Up, up, up as petrol prices hit record

The increase means petrol prices are at their highest in inflation-adjusted terms since the mid-1980s.

Hurricane Katrina hit the pockets of every New Zealand motorist yesterday, with petrol prices rising to record levels.

Prices cracked the $1.50 a litre barrier at New Zealand pumps - a 5c increase. BP increased the cost of 91- octane to $1.529, 96-octane to $1.579 and diesel to $1.019 yesterday.

Mobil, Shell and Caltex quickly fell into line. Gull has kept most of its 30 sites at the old prices but will review the situation this morning.

The increase means petrol prices are at their highest in inflation-adjusted terms since the mid-1980s. The 40-litre tank of an average-sized car will cost about $60 to fill.

Yesterday's increase came as the tropical storm shut refineries along the Gulf of Mexico and closed down 95 per cent of oil production in the region - about 30 per cent of the United States' total output.

Jonathan Hill, a spokesman for BP, said: "This is a serious situation and I am not sure we will see the problem fixed in the near future. The supply chain is very, very tight."

The rises in petrol prices are also rapidly adding to the Government's tax take, putting millions of dollars more into its coffers every month.

The 12.5 per cent GST component of petrol is now about 17c a litre, compared with about 13c when petrol cost 116c a litre six months ago.

Consumers' Institute chief David Russell greeted the latest price rise with "deep foreboding", saying it was setting "a new standard that we are going to have to learn to live with".

New Zealanders would have to modify their use of petroleum products and their spending habits.

The Government should take a "fairly urgent" look at lifting the 5c a litre surcharge imposed in April to boost transport spending, he said.

Automobile Association spokeswoman Jayne Gayle said she was concerned that yesterday's new charges were on oil the petrol companies had already bought at prices around $10 a barrel cheaper than they are now.

The cost to New Zealanders will not stop at the service station. Auckland Chamber of Commerce chief executive Michael Barnett warned businesses had to take the price rises into account.

An Automobile Association technical adviser, Jim McCutcheon, said that since March last year the cost of running an average-sized car had risen by 5.8 per cent.