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Nelson-based NPD opened its self-service station in the Dunedin suburb last Friday, initially offering 91-octane petrol for $2.12 per litre.
The city's average at the time was $2.26 per litre.
As of yesterday the station had raised prices to $2.16 and the nearby Z Energy dropped its prices to $2.19 per litre.
The Allied station on the same street was charging $2.23 for the fuel yesterday, but a worker said it was planning to drop its prices to compete with the rivals.
Most stations in other parts of the city were charging between $2.25 and $2.28 per litre.
BP was the outlier at $2.21.
AA spokesman Mark Stockdale said it was a common effect when ''no frills'' brands moved to an area that surrounding stations lowered prices.
''People will think when this happens that it's evidence that they have been getting away with charging more and why couldn't they have done it sooner?''
However, until the Government's inquiry into petrol prices, customers would have no conclusion as to whether the companies were charging too much or not.
For stations which required staff and a shop, lowering the price to compete with self-service stations could be unsustainable.
''That's good for motorists. For the retailers, they don't have a choice.''
-Drivers queued in Wellington yesterday for the opening of the new Waitomo fuel station in Upper Hutt.
Fuel prices regularly reach $2.30 in Wellington but yesterday 91 unleaded was $1.89 at Waitomo.