The new normal: High fuel prices may be here to stay

Thursday, 21 May 2026

Petrol and diesel prices may not return to pre-crisis levels, the public servant leading the national response says.

Ministry of Primary Industries director-general Ray Smith told a conference the country was unlikely to run out of fuel, but warned cost was now the bigger problem for households and businesses.

“Even once we get through all of this, the price probably won’t easily go back to where it was before we started,” he said.

The comments came as officials monitored the effect of conflict in the Middle East on global fuel markets and shipping routes.

Fuel prices have eased from their peak, but remain well above where they were before the war. Regular 91 petrol has risen from about $2.53 a litre to $3.16, after peaking at $3.58. Diesel has climbed from about $1.87 to $2.94, after reaching $3.99 at the peak.

AA principal policy adviser Terry Collins said while Smith was right to warn fuel prices could stay high into next year, it was too early to declare the old price was gone for good.

“Never is a long time to make a prediction,” Collins said.

He said the next 12 to 18 months could bring elevated prices, but global markets could shift again as supply routes adjusted, demand changed and more people looked at electric vehicles or other alternatives.

Collins said high prices were already changing behaviour, with motorists combining trips, driving less where possible, and watching prices more closely.

For businesses that cannot simply stop using fuel, the distinction between stable supply and affordable fuel is already shaping decisions.

North Canterbury dairy farmer and Federated Farmers North Canterbury president Bex Green said farmers were no longer panicking about fuel supply, but prices were still hurting.

“Prices definitely put a dent on things and they make us have to re-evaluate where our priorities are on farm,” she said.

She said stable supply was more important than price, because farms could not operate without fuel.

“We still have to farm. We can’t just stop farming. We can’t just stop feeding out to our cows.”

She said staff fuel use was also being watched more closely, and unnecessary jobs were being avoided while prices remained high.

Smith, who has been leading the national fuel response for about four weeks, said refineries and fuel companies were changing where they sourced crude oil from, because they did not want to remain exposed to the Middle East.

He said refineries supplying this part of the world were looking to crude sources including Africa, South America and India, rather than relying as heavily on the Middle East.

“They are going to diversify. But that will lift the price of it for everybody down this end of the world.”

Smith said he could not rule out disruptions to fuel shipments into New Zealand, despite meetings with industry players giving him confidence the country should be able to manage.

He said the outlook depended heavily on the war and how global markets responded.

“No one can guarantee anything and there’s a war going on or not going on and none of us quite know how that’s going to turn out,” he said.

“That’s quite a big dependency in what happens next.”

He said fuel importers and officials had a clear view of supplies ordered for the next two to three months, and shipments through March, April and most of May had arrived without disruption.

“We feel very confident, as we look out to July and August, that all of our fuel supplies ordered will be fulfilled out to that period, barring some disaster that happens somewhere unexpected.”