Video: Parliament debates solutions to rising fuel pricesKEY POINTS:
Economists are predicting that petrol prices will keep rising by up to 12c a litre even if world oil prices stabilise.
As well as facing a 2c rise in the accident compensation levy on petrol on July 1 - and a $25 increase in the annual registration fee for petrol vehicles - motorists may be in for a price rise of 10c or more as the value of New Zealand's dollar slides.
That would push 91-octane petrol to at least $2.23c a litre.
Bank of New Zealand chief economist Tony Alexander said yesterday he expected local prices to keep rising, even if the international oil market's upward spiral ended.
A lag over the past three months between international crude oil prices and those at local petrol pumps meant a further rise of at least 10c a litre looked probable.
That was even after last week's increases of 10c to 12c a litre, which the Automobile Association says should be enough to satisfy the oil companies.
Mr Alexander disagrees, noting "quite an unusual gap opening up in recent weeks between escalating oil prices and not sufficiently rising pump prices".
"It appears certain that even without any further change in international oil prices, the pump prices in New Zealand will rise further," he told the Herald from Tokyo.
A Ministry of Economic and Development energy review yesterday said an increase of almost 10 per cent in the three months to March 31 in the cost of crude oil was offset partly by a 4 per cent rise in the New Zealand dollar against the United States greenback.
But the Kiwi has slipped 6 per cent since then, contributing to a 34 per cent to 41 per cent rise in crude oil prices in New Zealand dollar terms.
Petrol prices have risen 18.5 per cent and diesel 37.9 per cent.
Part of the difference is explained by the fact that taxes are 50.5c for every litre of petrol sold, but road user charges for diesel users are separate.
The taxes include an ACC levy of 7.33c, soon to rise to 9.34c.
Because there is no accident levy on diesel, its users face an increase of $49 in their annual registration fees.
The Government also takes 23.4c in GST from the 210.9c price of 91-octane petrol, and 20.4c from diesel's 183.9c.
UBS Investment Bank senior economist Robin Clements said that although a strong exchange rate had insulated New Zealand to some extent from international price rises, "that protection is starting to slip away".
The Kiwi rose slightly yesterday to US75.61c, after a three-week slide, but Mr Clements expected it to continue ultimately to "something more normal, like US65c".
"Whether that happens in months or a year, we don't know, but if it does, obviously that is going to add another 10c or something like that to fuel prices."
Mr Alexander said it was "reasonable" to expect the kiwi to fall to US70c by the end of this year.
But he did not support calls from the AA and other groups for the Government to reduce GST on fuel.
"You don't want to be chopping and changing your tax system and creating huge extra uncertainty," he said.
"The lesson Japan provided the world in the 1970s is that when you get a price shock like this, you take it on the nose and you make your adjustments in the size of your cars and the way you use petrol."
His diagnosis is not shared by the left-wing Residents Action Movement, which has asked Commerce Minister Lianne Dalziel to extend a Government-ordered review of fuel pricing to an examination of why New Zealand crude oil is exported and more expensive stock is imported for the Marsden Pt refinery.
