Oil firms play ping-pong at pumps

Motorists squealed in protest at petrol pumps yesterday as prices lurched up by almost 6c a litre before ending the day either at or 1c below where they started.

The price of 91-octane petrol rose to a wallet-emptying 162.7c a litre and diesel to 121.9c for several hours, first at BP and then at Caltex and Mobil stations, before Shell scuttled the field by pitching a lower ball.

BP and Shell were last night selling 91-octane for 155.9c a litre - representing a net 1c price cut since yesterday morning - after a bout of gamesmanship spurred by an early cry of foul from the Automobile Association.

Caltex and Mobil rolled back to yesterday's starting price of 156.9c, after initially following BP up by 5.8c a litre for petrol and 5c for diesel, and then watching Shell split ranks by posting a lower increase of 4c.

Independent operator Gull Petroleum stayed at 156.9c throughout the day, saying it saw no reason to add to "confusion" in the marketplace caused by its larger rivals' antics.

Shell's pitch, which also left diesel untouched at 116.9c, prompted BP to take two steps backwards in the face of competitive pressure.

If BP's move had gone unchallenged, motorists would have been left paying 13.8c more for petrol than a fortnight ago, after 8c of earlier rises.

But at 2pm the company cancelled its diesel increase and pulled petrol down by 5c, leaving motorists with a net 0.8c increase covering an inflation-adjusted fuel tax rise imposed by the Government on Saturday.

Within the hour, Shell had wiped away its 4c increase, and BP responded at 3.30pm with a further 1.8c price cut.

Shell was then quick to follow BP down to 155.9c a litre for 91-octane and 160.9c for 95-octane, while leaving diesel at yesterday's starting price.

The play left AA motoring affairs manager Mike Noon relieved and elated, after earlier demanding that the oil companies explain their increases to the public.

"I think it's outrageous - this is a 'please explain' situation", he said in his initial response to the increases.

"As recently as Friday in [AA publication] Petrolwatch we asked the companies to hold the 0.8c [tax rise] and it is obvious that they haven't."

But by mid-afternoon, Mr Noon was rejoicing that the companies appeared to have realised they had upset "Joe Public" and had backed down accordingly.

He was reluctant to criticise their marketing tactics, in view of the reversal, saying: "We don't want to beat them up for doing a good thing."

Mr Noon noted, however, that even BP and Shell's new price was still 7c higher than a fortnight ago and equal to post-Hurricane Katrina levels.

Consumers' Institute chief executive David Russell said it was "peculiar" that such large multinational corporations appeared to have so much difficulty reading the market.

"In the end, we are very pleased that the obvious error of their initial judgment has been remedied with lower prices," he said.

BP spokeswoman Diana Stretch defended the company's increases, saying the cost of both refined petrol and diesel imports had risen more than 5 per cent since pump prices rose last Wednesday by 3c a litre.

She said its backdown showed how "competitive" the market was.

Her counterpart at Shell, Jackie Maitland, said her firm had responded to its own cost pressures in raising petrol by 4c a litre after a steadying of the NZ dollar was not enough to absorb the increase in imported stock. "But we didn't feel a need to move up 6c."