The cost of petrol is going up and it varies widely across the region. Photo / Stuart Munro
Whanganui people are paying more for their petrol than others in the surrounding region, according to recent prices.
As at about 10am on Tuesday three BP service stations in Whanganui had the highest price for unleaded 91 petrol in the region, according to the petrol price app Gaspy.
The exact same fuel was 38 cents a litre cheaper at a Palmerston North outlet.
Eight petrol stations in Whanganui were charging $2.40 or more for a litre, whereas in Palmerston North, Hāwera, Bulls, Sanson and Marton prices ranged between $2.12 and $2.38.
The BP outlets in London St and Taupō Quay were both selling for $2.50 a litre. The cheapest fuel in the region was at Pak 'n Save in Palmerston North - $2.12.
The Pak 'n Saves in Whanganui and Hāwera had the price at $2.26.
It was a shock when the price of unleaded 91 topped $2 a litre in late 2016.
Now it's $2.50 and $2.70 at some outlets, NZ Automobile Association principal policy advisor Terry Collins said. "Will we get to $3 a litre? I'm not sure if we will."
His advice is to shop around for petrol, and to get a fuel discount card and use it.
Whanganui petrol station staff were unwilling to say how they set fuel prices.
Collins wouldn't speculate about their profit margin, but said it would have to be at least 1 cent a litre.
The recent price increases were a simple matter of supply and demand, he added.
Supplies of petrol worldwide were short, and demand was high.
Collins said Covid-19 initially reduced demand but now it's ramping up and supplies are not keeping pace.
Investment in new oil infrastructure flagged when producers expected climate change to reduce demand, Collins said.
He said there was a balancing act ahead, to provide the right energy mix.
Setting the price of fuel at the pump is a complex matter, and Collins said outlets didn't get together to agree on it.
The prices they charge mainly depended on the model of their business.
A supermarket that makes lots of profit overall can afford to reduce its petrol price, Collins said.
A business with few staff can drop its price if it sells a high volume.
A business that makes most of its money from convenience items like magazines, coffee and doughnuts can also afford to drop its price.
In a big town there could be more competition, forcing prices down - but that had not been happening in Whanganui recently, Collins said.
And towns with a lot of through traffic might be tempted to offer cheap fuel, he added.
Price doesn't depend on distance from the Marsden Point oil refinery, the AA spokesman said.
There were also variations depending on who owned the business, he said.
Sometimes it was a fuel company, but it could be an individual operator who can choose which fuel wholesaler to buy from.
The prices of "premium fuels" like 95 and 98 are inflated further than those for 91, Collins said.
That could be because they sell at low volumes, which drives the price up. Or it could just be that people are prepared to pay those prices, he said.
There used to be a "big four" of petrol retailers, and Collins said they made a lot of profit out of New Zealand. Now there are new entrants like Waitomo, Allied, GAS and NPD.
More than $1 of the money paid for a litre of petrol goes to various kinds of tax.
There's 77 cents in the fuel excise duty tax used to build and maintain roads, 9 cents for the Emissions Trading Scheme, 6 cents to ACC and 12.5 per cent in GST.
Getting petrol to the outlet selling it relies on a whole lot of other businesses, Collins said.
Each of them "clips the ticket" along the way, he added, including the oil producer, the refinery, the transporter and the wholesaler.
Prices could drop when New Zealand's only oil refinery closes, Collins said, and we import cheaper refined oil from overseas.