, you should walk or bike and take the roof racks off your car when not using them," he said.

"We believe people should use less fuel, period - that's why we're into biofuels. It's very important that people learn to use less fuel, extremely so."

Green Party transport spokesman Gareth Hughes said the increases showed more than ever that the Government had to plan for "a future of high oil prices".

"It is irresponsible for the Government to borrow billions to build motorways without even considering the effect of high oil prices."

He said Transport Minister Steven Joyce had, in answer to written parliamentary questions, admitted that no explicit analysis was undertaken of the risk of oil shocks in business cases for the Government's seven "roads of national significance" projects.

RUNNING COSTS

91-octane petrol
* July 2008: $2.19
* December 2008: $1.33
* Most of 2009: $1.60-$1.70
* Most of 2010: $1.70-$1.80
* Now: $1.96