As petrol prices rise, how to pay less at the pump this summer

Wednesday, 22 December 2021

The United States has the cheapest fuel in the OECD.

As many people across the country plan their summer road trips, some may be looking at their service station’s price board with a wince of pain.

According to statistics from MBIE, average petrol prices have risen more than 50 cents per litre since last summer.

The ministry also predicts that prices could rise to more than $2.60 for 91 octane fuel before the end of January.

Gaspy, a free app that lets motorists compare fuel prices in their area, has the current New Zealand average for 91 octane fuel at $2.47 – 95 octane is at $2.63 per litre, and 98 is at $2.74 per litre.

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Gaspy co-founder Larry Green says planning ahead is crucial for people wanting to save a few cents at the pump.

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Larry Green, co-founder of Gaspy, said it was important for people to do their research before they pulled up to the pump.

“Prices have been marauding around $2.50 for 91, which makes it important to get the best value possible whenever you can. This is especially important if you are taking a lengthy road trip and will be using a lot of fuel,” Green said.

Green said the best thing people could do was stay informed on what the average fuel prices would be in the area they were travelling through.

“Find a good fuel price and fill your tank up when you can, so you don't get caught out in more expensive regions. Make sure you plan ahead and find the best prices en route to your holiday destination,” Green said.

Brad Olsen, economist at Infometrics, says rising carbon prices and the omicron variant have been two competing factors on the price of oil.

As far as fuel prices in OECD countries go, according to MBIE data New Zealand is in the middle as the 18th most expensive fuel.

The most expensive fuel in the OECD was the Netherlands where premium unleaded cost NZ$2.70 per litre.

The cheapest fuel is in the United States at just over NZ$1 per litre.

Brad Olsen, principal economist at Infometrics, said petrol was an interesting commodity to watch as it was dependent on pressures from the global economy.

Olsen said a key factor of the rising petrol prices had been the upwards pressure on carbon prices.

“The carbon price has massively increased, which is going to continue to cause rising prices regardless of oil barrel prices,” Olsen said.

“Because the carbon price has gone up so much in the last six months, those charges are part of the price that motorists are seeing. Over the last year the ETS portion of fuel prices have increased by 80 per cent. This time last year it was just below 9 cents per litre, it is now 16 cents per litre,” Olsen said.

“Throughout most of November we saw prices sitting in the high $2.5. Compare that to even a few months back in July which was pre-delta where the average was $2.24. So you have gone up almost 25-30 cents a litre in a matter of months,” Olsen said.

Olsen said what was paid in tax was significant.

About 45 per cent of the money paid for fuel was going to tax and carbon credits, Olsen said.

“From our point of view there is a feeling that fuel prices remain elevated, but short-term increases could be reduced by the threat of the omicron variant. But we do expect to see fuel prices remain high while global activity remains at that better than expected level,” Olsen said.