KEY POINTS:
Motorists still reeling from the fuel price hikes of June and July are asking why the price they are paying appears to be falling almost three times slower than the world oil price.
The Government has repeatedly told drivers that increases in the price of crude oil caused petrol price increases, which saw regular 91 peak at $2.18 a litre in July.
After howls of protest, the Government commissioned a study that found New Zealand's petrol market was "fundamentally competitive" and that, prices were not fast to rise and slow to fall.
But the Herald on Sunday can reveal that despite crude oil prices slumping more than 33 per cent since their peak in July, petrol prices have dropped by an average of just over 8 per cent.
As the price of crude oil hit US$147 a barrel in the second week of July, petrol reached $2.18.
The oil price has dropped significantly since then, falling to less than US$98 a barrel last week.
But the petrol price has fallen more slowly, settling at an average of less than $2 a litre for the past three weeks. Some companies in Auckland dropped their prices on Friday, with the lowest being Shell on just under $1.94 and Gull on just under $1.92.
Automobile Association spokesman Mark Stockdale said drivers were asking why. "We've had people ringing us up, saying, 'Why isn't the pump price going down?"'
Stockdale said the simple answer was the exchange rate.
"The crude oil price isn't the only factor. The only thing stopping the pump price being lower today is the exchange rate. In April it was 78.5c to the US dollar - now it is 65.25. That's a huge difference."
Stockdale said another factor was the 2c a litre rise in the ACC levy on fuel in July. He agreed with the Government's view on petrol prices. "I think the prices are about right."
Hamish Wilson, testing manager at Consumer NZ, agreed the exchange rate was the key factor and the half a per cent cut in the official cash rate on Thursday would not help because it had caused the New Zealand dollar to fall 2.3 per cent to US65.25c.
"That's not good for the petrol price. The unfortunate fact is we pay for petrol in US dollars. It's a lose/lose situation, there's nothing we can do about it."
However, he believed a drop in the petrol price was justified. "We always think there's room for the oil industry to do better. They seem to have reverted into their old mode where they are slow to drop prices. But I understand some of where they are coming from."
Commerce Minister Lianne Dalziel was unavailable for comment, but a spokesman for the Ministry of Economic Development said any idea that petrol companies were profiteering at the expense of motorists was wrong.
"There is no evidence they are earning more now than what they were three months ago," he said.
"There is the base cost, the exchange rate, oil company margins, taxes. I wouldn't think there was much room for companies to drop prices."
He said the oil price was volatile and all the ministry could do was monitor the situation and publish importer margins on its website.
"New Zealand is a mature market and relatively competitive, despite what people may think," he said.
"On the retail side there is just no money in petrol, in terms of profit it's bugger all."
