Broadband driving drop in petrol sales

Mike Bennetts says people are Skyping relatives instead of visiting.
Mike Bennetts says people are Skyping relatives instead of visiting.
Z Energy says petrol consumption is falling in relation to increasing availability of broadband.

While more fuel-efficient vehicles and rising petrol prices have also contributed to consumption falling from its 2007 peak, Z's chief executive, Mike Bennetts, said demand was more sensitive to broadband connectivity than these traditional factors.

"People are doing less discretionary motoring and that may be about the price but what we have found is quite a strong link between broadband connections and fuel consumption," he said.

"People are doing online shopping and Skyping granny rather than making the fortnightly visit."

A 1 per cent improvement in broadband connectivity is estimated to cause a drop of 200 million litres a year in national fuel demand, more than the impact of GDP growth, population, fleet turnover, vehicle efficiency and the petrol price.

Fuel consumption peaked at 4.2 billion barrels a year in 2007 but is estimated by Z and the Ministry of Business, Innovation and Employment to fall to 3.6 billion barrels within the next 10 years.

Z has between 25 per cent and 30 per cent of fuel sales, and data compiled for an investor day shows light vehicle travel per person has fallen 6 per cent since 2005.

However, diesel use is increasing and while historically pegged to GDP growth is now surpassing that.

Bennetts said jet fuel sales were influenced by the strength of tourism, although an increased number of aircraft was balanced by more efficient engines.

Refinery margins were highest with jet fuel and diesel, followed by petrol, and the lowest were fuel oil and bitumen.

Declining petrol sales made margins more important, he said.

"We've been beating the drum for a few years. In a flat market, albeit declining in some products, it's all about margin management as the way to be successful."

After-tax profit was about 3c to 4c a litre and if the company was able to add a cent of margin that would make up for 8 per cent to 9 per cent less volume.

BP said its figures also showed a fall in overall petrol consumption and its own sales were outstripping industry-wide diesel demand, growing by about 3 per cent. It said demand for premium petrol was increasing.

Volume slips

4.2 billion barrels a year - fuel consumption peaked at in 2007.

3.6 billion barrels a year - expected total within next 10 years.

-  Grant Bradley of the New Zealand Herald

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