Petrol cuts likely to be temporary: AA

File photo / NZ Herald

Major petrol companies may have slashed prices but it's likely to be temporary, the Automobile Association (AA) says.

Shell was the first to drop its price for petrol and diesel by six cents a litre from 7am today, with its new price for 91 octane petrol at 215.9 cents, 222.9c for 95 octane and 157.9c for diesel.

BP, Caltex and Mobil quickly followed Shell's lead and cut petrol prices but the AA says consumers shouldn't celebrate too soon.

"We shouldn't expect that this is the beginning of a series of price reductions," AA PetrolWatch spokesman, Mark Stockdale, told BusinessDay.

"The expectation is that oil prices overall are going to continue to rise more likely than they will fall and that means that we can expect in the long run, fuel prices to rise so we have to get used to the idea that fuel prices are going to go up rather than down."

However, the consumer would benefit from the price drop in the short-term, he said.

"The AA's analysis shows that reduction in the cost of imported petrol and diesel has actually fallen further than about 6c a litre so we think there's an opportunity for further price reduction in the coming days."

Last week motorists were stung with record petrol prices as major suppliers increased the cost of 91 octane petrol by 3 cents to 221.9c a litre.

Oil companies blamed the price of refined oil rising faster than the exchange rate, prompted by demand in the United States and West Africa.

- NZPA