Business will pass on petrol price increase - and inflation will rise again
Wednesday, 11 March 2026
The cost of petrol and diesel as a result of the US/Israeli war with Iran will leave consumers paying much more at petrol pumps, but also at retail tills.
Companies spoken to by The Post are starting to consider what actions they will have to take in order to mitigate some of their fuel bills, with petrol edging up to about $3 a litre this week (although it has since dropped to about $2.69 a litre this afternoon). Diesel has also risen, up 36c a litre, to about $2.50.
For NZX-listed Move Logistics, oil and gas prices are “exceptionally significant cost drivers”, says chief executive Paul Millward.
“We've come off a number of years where demand has been low, so we're going to have no choice but to pass them on through a fuel-adjustment factor. We just can't absorb them.”
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The company was still working through how it could best respond to the fast-moving situation, but Millward said it had already seen direct, “significant” increases passed through.
“It's settled a bit overnight, but it's challenging and, down the line, what it means for the economy is a big question too.”
The Middle East provides up to 80% of the crude oil to the main refineries that New Zealand buys oil from in South Korea and Singapore, so what happens in the area, as Iran fight to control movement through the vital Strait of Hormuz, will affect all Kiwis.
Mainfreight group managing director Don Braid said the company used a fuel-adjustment factor that applied when fuel moved up or down.
“For international freight the airlines and shipping lines have a similar calculation that we pass on through to customers.'
Port of Tauranga spokesperson Rochelle Lockley said that business was taking a slightly different approach to fluctuating fuel and with the end point a great unknown, “we're just riding it out at this point”.
One slight silver lining for businesses and consumers was that there had been no change to shipping schedules as yet, mainly because there were no direct services from the Port to the Middle East.
This is significant because, for example, global shipping costs showed an increase of 785% between November 2019 and their peak in September 2021 - over the Covid-19 period - and consumers are again the ones largely footing the bill.
“Where we will start to have problems is once the big international hub ports start getting congested,” said Lockley. “So, the likes of Singapore or Shanghai or Malaysia’s Port of Tanjung Pelepas. Once they get congested, then there can be flow-on effects with shipping delays and cargo delays. But that's not happening yet to any great scale.”
That was affirmed by Woolworths, which sought to discourage panic buying by assuring customers they had no expectation of shelves falling empty.
“We are watching the situation in the Middle East closely. At this stage our stock levels and pricing have not been affected but we continue to monitor it,” Woolworths said in a statement to The Post.
Hastings family owned trucking firm ETL’s general manager David Hill said if the cost of fuel went up it automatically had to recover the increase from the customer. The company lifted its fuel price by 37 cents last weekend.
ETL reviewed the fuel price monthly and then fixed the price for the next month. “For every 5c increment diesel goes up and down, we apply a 1% fuel adjustment factor plus or minus.” Hill said.
“I'm faced with a situation of having a fuel bill in big months of over a million dollars. So it is material.”
But if the Stait of Hormuz reopened the pressure would come off the price of oil. “So it may not be as dramatic as everyone thought it was going to be,” he said.
The escalating prices have taken such a toll on Air New Zealand’s business model it has had to recast its financial forecasts to try and keep shareholders’ expectations in check. It has added surcharges to its domestic and international flights.
Close eye
Fonterra runs a fleet of 500 milk tankers, but it was also seeking to assure farmers and shoppers that it could manage disruption caused by the war.
But it said: “We have decades in this market with long standing customers that we have a history of working with through a variety of circumstances, we will continue to do this.
“This is a complex and dynamic situation that is changing daily, but late last week, through the strength of our partnerships with customers and Kotahi, we started delivering product to some ports in the Middle East. We are confident we are on the right track to be able to get further product to customers shortly.”
Auckland-based Waste Management has a fleet of 1000 vehicles operating across the country and, as a transport intensive business, “we keep a close eye on global fuel markets and the factors that can influence them,” says the company’s New Zealand chief corporate services officer Richard Griffiths.
“Fuel prices move up and down over time, so we already have processes in place to manage that volatility. This includes how we procure fuel, how we operate and optimise our fleet, and in some cases contract mechanisms that allow for fuel price adjustments.”
Griffiths said moderate increases could generally be absorbed through normal operational efficiencies and cost management.
However, “history shows that fuel price shocks can persist for a period before easing. During major supply disruptions, such as the Russia Ukraine conflict in 2022, higher prices lasted for several months before gradually settling”.
Electrification push
Waste Management already has electrification as part its long-term fleet strategy, mainly as a result of trying to reduce emissions.
“Higher fuel prices can strengthen the business case for electric vehicles, but the pace of change is more influenced by the availability of suitable trucks, charging infrastructure and making sure the technology works reliably in real-world collection operations,” Griffiths said.
Another organisation that is trialling electric trucks and liking it - and liking it more as fuel prices increase - is KiwiHarvest, New Zealand's largest food rescue organisation.
The company has 10 trucks on the road daily, rescuing and delivering food and, in the past year, one of those has been an electric truck loaned to the non-profit by JAC Motors.
It’s worked “really well on a battery, even with the refrigerator on the back - so definitely electric trucks are something worth considering more,” said Anne-Marie Friis, head of fundraising and marketing.
More broadly, KiwiHarvest has a sponsor in BP, which supplies the non-profit with about 80-90% of its fuel costs, but there is a cap on the sponsorship (as there is on most) and with price rises, that percentage of fuel BP’s money covers goes down.
It could end up being 60-70% instead, said Friis, and would mean on top of the many efforts they make currently to keep fuel costs down, like work out the most efficient routes, they would have to find the money elsewhere, which would inevitably mean less food rescued and delivered.
“This, at a time we are facing more demand than ever - in the last three years, we have doubled the volume we’ve rescued and delivered, and every single charity we supply would take more tomorrow if we could get it to them, but it is very expensive to do.”
Another non-profit keeping a close eye on what’s happening is Pet Refuge. Petrol makes up around 12% of its operating costs, incurred as it transports pets away from domestic violence situations.
Chief executive and founder Julie Chapman said if petrol prices continued to rise, there would be a direct impact on the number of pets and whānau it could help.
“A 10% increase in petrol costs is equivalent to around 150 safe bed nights we would no longer be able to provide - or about five pets each month we wouldn’t be able to help escape violence.
'We rely on donations from our generous supporters …every donation helps ensure we can keep transporting pets to safety, so families escaping violence don’t have to choose between their safety and their pets.”