Petrol pump price drop not keeping pace with oil fall

Monday, 10 June 2019

Taxes account for more than half the price we pay at the pump. (Video first published in May 2019)

A drop in the price of crude oil has not flowed through to as much of a saving at the pump.

Over recent weeks the price of crude oil has dropped to $81 a barrel, from $97 on May 20.

In the same period, the price of petrol fell to an average $2.17 a litre for 91 on Monday from a high of $2.24 per litre on May 24, figures provided by Gaspy show.

In mid-February, when crude oil prices were about $2 more a barrel than they are now, the price of 91 was $2.13, according to the Automobile Association (AA).

* Petrol price falls on the back of sliding international oil price and strong New Zealand dollar

* Q&A: petrol prices and why we'll never see super cheap petrol again**

AA petrol spokesman Mark Stockdale said there had been an 8 cent drop this week, and a drop of six cents the week before, which was unusual, but reflected the international price of oil.

'Certainly commodity prices now seem to be falling, which is great. People were worrying that prices were rising. Right now it looks like the panic is off,' he said.

Gareth Kiernan, chief forecaster at Infometrics, said importers' margins increased from 31c per litre to 38c between May 10 and May 31 and could have expanded yet further in the last week.

'In percentage terms, margins now look to be at their widest since November of December last year.

'Margins had plunged in the wake of the government announcing the petrol price inquiry by the Commerce Commission in early December, from 36c a litre on 30 November to 24c by 11 January. This shrinking of margins was similar to the 10c margin drop in June 2017, as petrol companies tried to limit the possible fall-out due coming from MBIE's investigation for Judith Collins which was released in July that year. At that time, the thinner margins lasted for a while before we saw them start to trend upwards again from about mid-2018.'

Fuel prices have dropped sharply in recent weeks.

Gaspy co-founder Larry Green said that as it got colder, Kiwis spent less, and shopped more selectively.

'This week's falling price has been led by some of the smaller stations and the big boys are having to drop their prices to stay relevant,' he said.

Petrol is dominated by four big fuel companies, BP, Mobil, Z and Caltex, which is owned by Z.

But Gull, an Australian-owned fuel retailer that sells through un-manned stations with a no-frills set up, has slowly spread across the country providing a cheaper option.

New Zealand Automobile Association Petrolwatch spokesman Mark Stockdale.

Typically when Gull sets up shop in an area, the surrounding majors drop their prices to compete.

Other cut-price fuel companies like Waitomo in the North Island, or Nelson Petroleum and McKeown in the South Island, have a similar effect on prices in areas where they compete.

But Gull and Waitomo, the two largest no-frills petrol brands only operate in the North Island to date, and until Waitomo opened in Upper Hutt in May, were not operating in Wellington either.

Petrol companies have been approached for comment.

*comments on this article have been closed