AA says petrol still too costly despite 5c drop

Petrol prices have been chopped by 5c a litre for the second time this week, but the Automobile Association says they remain painfully high for motorists.

The four main oil companies cut their prices in quick succession yesterday afternoon to reflect lower import costs and a further strengthening of the New Zealand dollar.

That took 91-octane petrol at most city pumps down to 166.9c a litre, and 95-octane to 171.9c - a net 10c reduction since prices fell off their record high on Monday.

A weakening of demand from the United States as its summer holidays draw to a close, and the ceasefire in Israel and Lebanon, were cited as factors behind lower prices for crude oil and refined petrol.

But diesel, which last fell at the beginning of this month, remained last night at 124.9c.

Automobile Association spokesman Mike Noon said this had been "a truly excellent week for motorists" but he believed petrol would have to fall below $1.50 before they could take any great comfort.

The last time petrol was below that level was in March, and prices remain 31c higher than at the start of the year.