With a framework agreed between the United States and Iran to end the war and open up the Strait of Hormuz, petrol prices have headed downwards.
Petrol has dropped below $3 a litre for 91 octane petrol in Dunedin and further afield.
AA transport policy and advocacy policy director Terry Collins said the drop had more to do with cheap fuel being secured for New Zealand customers about a month ago.
‘‘And we've just seen those prices come through. The price of oil had come down. It had got below $US100, then it was heading down. The price of oil was softening,’’ Mr Collins said.
‘‘The refining costs weren't so high around it. The exchange rate just went up a fraction. There was a variety of inputs just playing out.’’
Petrol companies said the retail price was set at replacement which, Mr Collins said, should drop the price further.
The ‘‘rockets and feathers’’ argument (prices go up like a rocket but drop like a feather when supply increases) came to light when it came to fuel prices, Mr Collins said.
Some fuel companies would have incurred losses when the price went up as they attempted to hold some prices, especially diesel, so had to regain those losses, so may not be keen to drop prices so quickly.
He suggested prices would sit around $2.80 a litre for 91 for the next year.
He said it was vital for the New Zealand economy to get the price of diesel below $2 a litre and also lower the price of jet fuel.
