Petrol prices surge again

Fuel prices surged again yesterday - by 4c a litre for petrol and 3c for diesel - in response to a continuing world supply crunch.

All four main oil companies lifted their prices during the day, leaving just the small West Australian-owned supplier Gull Petroleum trying to retain a brief marketing edge by resisting increases at most of its 30 service stations.

Spokesman Ulrik Olsen said the firm would wait until this morning to review its prices, but admitted it would be unable to hold out for long.

Automobile Association spokesman George Fairbairn acknowledged the inevitability of the latest increases, but said it was disappointing for motorists that the main suppliers moved so fast after world oil prices traded above US$65 ($92.73) a barrel on Wednesday night.

BP Oil spokesman Jonathan Hill said his company had resisted raising its prices in recent days, hoping that successive increases in world prices were short-term spikes.

"But it does appear to be a trend, unfortunately," he said.

Oil has never cost more in nominal terms, although it would have to exceed US$82 a barrel to become more expensive than in 1980 if inflation is taken into account.

The price of standard-grade 91-octane petrol has jumped almost 30 per cent since the end of last year, from 111c a litre to 143.9c.

Motorists still using 96-octane have to pay 148.9c at most stations, or 149.9c at Caltex outlets, which maintain a 6c price differential between the grades.

Diesel is now 22c a litre dearer than in December, at 96.9c, although it reached 97.9c before a 4c price cut last month.

Bus and Coach Association executive director John Collyns said his members were feeling the pinch, particularly as many were locked into contracts with inbound tour operators or fare ceilings set by regional councils for urban services.

But he said he was recommending to tour coach operators that they consider introducing fuel surcharges, similar to those of airlines.

He also disclosed that the association had begun negotiating with the Auckland Regional Transport Authority for an undisclosed increase in its maximum fare schedule, which binds all bus operators providing subsidised services.

Mr Collyns said patronage had started increasing in the past two months on some Auckland routes, after a slump blamed on factors such as a decline in overseas students.

The association believed the partial recovery may be because petrol prices rises were prompting more people to leave their cars at home and catch buses instead.

Economist Robin Clements, of merchant banker UBS, said he feared a combination of long-term international factors, including unrelenting demand from China and elsewhere and insufficient investment in oil exploration and refining, could keep prices up for some years.

He acknowledged that a weakened US economy, blamed partly on fuel price rises, was helping to keep the NZ dollar relatively high.

That acted to some extent as a buffer against even higher petrol and diesel prices in this country.

But Mr Clements warned that a drop in the dollar from its present value of almost 70USc to its historical level of about 58USc was inevitable "sometime in the next two years".

The Green Party's Keith Locke said the latest price rises made it imperative for the Government to spend even more on public transport rather than sinking the bulk of transport investment into new roads.

"One day we will wake up and find cars are too expensive to drive."

Then and now

91-octane:
* 111c in December
* 143.9c now.

Diesel
* 74.9c in December
* 96.9c now