Double whammy sparks record rise

Z's Sheena Thomas said the tax rise was higher than her firm's annual profit margin in most years, so it had no room to absorb extra costs. Photo / Dean Purcell

An industry-led rise and a tax increase have pushed petrol prices to equal a record high reached last year.

Increases imposed by the four main oil companies of 4c a litre for both petrol and diesel - within three days of fuel taxes rising on Monday - have been slammed by the Automobile Association as unjustified.

"It's a bad look for the fuel companies to be raising prices so quickly after the tax rises," spokesman Mark Stockdale said yesterday.

The double-whammy has hit motorists with a 7c increase in petrol prices since Monday, when the Government raised its excise tax by 3c a litre to pay for roading projects, notably its seven Roads of National Significance such as the Waikato Expressway and Puhoi-to-Wellsford motorway extension.

The price for 91-octane petrol has risen to 222.9c a litre at non-discounting petrol stations selling the main brands, the same as the record price set in August, although industry minnow Gull has yet to move again since passing on the Government's tax rise on Tuesday.

New diesel prices of 153.9c or 154.9c follow a 4c industry increase, which is on top of a 10 per cent rise in road user charges paid separately at outlets such as NZ Post shops.

Mr Stockdale said motorists also faced a "grim" outlook for the future, with a general downward trend in the value of the Kiwi dollar and political instability in the Middle East likely to put pressure on commodity import prices.

But he said both the exchange rate and import costs had been stable over the past fortnight, so he could not see any justification for the industry's latest price rises.

BP spokesman Jonty Mills said the two sets of rises were entirely separate.

The first was a Government-imposed increase which his company could do nothing about, except for absorbing an extra GST component of 0.45c on top of the 3c excise rise.

What followed was simply an industry response to market conditions, which had seen a decrease in the dollar's value and higher import costs since the previous retail increases, on June 7. He said international oil prices rose 2 per cent on news of the coup in Egypt.

Z's Sheena Thomas said the tax rise was higher than her firm's annual profit margin in most years, so it had no room to absorb extra costs.

Petrol Prices Up