Motorists, transport hit by big fuel rises

Motorists and freight firms were hammered yesterday by the steepest fuel-price rises of recent months - 6c a litre for both petrol and diesel.

Petrol leaped to $1.48 a litre for the most common grade, 91 octane, and to $1.53 for 95 octane at most main-centre pumps.

Although these prices remain 8c short of a peak reached in September for petrol, after Hurricane Katrina's rampage through United States oil fields, the cost of diesel at $1.06 has never been higher.

BP Oil spokesman Neil Green said the industry decided to try to limit price rises over Christmas but a continuing squeeze on international refining capacity combined with a weaker New Zealand dollar had forced its hand.

Automobile Association motoring policy manager Jayne Gale accepted that importer margins on petrol had been lower than average in recent weeks, but said such a big increase in one hit would be hard for motorists to swallow.

Among the most immediate victims will be those looking forward to driving to holiday resorts over the two long weekends between now and Waitangi Day on February 6.

But the diesel price rise has even deeper ramifications for the economy once higher costs for freight firms, manufacturers and farmers feed into the marketplace.

Road Transport Forum chief executive Tony Friedlander said his organisation was very concerned about importer margins on diesel that appeared well above average at more than 20c a litre.

But he added that the picture might be confused by a fuel-specification requirement that meant oil companies had to buy more expensive product.

The forum had hired an independent adviser to analyse the pricing structure for diesel to ensure transport operators were not being treated unduly harshly.

The sharp rise in price yesterday reignited debate for any efficiency drive to be based on lowering the age of the national fleet rather than reducing engine sizes.

The AA said it would support a move to graduated vehicle taxes on grounds of encouraging fuel conservation, reducing pollution and reducing the road toll.

Ms Gale noted that taxes on a one-tonne vehicle were the same as those on a three-tonne vehicle.

"It doesn't seem consistent to us that you don't have a graduated set of charges on vehicles based on size.

"We'd be broadly in line with what [Green Party co-leader] Jeanette Fitzsimons is suggesting," Ms Gale said.

Ms Fitzsimons said last year the party wanted the Government to reward people who bought "environmentally sensible" cars.

"It is essential to improve the efficiency of New Zealand's vehicle fleet as quickly as possible to protect ourselves against ever-rising fuel prices and to reduce unnecessary climate change emissions," she said.

But Motor Industry Association chief executive Perry Kerr said his organisation would strenuously oppose taxing cars according to engine size.

"We agree something needs to be done in terms of the efficiency of the fleet. We would, however, be more likely to support increasing the registration costs in relation to the vehicle's age as opposed to whether it had a large or small engine."

Old cars caused most of the pollution, and the average age of cars had risen to 11.9 years from 9.93 years in 1992.