Fuel prices drop, so what does this mean for the summer roady?

Sunday, 24 November 2024

Fuel prices have dropped annually, so what does this mean?

Stats NZ datsashows petrol prices dropped 13.9% annually, while diesel dropped by 23.4%.

International oil prices remained at the lowest so far for 2024.

It was likely fuel prices would remain stable into the coming year.

Fuel prices have dropped significantly over the past year and as we look ahead to the summer roady, prices could stay low.

New Zealand's inflation rate has dropped to 2.2%, the lowest in more than three years. Although prices are still rising, the pace has slowed. Lower prices for air travel, petrol, and vegetables helped, but rent and insurance costs have increased.

But it would not just be affecting the price at the pump, but also the price of what you pay at the shop, or if you prefer to fly to your summer destination, the price of your plane ticket.

According to Stats NZ petrol prices dropped 13.9% annually, while diesel dropped by 23.4%.

Infometrics chief executive Brad Olsen said fuel prices had been lower in recent months, as international oil prices remain lower than at other points in 2024.

Ministry for Business Innovation and Employment fuel price monitoring up until 8 November showed that regular petrol averaged around $2.73 per litre over the past four weeks, with prices in October some of the lowest seen since July 2023, as the fuel excise duty subsidy from government ended and fuel prices trended back towards a market price.

“Fuel prices are down 9% from their 2024 high point, when fuel prices spiked to $3.01/L in mid-April,” Olsen said.

“This decline has been helped by an 18% drop in crude oil prices – Dubai crude oil has remained lower in recent weeks. Lower international oil prices are driven by lacklustre expectations for global growth in the next year, particularly out of China – if there’s lower demand for oil, but roughly the same supply, prices will fall.”

The summer roady might be a bit cheaper than last year thanks to lower fuel prices.

Although it was tough to forecast where fuel prices would go, Olsen said Infometrics current forecast was that fuel prices might keep around this current level into next year.

And the lower fuel prices would not just be welcomed by those wanting to do a road trip.

“They also help limit the cost of air travel, and most importantly the cost of moving goods around New Zealand. So lower fuel prices at the moment might help keep the price of other goods in the shop from going up,” Olsen said.

“Although there’s a risk fuel prices could go lower still, with poor economic numbers out of China, the cuts to interest rates across the world could provide enough stimulus to raise oil demand, which could put pressure on oil prices to go higher too.”

BNZ chief economist Mike Jones said international oil prices had been “very choppy” over the past 12 months.

“But through it all a gradual downtrend has shone through and that’s been the main factor behind the recent declines in NZ petrol prices. Those oil price declines have offset a small depreciation in the NZ dollar which has tended to work in the other direction,” he said.

But where petrol prices go from here was dependant on what happened to international oil prices and the NZ dollar.

“It’s thus pretty hard to make any sort of accurate prediction at the moment given both can move around a lot and global markets are in a heightened state of uncertainty,” he said.

“Declines in petrol prices been good news from the perspective of household budgets. The extra spending power, with falling mortgage rates also helping, seems to have contributed to a little more discretionary spending starting to come through over the past couple of months.”