Petrol prices level out as 'Gull effect' eases

The "Gull effect" which has kept many North Island petrol prices low and South Island prices high is finally easing, the Automobile Association says.

Last week, Gull petrol service increased its fuel prices sparking an overall rise in prices in areas where it operates.

Other petrol services had previously been forced to keep their prices low where Gull operated to remain competitive -- a term AA coined "the Gull effect".

The price of oil wasn't any cheaper so stations were forced to lift gas prices elsewhere to help fund lower prices in areas were Gull was present, AA petrol prices spokesman Mark Stockdale said.

The national average fuel price was now $2.05 for 91 Octane and $1.31 for diesel.

"People in places such as Auckland, Whangarei, Bay of Plenty, Manawatu, Levin and Masterton will have noticed their prices go up slightly, while people in the South Island and parts of the North Island where Gull isn't present are finally getting welcomed price reductions," Mr Stockdale said.

Oil prices hadn't affected the petrol price changes, he said. "It's got nothing to do with the price of oil or anything like that.

"For a long time companies had to keep their prices really low where Gull was. That meant they were cross-subsidising to make up for revenue.

"That kind of extreme price wars wasn't sustainable -- it had to come to end at some point."

Pricing should remain relatively steady while oil prices remained consistent, Mr Stockdale said.

Gull retail development manager Karl Mischewski said the low-low prices weren't sustainable -- even for Gull.

"We're generally able to set prices lower than our competitors because we can operate at lower costs," he said.

"But it's like AA has said, the aggressive price wars that have been going on for some time now weren't sustainable."

Competition was still rife, however. "We believe our prices are still cheaper than most competitors," Mr Mischewski said. "Competition is healthy and still continues today."

BP spokesman Jonathan Mills likewise said competition had eased off slightly in the past week.

"There's been really fierce competition in some regions in recent times," he said. "We will always compete strongly where and when we can.

"In the past week, there's been some disparity in the regions so we've changed our prices to react to the current market."

- Catherine Gaffaney of NZME. News Service

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