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Petrol prices rose 5c a litre at most services stations yesterday, and diesel hit prices not seen for more than a year.
The rises are in response to the continuing world oil squeeze, which has sent crude oil prices soaring.
The price of 91-octane petrol went up to 173.9c a litre and diesel to 127.9c.
Petrol is still 3c a litre cheaper than the record of 176.9c set in August last year, but diesel has never been more expensive, equalling peaks reached on two occasions last year.
The price of United States light crude oil surged to a record US$99.29 overnight before falling back to US$97.53 at 5.30am.
All four large oil companies lifted prices yesterday, leaving only industry minnow Gull vowing to hold out until at least tomorrow, to attract custom from bargain-hunting motorists with discount vouchers from shopping at supermarkets today.
Shell, Caltex and Mobil lifted their diesel prices by 8c to match a 5c rise imposed by BP, which started off 3c above the others after an increase early this month.
The Automobile Association says the price rises are particularly disappointing, arriving as motorists plan pre-Christmas activities.
It is urging its more than one million members to take advantage of supermarket discount deals.
"It's a disappointing development, leading into Christmas, when people are going to be travelling more," said spokesman Mark Stockdale.
Jucy car rentals chief executive Tim Alpe said more Aucklanders are leaving their larger vehicles at home and hiring smaller models for weekend trips such as to the Coromandel Peninsula.
And Mr Stockdale believes that eventually families may decide to buy smaller cars and rent larger vehicles for summer holiday trips.
Quotes for US light crude booked for delivery in January rose more than US$1 yesterday to US$99.29c amid fears that limited Opec oil supplies may leave the market short over the Northern Hemisphere's winter.
International oil prices have been rising in recent months because of the falling US dollar and are 40 per cent higher than in mid-August.
In New Zealand, retail prices - partly cushioned by the strong NZ dollar - have risen about 13 per cent for petrol and 24 per cent for diesel.
BP spokeswoman Diana Stretch acknowledged that the price rises were counter to the downward trend usually seen at this time of year.
But she said her company had faced a 7 per cent rise in imported petrol costs since pump prices last rose on October 29, and a savage diesel jolt of more than 10 per cent.
She said world supply concerns had been aggravated by unplanned shutdowns at two large American refineries.
Ms Stretch also said New Zealand was entering "a whole new era" of fuel prices because of proposed Government measures such as the carbon emissions trading scheme and regional petrol and diesel taxes.
These could push the price of a litre of petrol above $2 regardless of world trends.
Based on European carbon trading quotes, the emissions scheme could add 9c to the price of a litre of petrol, Ms Stretch said.
The Government also intends passing legislation by April to allow regional fuel taxes of up to 10c a litre to be imposed from July, to raise money for public transport and roading projects.
On top of that:
* The Accident Compensation Corporation is considering raising its levy on fuel by at least 2c to recover soaring costs from road smashes.
* Petrol excise will increase by about 2c in April to counter inflation.
* The Government is considering an excise rise of about 1c by 2012 on petrol to recoup a tax exemption on biofuels.
* GST will be added to all increases.
