NPD is building fuel stations in Mosgiel and Kaikorai Valley.
Motorists have already noticed differences in petrol prices of more than 20c between retailers across the city.
AA fuel spokesman Terry Collins said the introduction of two new low-cost stations was likely to cause more fluctuation in fuel rates.
‘‘Generally what happens is when those low-cost operators come into an area and compete with the other ones they come in at lower prices and so the other stations generally have to try and match it to keep their customers,’’ he said.
The price of fuel in New Zealand was largely dictated by external geopolitical factors, he said.
The cost of buying oil and refining and shipping it and the country’s exchange rate were the four main inputs that determined local prices.
‘‘There’s very little we can domestically do about that or [what] the oil companies can do.’’
Other factors that influenced the price included taxes, the emissions trading scheme, an ACC levy and an engine fuel monitoring levy. The only wiggle room companies had was their margins.
Petrol companies with lower prices saved costs by chasing a larger volumes of customers.
‘‘They’re prepared to take a smaller profit and sell more product because, ultimately, they make more money doing it,’’ Mr Collins said.
Low-cost operators such as NPD, Gull, Waitomo and Allied could also offer cheaper prices by saving on their overheads because they did not have toilets, cleaners or staff managing their stations.
Generally, there were two models in the industry — full service and no service.
Often retailers offered discounts on low-volume days such as Tuesdays to get more customers.
Fuel prices in general had gone up in recent years not because of margins from retailers, but rather transportation and other costs associated with the industry.
Future changes to fuel depended on external factors such as conflict between the United States and Iran and the resolution of the Russia-Ukraine war.
‘‘There’s plenty of oil out in the world right now. But really it’s geopolitical.’’
