New Zealand retail fuel prices appear set to remain in mid to upper $1.70-plus range for some time as the high New Zealand dollar continues to cushion consumers from a devastating blow to their wallets from escalating global oil prices.
With the kiwi at US80c and oil above $US100 a barrel, pump prices of 91 petrol, at $1.74 per litre yesterday, should theoretically change to $1.79, Westpac chief economist Brendan O'Donovan said yesterday.
‘‘Oil is in a highly volitile state at present,'' he said when contacted yesterday.
If the kiwi was to trade at US60c, the immediate petrol price at current oil costs would be about $2.15 a litre.
Record oil prices touching $US105 a barrel this week - reflected in New Zealanders continuing to pay near-record retail prices of $1.77 during February - appear unlikely to gain any reprieve from the Organisation of the Petroleum Exporting Countries, which has ignored pressure to increase oil production.
Oil hit $US104.95 on Wednesday, then eased in price, after Opec refused to increase production from any of its member states.
Opec's 13 members met in Vienna this week and decided to hold oil production levels flat, insisting oil markets were well supplied.
Opec blamed the record prices on factors outside the cartel's control, including speculators and the ‘‘mismanagement'' of the US economy:
‘‘What's happening in the oil market is due to the mismanagement of the US economy, which is probably affecting the rest of the world,'' Opec president Chakib Khelil said.
Mr O'Donovan said given that oil supplies were fixed and demand in the US and Europe was waning due to economic slowdown, escalating prices were due to investors in cash-rich ‘‘commodity index funds''.
He said a report found $US5 billion-$US10 billion a week had been poured into a variety of commodity funds, including oil, grain, metals, gas and sugar each week during the past two months, amounting to $US200 billion of investment.
